The most recent Supreme Court ruling on this controversial issue was in the case of MGM v. Grokster. Reversing the opinions of both the district court and the Third Circuit, the Supreme Court found that, though the software could be used for both infringing and non-infringing purposes, the companies “induced” its users to infringe copyright. Even though the software may have had substantial non-infringing uses and may thus have passed the Sony test, the court unanimously felt that the software was created with the intention of allowing users to infringe copyright for the profit of the company . While these file-sharing networks were shut down as a result of the ruling, the government did not seek prosecution of users, many of whom had shared less than $1000 dollars worth of copyrighted works and were thus not criminally liable under the current U.S. code. And while the government may have had a shot at prosecuting the creators and marketers of the software itself, as their product had been found to induce copyright infringement, with damages likely totaling thousands of dollars, a federal case was never made of it. Grokster was shut down, and numerous file-sharing networks popped up in its place, while legal digital distribution networks gained popularity as well, filling the gap left by the popular illegal networs. The war on piracy continued despite this dramatic ruling, and the complaining on behalf of the record companies has yet to cease.
To those not acquainted, the Grokster case was the final decision by the U.S. Supreme Court to make most p2p file sharing applications illegal. The court reached this decision after it reviewed an appeal of another appeal that went from a dismissal by the United States District Court for the Central District of California in 2003, to the Ninth Circuit Court of Appeals, where the previous decision was upheld. When relating special court cases to sites online today, an individual may spring to the conclusion that the Sony Corp. v. Universal City Studios case would provide the answer easily. This was the case that prevented VCR manufacturers from having liability and suit brought against them for contributory infringement when users created copies. While the court in the Betamax case famously stated that VCR’s were "capable of substantial noninfringing uses," the decision in the Grokster case stated that even if something has the ability for those noninfringing uses, if no action is taken to prevent infringement of copyright law, it may be guilty of contributory infringement.
How does this relate to the sites and programs used today? Do the YouTubes and BitTorrents have to fear the wrath of possible copyright infringement? The Answer is no, they do not; but, there is a caveat, they must follow the rules of Section 512 of U.S. Copyright law and remove infringing work. This case undoubtedly very significant when approaching and concerning intellectual property theft and property theft in the digital age.