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Grokster Settles Litigation and Shuts Down
Grokster, the distributor of peer-to-peer music and movie downloading software, has agreed to stop distributing its software following a $50 million settlement with record labels and Hollywood studios. Under the terms of the agreement, Grokster will immediately stop supporting its file-swapping network, and Grokster's owners will be responsible for paying a total of $50 million in damages to movie studios, record labels and music publishers.
This settlement comes four months after the United States Supreme Court ruled substantially in the recording industry’s favour. In a June 2005 decision, the court said that companies that deal in file-swapping software could be liable for their users' copyright infringement if they had encouraged or "induced" it in any significant way. In a message posted on its website after the settlement, Grokster indicated that the Supreme Court decision was a principal reason for suspending the service.
After the settlement, Grokster’s lawyer stated: "The brand will live on. It is shut down, but we look forward to launching a licensed, legal new version of Grokster." Grokster’s assets will likely be acquired by Mashboxx, a legal peer-to-peer network that is close to launching, founded by former Grokster President Wayne Rosso.
While this is a significant step toward bringing the four year old case to a close, the lawsuit is not over yet. Grokster's co-defendant, StreamCast Networks, remains operating, and has indicated that it will continue to fight the case in the lower courts.
For a copy of the decision, visit:
MGM Studios Inc. v. Grokster, Ltd.
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