The case of MGM (backed by MPAA and RIAA) versus the peer-to peer file sharing Grokster is one of the most important copyright infringement cases in recent times.  The case came about because MGM thought that both Grokster.com and StreamCast.com were liable for copyright damages due to their supposed encouragement of illegally sharing movies.  Both Grokster and StreamCast were actively marketing particular software that aided in the downloading of both pirated movie and songs.  The two sites targeted the earlier ruling in the Supreme Court 1985 Betamax as their defense.  The Betamax ruling asserted that VCR manufacturers are not responsible for a VCR users who copy movies illegally.  The Supreme Court ended up ruling against Grokster and StremCast, saying that they could not hide behind a the 1985 Betamax ruling because unlike the VCR companies, they were actively promoting file sharing.  The fact that the Supreme Court wholly disregarded a past copyright ruling is poignant, because previous rulings on copyright legislature are often factored heavily into new decisions.  Two other points make this case specifically interesting.  Firstly, the Supreme Court highlighted the fact that although file sharing tools have the ability to be used illegally, the file sharing software itself and the activity of file sharing is not considered to be illegal.  Secondly, they state that the manufacturers of the specific file sharing products cannot be held responsible for how users choose to proceed once they have access to the software.  The one exception is when the manufacturer actively promotes or encourages infringement.  Ironically, it seems that although Hollywood thought that they scored hugely in this case, file sharers actually profited from this case as, ultimately, it was decided that file sharing itself is not illegal.

This particular case involved Universal City Studios and the Sony Corporation of America, and is most often referred to as "the Betamax case."  In 1976, Sony introduced their Betamax VCR, and used the machine's ability to record television as a marketing strategy.  Universal City Studios countered that Betamax's technological ability to copy programming for was a direct copyright infringement.   Sony argued that  their consumers had the right to record various programs in the privacy of their own home.  Rulings and appeals were traded back and forth until the case reached the Supreme Court in 1984  The Court eventually ruled that the company itself could not be held accountable for its creation of a new technology, even if said technology is used for specific infringements of copyright law.  As long as the technology can be used for legal purposes, then the manufacturer is not at fault for any user infringements.  The court's reasoning behind this ruling was that the public should not be deprived of a productive technology simply because some users choose to use the product unlawfully.  This case may in fact be the most important copyright infringement case in regards to how it affects and influences the decisions made regarding piracy and, specifically, peer-to-peer file sharing.  Another extremely famous case of MGM versus Grokster used the ruling of this case to argue in their defense.  It provides a great point of reference for my paper, as it shows the way in which the early beginnings of piracy were dealt with on a legislative basis.

This article, by Chuck Cochems, is an interesting look into the mind of a video game consumer.  This particular consumer is annoyed at video game companies (“corporate fat cats”) for their unending bashing of video game emulation.  He feels that they are simply out to make as much profit as possible, and do not really care about what is right or legal.  However, what starts as just a long rant against the industry morphs into the author’s attempt to find a legitimate, legal defense for video game ROMs.  After discarding all of the traditional defenses, he turns to the Betamax case, and focuses on what he refers to as “the personal use defense.”  Through his reading of the decision, the author comes to the conclusion that ROMs made for personal use could not be infringing.  He also applies this personal use logic to the DMCA, claiming that since a personal use could not possibly be commercial, the DMCA does not apply to copies made by consumers (he also notes catch-22 inherent in the DMCA, that nobody can legally provide the equipment to make a legal backup copy of a video game).  So, there does exist a legal means for a consumer to make backup ROMs of a video game.

While the author makes some valid points, a lot of his logic seems to fall flat.  The Betamax case cannot be applied to space-shifting quite as easily as Cochems might think, even if it only applies to personal use.  And not every personal use is non-infringing; it is clearly possible to infringe on someone’s copyright without selling or trading the infringement.  Also, he simply waves the DMCA away with a wand and the magical words “personal use.”  This is an unlikely scenario at best, and downright wrong at worst.  However, the true power of this article is to demonstrate how important this issue is for a significant segment of consumers.  It is clear while reading this article that Cochems cares passionately about video game emulation, if only on an ethical level.  He is “sick and tired” of the attempts by the video game industry to stamp out emulation, and he is looking for any legitimate argument to ensure the legality of video game ROMs.  The video game industry wants to avoid creating a consumer base that predominantly resembles Cochems.  Otherwise, they could find themselves in the same position as the RIAA.

“Sony Corp. of America v. Universal City Studios, Inc.” was a significant decision in copyright law dealing with new technologies that made it possible to record copyrighted television shows. The ruling in this case, also referred to as the “Betamax Case” which was the original VCR player that Sony produced, was that time-shifting is within the boundaries of fair use and is not copyright infringement. The court said that the manufacturers of such products could not be held liable for copyright infringement. This would come up during the Grokster case and it would ultimately be decided that manufacturers could be held liable if the product was intended to be used for infringing on copyrighted material.

The court stated that private time-shifting was a significant non-infringing use of the new technology. The court went on to say that just because some people could use the device for copyright infringement, the fact that there are substantial legal uses for it outweighs that. If the nature of the reproduction of works was non-commercial and non-profit then the court saw that there was nothing wrong with it.

It is quite ironic that Disney, who fought to keep Sony from producing the Betamax, was actually one of the biggest beneficiaries of the new home video technology by making a lot of money off of home videos. This case is important for my argument because this ruling has become the standard to which other copyright infringement cases have been held to for many years. The ruling in the Grokster case changed this precedent slightly by making the producer liable if it could be shown that they somehow encouraged or facilitated illegal copyright infringement.

This article is written by the Center for Democracy and Technology, a non-profit interest group that “seeks to promote free expression, privacy, and individual liberty on the open, decentralized internet.” This document “outlines the limits on the scope of secondary copyright liability,” looking at the Grokster decision, the landmark decision in Sony Corporation of America v. Universal City Studios, Inc. (1984), and patent law precedents relating to inducement liability. The goal of this investigation is to make sure that "secondary liability for copyright infringement does nothing to compromise legitimate commerce or discourage innovation having lawful promise.’” The Grokster case and the Sony decision can obviously be looked at be looked at individually, but this article does a nice job of synthesizing the information and explaining how they impact each other.

The article focuses on the new implications of the “inducement test,” what repercussions the situation has for the Sony rule and what this all means for vicarious liability. The article focuses on one key difference in clarification between the Grokster and Sony decisions. The language in the Grokster decisions "suggests that the Sony test focuses on 'substantial' non-infringing uses, not 'commercially significant' non-infringing uses." With Grokster, the emphasis was certainly placed on the commerical uses of the site. Monetary gains became one of the most significant factors of the case, not just ethical or legal implications. Certainly the internet is just as much a business as any other commerical frontier in the world, but more and more - especially illustrated with the Grokster decision - financial viability is the determining legal decision making. For example, today YouTube is currently seen as protected by the safe harbor provison, although some of the content being posted on YouTube today was possibly (or probably) also availible on Grokster. YouTube has been able to position itself not only in a safe harbor in a legal sense, but also in a financial sense by teaming up with companies who own many of the copyrighted works that are being infringed.

Of course the Sony case was also motivated by money, but more than ever before the current world of the web and the sites that are allowed to function within its borders are completely a function of their monetary potential for copyright holders. Grokster was taken to court because it posed a threat to the financial success of copyright holders. YouTube poses a similar threat as well, but thus far has been able to keep in partnership with the people who would be taking them to court in the first place.