Want to stay current on e–commerce law? Sign up for Email Newsletter.
U.S. Supreme Court Rules in MGM v. Grokster
In the landmark decision of Metro-Goldwyn-Mayer v. Grokster Ltd. released on June 27, 2005, a unanimous U.S. Supreme Court found that peer-to-peer software (P2P) distributors who promote the use of their software for the purposes of copyright infringement can be held liable for the resulting acts of infringement by users of their software. The ruling is seen as a major victory for the entertainment and recording industries and a damaging blow to unauthorized P2P file-sharing firms.
The Court's ruling overturned two lower court decisions that had dismissed the lawsuit against Grokster and StreamCast Networks without a trial. The lower courts found that, since both software programs had substantial non-infringing uses, neither could be liable for the infringement of its users unless the distributor had failed to act on actual knowledge of specific instances of infringement. The U.S. Supreme Court rejected these views of the lower courts and found that it was appropriate to consider evidence of intent of inducing copyright infringement on the part of a product distributor.
In reaching its decision, the Court found the record to be replete with evidence indicating that when Grokster and StreamCast began distributing their software they "clearly voiced the objective that recipients use [the software] to download copyrighted works, and each took active steps to encourage infringement", including:
1.directed advertising to users of Napster (a file-sharing service that was successfully sued by copyright holders for facilitating copyright infringement);
2.newsletters with links to articles promoting access to copyrighted materials;
3.Internet search engine optimization for "file-sharing" and "Napster" searches; suggestive naming of the software programs;
4.affirmative responses to requests for locating and playing copyrighted materials; and
5.internal communications and unreleased advertising design.
The Court also found it important that neither distributor "attempted to develop filtering tools or other mechanisms to diminish the infringing activity using their software" and that the business models of the distributors were based on directly advertising to their users requiring high-volume use, which the record showed was infringing.
The Court noted, however, that "mere knowledge of infringing potential or of actual infringing uses . [or] ordinary acts incident to product distribution, such as offering customers technical support or product updates" would not be enough to subject a distributor to liability. The Court's ruling now sends the case back to the trial court for reconsideration in light of these findings.
For a copy of the decision, visit:
http://shorl.com/hebrijejofipru
For additional information, visit:
http://shorl.com/hupofrutavuste