Download MGM v. Grokster: Legal Battle on P2P File Sharing & Copyright Infringement and more Slides Management Fundamentals in PDF only on Docsity! Grokster • Grokster (and its relatives) involved an important technological change from that of Napster – Napster worked from a central server – Grokster used a “node” approach to finding music (and other) files online, so once the program was installed and working, the makers of the software had no control over who was copying what – they could not even monitor such copying – Grokster was also not limited to MP3 files but could be used to copy any file in the appropriate directory of the host computer • Grokster too argued that its software had a substantial noninfringing use, namely P2P copying of copyright-unprotected files Docsity.com Grokster • Relying on Sony the Ninth Circuit agreed with Grokster: – For contributory infringement, the key distinction from Napster was that, at the time of the illegal copying, Grokster had no knowledge of who was copying nor any ability to stop it – For vicarious liability, too, Grokster was not in a position to stop or control the copying activity once the software (which all agreed had a noninfringing use, although there was a big debate over the degree such use was noninfringing in practice) • The Ninth Circuit therefore refused to hold Grokster liable for secondary copyright infringement, and the recording studios appealed to the Supreme Court Docsity.com MGM v. Grokster • What were the business models for these defendants? – They gave their software away for free – They sold advertising space, for which they could charge more if there were more users – There would be more users if there were more “free” music available that users would otherwise have to pay for • None of the defendants did anything to try to stop copyright infringement using its network • The Court poses the problem as balancing the protection of artistic creativity through copyright and allowing keeping courts out of the business of interfering with technological innovation Docsity.com MGM v. Grokster • The Court reviews the Sony rule and holds that the Ninth Circuit erred when it treated the “substantial noninfringing use” rule of Sony as the only basis for finding contributory infringement – There was no evidence in the Sony case that Sony actively encouraged using VCRs for infringement – If a device has no substantial noninfringing use, an intent to encourage infringement may be presumed – Because the device in Sony did have a substantial nonfringing use, no such intent could be presumed • Here, however, there was much independent evidence that the defendants encouraged use of their devices to infringe copyrights • The Court thus holds that someone distributes a device with the object of promoting infringement, he will be liable as a contributory infringer (p. 937) Docsity.com MGM v. Grokster • What was the evidence of intent to encourage infringement here? – Each defendant sought to entice former Napster users, who were known to be major infringers – Neither party developed any filtering tools to diminish infringement – Their business models involved making money by selling advertising space, and the more users there are, the greater the advertising revenues can be • The Court says that neither failure to develop filters nor a business model based on advertising is, in itself, sufficient for liability • So, lower courts are now seeking to work out the basis for “inducement” liability when the encouragement of infringement is not so blatant as it was in Grokster. – So far, none has been found although reported litigation is sparse Docsity.com
