The full effect of the Grokster case is still yet to be determined. The case itself is important in current discussions of copyright law because of the way the Inducement Doctrine was used in reference to copyright. The case is also significant because it touched on the highly contentious issue of when and to what extent a distributor can be held liable for the infringement of individual users.
The case itself did not just concern Grokster, but also Morpheus, KaZaA and StreamCast. 28 of the world's largest entertainment companies brought a lawsuit against them, hoping to establish a new precedent to be used against other technology companies mostly in the realm of, but not limited to, peer-to-peer file-sharing networks.
Originally in the case, the Ninth Circuit court ruled that the companies responsible for distributing Grokster and the other services could not be held liable for the violations of its users because of precedent of the Sony ruling, which found that distributors could not be held liable for the infringing activities of its users so long as the tool was capable of substantial non-infringing uses. However, the Supreme Court set aside this ruling. The Court did not overturn the Sony Doctrine, but it did not re-interpret it either. Instead, the Court chose to turn to the Inducement Doctrine. Now, in addition to the uncertainty regarding contributory infringement and vicarious liability, innovators must also contend with the problems of inducement.
The court’s holding stated that “for the same reasons that Sony took the staple-article doctrine of patent law as a model for its copyright safe-harbor rule, the inducement rule, too, is a sensible one for copyright. We adopt it here, holding that one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties."
In the final decision, the Supreme Court found the defendants guilty of inducement for three main reasons. First, the companies showed that they were “aiming to satisfy a known source of demand for copyright infringement, the market comprising former Napster users.” The court looked at the companies’ internal communication and found several documents that made “constant reference” to the model and practice of Napster. Secondly, MGM was able to show that none of the company’s attempted to develop filtering tools or other mechanisms to diminish the infringing activity, which the Supreme Court felt underscored “Grokster’s and SteamCast’s intentional facilitation of their users’ infringement. (The Ninth Circuit looked at the lack of such tools as “irrelevant” because the companies “lacked an independent duty to monitor their users’ activity.”) Additionally, though, the Supreme Court decision stated that “in the absence of other evidence of intent, a court would be unable to find contributory infringement liability merely based on a failure to take affirmative steps to prevent infringement, if the device otherwise was capable of substantial non-infringing uses. Such a holding would tread too close to the Sony safe harbor.” Thirdly, the Court concluded that the companies’ selling advertising space was further evidence of unlawful objectives. The court stated that “the more the software is used, the more ads are sent out and the greater the advertising revenue becomes. Since the extent of the software's use determines the gain to the distributors, the commercial sense of their enterprise turns on high-volume use, which the record shows is infringing."
tagged Grokster MGM secondary_liability by lindseyr ...on 28-NOV-06
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.