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Groking Grokster

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The net is abuzz with the implications of the Grokster case. In case you don’t know, MGM sued Grokster because its P2P file sharing software made possible widespread copyright infringement by Grokster’s users. The case was dismissed, in Grokster’s favor, by the lower court on a motion for summary judgement, holding that under the leading case in this area of copyright, the Betamax case (i.e., Sony v. Universal), there was no basis for liability. MGM appealed to the Supreme Court, which granted a hearing. The SC just handed down its unanimous opinion, in which it vacated the decision below and remanded the case, saying that there is room to find imputed liability for copyright infringement by Groksters users despite the Betamax case because Grokster solicited users to use their product specifically to violate copyrights.

What the SC did not do is lay down any clear rules between knowledge that copyright could be violated (which is OK and does not support liability) and soliciting for the purpose of violation (which now may support liability). They said, “It is enough to note that the Ninth Circuit’s judgment rested on an erroneous understanding of Sony and to leave further consideration of the Sony rule for a day when that may be required.” In essence, they punted.

We now know that advertising asking people to use your product for purpose of infringing copyrights is enough to impute vicarious liability, but we don’t know what actions short of that could trigger such liability. We know that the Betamax safe harbor of ‘substantial non-infringing use’ still exists, and we know from the soon to be famous footnote 12 of Grokster 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 noninfringing uses.” So just a failure to put in filters, or encryption, or a broadcast flag, or other copyright protection schemes isn’t evidence of intent. That’s a big relief, and potentially a significant victory. But the question remains what ‘other evidence of intent’ might look like, other than advertisements that solicit infringement.

There is a lot of unknown territory between those borders drawn around liability and no liability, and therein lies the problem with this decision; the uncertainty will surely chill domestic investment and innovation in these important networking technologies. In some ways, it would be better if the Court had refused to become involved and forced the hand of Congress on the matter. There would be clearer rules in a shorter period of time. There could be evidence and argumentation from a variety of points of view. There would be clear signals to the market. But there is one critical way in which this result is better than Congressional involvement; in Congress the heavy purse of media owners desperate to strangle these technologies in the cradle would tip the scales of justice toward protecting copyrights at the expense of all other values.

With this decision to delay drawing a firm line in the law, the SC has given more time for entrepreneurs and users to prove the commercial and cultural potential of P2P technologies. I’m inclined to be grateful for at least that small favor. I never expected either the SC or Congress to make enlightened decisions on these matters when the profits of large media corporations hang in the balance – just the opposite, in fact. At least now there is the possibility, however remote, that these technologies will take root as deeply as e-mail or the web before the law can decide whether to apply fertilizer, or weed-killer.

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  • Eric Olsen

    exceptional job on this Michael: clear, concise, nice background and implications of the ruling. Thanks!