Case 545 U.S. 913 (2005)

This is a United States Supreme Court decision in which the Court unanimously held that the defendants, Grokster and Streamcast (P2P file sharing companies), could be sued for inducing copyright infringement via their marketing revenue from their respective file sharing software. The plaintiffs consisted over two dozen of the largest entertainment companies (led by Metro-Goldwyn-Mayer studios). The case is arguably one of the most important copyright infringement cases in the past 20 years. Justice Souter's decision is of particular importance : "We hold 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."

While the Court unanimously concurred that Grokster could be liable for inducing copyright infringement, there was considerable disagreement over whether the case is substantially different from the Sony Betamax case, and whether the precedent established by Sony should be modified. The majority of the Justices would have either expanded or contracted the Sony Betamax doctrine, however the Court as a whole did not chose to reexamine the Betamax precedent in the decision, given they were split into three equal-sized groups. Instead, a new, and perhaps more ambiguous, test has been developed to determine whether the software in question is not protected by the Sony ruling. In short, the distributors of the programs advertised and/or otherwise induced its use for copyright infringement. MGM et al. asserted that the defendants' refusal to incorporate a mechanism to filter copyrighted materials from the file-sharing network constitutes an intent to promote copyright infringement. However, Justice Souter notes that "...liability merely based on a failure to take affirmative steps to prevent infringement, if the device otherwise was capable of substantial noninfringing uses" would not be considered contributory infringement.

This case is important, because it illustrates the judicial precedence in regards to P2P as well as the extent to which large corporations disagree with the very essence of peer-to-peer sharing. It will be important to my paper because it is highly referenced in the literature and other sources.

This is the Supreme Court Opinion regarding the MGM et al v. Grokster et al case. The opinion of the court was delivered by Justice Sutter. Essentially what happened was that the decision made by the United States Court of Appeals for the Ninth Circuit was reversed. The question raised before the court was "under what circumstances the distributor of a product capable of both lawful and unlawful use is liable for acts of copyright infringement by third parties using the product." According to the court, there was an error made by the Ninth Circuit Court, in its interpretation of Sony v. Universal City Studios. "The Ninth Circuit has read Sony’s limitation to mean that whenever a product is capable of substantial lawful use, the producer can never be held contributorily liable for third parties’ infringing use of it..." This document includes a description, gathered in the process of litigation, of how the Grokster and StreamCast products worked what technologies they used (Gnutella and FastTrack) and more importantly how the products were used by their users. It is made known that although the products have legitimate uses "90%" are copyright infringement uses. Another important point made by the document is that both Grokster and StreamCast profitted from advertisements that users would see while using the product. Furthermore, it is made known that "the business models employed by Grokster and StreamCast confirm that their principal object was use of their software to download copyrighted works." The decision of MGM v. Grokster essentially made the precedent that the Sony v. Universal decision doesn't leave service providers such as Grokster and StreamCast unliable for copyright infringement made by third parties using their product.

This source is very valuable for my research paper because it is one of the only cases dealing directly with the issue of p2p filesharing. Furthermore it provides support for my contention that government can and should shut down websites involved with/enabling copyright infringement. Many of such service providers use the Sony v. Universal case as defense against being liable for copyright infringement stemming from the use of their service by third party users. This case set a precedent to how future cases involving filesharing and copyright infringement cases are going to be handled in the future. Also, many of the current websites being targeted by the MPAA and RIAA and other agencies, whether in the U.S. or elsewhere, including www.IsoHunt.com among others, function in similar ways as Grokster and StreamCast did. Therefore if Grokster and StreamCast were found liable by the Supreme Court in this case, some of the strategies/analyses from this case can be used to shut down other sites such as IsoHunt.