Grokster Ruling Perspective: NARAS vs CEA

In the Grokster case, the Supreme Court unanimously decided 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, going beyond mere distribution with knowledge of third-party action, is liable for the resulting acts of infringement by third parties using the device, regardless of the device’s lawful uses.”

And they remanded the case (see Michael D. Bryan’s analysis) “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.”

The Court did not say which actions short of marketing/advertising your service for the purpose of violating copyright would confer liability, so the essence of file-sharing — providing the technology to enable it — was left an open question.

Perspective on the decision seems directly related to economic stake in the case. Here is Neil Portnow, president of the NARAS on the ruling:

The National Academy of Recording Arts & Sciences represents 17,000 musicians, composers, artists, engineers, producers and songwriters and is dedicated to improving the quality of life and cultural condition for music and its makers.

Today is a good day for music fans and the 17,000 musicians, composers, artists, engineers, producers and songwriters that are the members of the Recording Academy. By unanimously upholding the rights of creators, the Supreme Court has defended an environment for legal online music services to thrive.

As the National Academy of Recording Arts AND Sciences, our membership embraces new technologies that deliver their music to fans in innovative ways. The court is forging the way for the legal digital services – those that compensate the creative professionals – to enable music fans to hear their favorite artists wherever, whenever and however they want.

The opinion also sends a strong message in defense of copyright protection, defending artists’ rights to create and to profit from their works within a safe and supportive system, while also making sure those rights are taken into consideration as technology continues to evolve.

Previously The Recording Academy submitted an amicus brief on behalf of the creative community, which depends on sales of its works to earn a living. We thank the Court for its insight into this important case and for the protection of music makers. The Academy will continue to defend its members’ rights wherever and whenever necessary.

Consumer Electronics Association President and CEO Gary Shapiro has a different perspective.

The immediate impact of today’s ruling is twofold: massive uncertainty and the likelihood of massive legal bills. The Court has done little to provide a clear path for legitimate innovators and manufacturers to avoid lawsuits related to copyright infringement over legitimate products and services.

With this ruling the Supreme Court has handed a powerful new tool to litigious content creators to stop innovation. Innovators must now consider new murky legal rules and potentially overwhelming legal costs before bringing their product to market – or even moving forward with an innovative idea. It is essentially a ‘full employment act’ for plaintiff’s attorneys and a guarantee for further lawsuits.

While the Court appears to have sought to narrowly tailor this decision to protect technological development and provide some guidance to promote innovation, the intent test established under this ruling stands as a heavy burden. Content creators may potentially find any act as an ‘infringement to induce’ and shut down a new product or service with the threat of a lawsuit. Who knows how many innovative products and services now face a premature death as the result of this ruling?

At the same time, the Court appears to have upheld the critical principles it established in its Betamax ruling, underscoring that products that have substantial non-infringing uses are legal even if they can be used for copyright infringement. The open question, again however, is the lack of clarity in determining intent to encourage infringement.

As we continue to examine the full impact of this ruling we will determine the next steps in our continuing efforts to protect innovation, consumer choice and fair use rights.