In this case the software company known as Grokster along with other companies distributed free software that allowed users to share files between their computers. The software was not intended for illegal downloading but users mainly used the software to download copyrighted files. The software companies knew that this illegal file-sharing was going on and they encouraged it through computer ads. A large group of entertainment companies headed by Metro-Goldwyn-Mayer Studios (MGM) sued Grokster and the other software companies for violation of the Copyright Act. They said that the software companies were intentionally distributing the software so that users could infringe works that had been copyrighted. The district court along with the Ninth Circuit court ruled in favor of Grokster and the software companies stating that the software could have been used lawfully therefore they were not liable for what users chose to do with it.

     Were the software companies liable for infringement? In my opinion they were liable. The fact that the software companies were encouraging consumers to continue to buy and use their product even though a great number of them were using the product for the wrong purpose makes them partially responsible for the user's actions. The encouragement by the companies was only a way for them to get more consumers and thus make more profit.

     The case went to the Supreme Court and they ruled in favor of MGM Studios and the entertainment companies that the software companies were liable for the infringement acts of their users. The court said that although the Copyright Act did not make someone liable for another's infringement, secondary liability applies. The fact that the software was so widely used makes it difficult to deal with each individual infringer therefore the secondary source, the software companies, must be liable.   

     This case shows a pretty advanced form of piracy in music software. The fact that the court system was able to use secondary source liability to persecute the software companies shows the attempts of the court system to keep up with the advancement of piracy in order to fight it.  

The article by Mr. Cloak discusses the evolution of online copyright cases in the pre-DMCA era. Before the DMCA, there was very little protection from liability for online user-generated services. The first case to test website liability in copyright infringement was Playboy Enterprises, Inc. v. Frena. Frena owned an online message board service that allowed its users to post messages and pictures to share with others. One user uploaded over 100 images copyrighted by Playboy. Playboy consequently sued Frena for copyright infringement, despite that fact that Frena had not actually uploaded the pictures himself. The court ruled that Frena was liable for the infringement, failing to note that Frena simply ran a service allowing others to upload images. The case of Religious Technology Center v. Netcom On-line Communications Services advanced the Frena ruling when the Church of Scientology sued Netcom for allowing unpublished Scientology writings to be posted on its services. The court judged that Netcom was not directly liable for this infringement because it had not directly facilitated the infringement. Rather, its software had automatically uploaded the infringing material without the knowledge of the operators. While Netcom was not liable for direct infringement, the court noted that it might be liable for another type of infringement. A website could be liable for Vicarious Liability if it receives direct financial benefit from the infringing material and has the ability to control infringement. Similarly, it could be guilty of Contributory Infringement if it has subjective knowledge of the infringement and substantially participates in the infringement.

The aforementioned types of liability have been mentioned in multiple copyright cases, such as the Napster case. With the advent of the DMCA and the Safe Harbor law, a service like Youtube is increasingly safe from direct liability. Youtube, however, could be held Vicariously Liable: it receives ad revenue in proportion to the number of users; if the number of copyrighted videos increases, its ad revenue will increase. Youtube has also developed filtering software, giving it the ability to control copyrighted material. For this reason, it could still theoretically be vicariously liable. Youtube could also be liable for Contributory Infringement because it has knowledge of infringement on its site (evident from the numerous takedown notices it receives). However, by demonstrating sufficient non-infringing uses of its services, like Betamax, it can escape Contributory Liability by being labeled a “staple article of commerce.” As Mr. Cloak states, “subjecting YouTube to liability from copyright owners could destroy a major facilitator of American creativity.” At the same time, authors have the right to control their works. Thus, the DMCA establishes a perfect medium by protecting online services from direct liability for allowing their users to upload anything, while also allowing copyright owners to request their work be removed if they wish. Subjecting Youtube to liability for simply allowing creativity to thrive on its servers should not be allowed, unless Youtube is proven to be guilt via vicarious or contributory means.

As Alfred Yen, professor of law at the Boston College Law School, states in his introduction, this article "studies the construction of third party copyright liability in light of the recent Supreme Court case Metro-Goldwyn-Mayer Inc. v Grokster, Ltd.” The article is broken up into five sections: the first describes the doctrines that governed third party liability before Grokster, the second uses “fault and strict liability to expose the theoretical and practical tradeoffs implicit I these differing constructions, the third analyzes the case itself, the fourth describes the implications of the decision and “sets forth the general contours of an improved, post-Grokster­ construction of third party copyright liability, and the fifth gives some thought to the future of this subject matter.

The Grokster case is the latest in a series of cases where an internet service provider has been prosecuted for the actions of its users. Yet, even with this new decision in the books, little progress has been made to determine who is really the most responsible for infringement or how to hold them adequately responsible. Yen writes that “third part copyright liability benefits society by encouraging individuals to stop others from infringing, but those benefits come at a price… third party copyright liability suppresses non-infringing as well as infringing behavior.” Overall, this paradox illustrates the biggest deficit of internet copyright law: the inability to find the balance between, in Yen’s words, “desirable and undesirable consequences” of new technology. At this point in time, there seems to be no obvious strategy for regulating the internet without stifling future innovation and creation.

This article points out that although Grokster “gave the Supreme Court the opportunity to straighten out the law of third party copyright liability” little to no progress was actually made in interpreting pre-Grokster doctrines of third party copyright liability. Instead of “choosing between” existing “differing interpretations” of the law, Yen writes that the court “adopted a dormant theory of third party copyright liability, inducement.” Overall, Yen’s article shows that “inducement give courts a new tool for holding culpable defendants liable which reducing the risk of undesirable side effects.” Yen describes the Grokster decision as being “not a landmark, so much as a milestone, ratifying a continuing détente between those who build on the Internet and those in a position to regulate the builders.” This decision has also turned the focus of internet gate keeping to controlling software and PC uses ability to run that software rather than the ability to control the entire network.

Whether or not one agrees with the merit of the new inducement doctrine, this article is a comprehensive look at an area of copyright law that is important and continuing to quickly evolve. The story of these laws will continue to change drastically in the years to come, but this is a useful, informative and through-provoking look at the situation thus far.