Archive:Grokster FAQ

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What is MGM v. Grokster?
It is a case which was recently decided by the U.S. Supreme Court. Movie studios (including MGM), record labels, and music publishers sued Grokster and StreamCast, which are companies that make peer-to-peer file-sharing (p2p) software.
What did MGM say?
MGM claimed that Grokster's product encouraged users to infringe MGM's copyrights, and that Grokster was responsible for the actions of its users. The legal theory for this is called contributory copyright infringement, which is different than direct copyright infringement.
What did Grokster say?
Grokster claimed they were protected by the Betamax doctrine, which is a legal defense to copyright infringement established by the U.S. Supreme Court when Sony was sued over the Betamax VCR in the '80s. The Betamax doctrine said that as long as a technology can be used in legal ways ("capable of substantial non-infringing uses"), then the product's manufacturer isn't responsible for any infringement its users do with the product.
What did the court decide?
The Supreme Court said that if a company encourages ("induces") its customers to infringe someone's copyright, then the company can be liable for contributory copyright infringement and may have to pay any money damages caused by the infringement.
So did Grokster lose?
Grokster did not win this appeal on this one legal issue. MGM won the appeal, but that does not mean that Grokster has lost the whole lawsuit. The Court sent the case back to a lower court to re-try the case. The lower court will have to decide if Grokster and StreamCast induced their customers to infringe copyright.
Did the court throw out the Betamax doctrine?
No, the Court created a new standard that can be applied in addition to Betamax. Now a technology manufacturer can be held liable for its customers' infringement if a.) the technology is only capable of being used for infringement or b.) the manufacturer encourages the customers to infringe.
Is p2p illegal now?
No. P2P is no different from the Web, e-mail, instant messaging or any other way to trade files. It can be used for legal or illegal purposes. P2P is used for all sorts of legal purposes, and has some serious advantages over other methods of distribution. But if a certain program's manufacturer induces its customers to infringe then that manufacturer could be liable for their infringement.
You keep saying "induce." What's that mean?
Well, that's the tricky part. The inducement doctrine is ambiguously defined at best. There has to be "clear expression" or "affirmative steps" to promote infringement, but there is no mention in the decision of how explicit these actions have to be in order for them to be considered evidence of wrongful intent. Unfortunately, this leaves the door wide open for copyright holders and courts to question the motives of an inventor in every aspect of the development process -- from early product design to marketing. There is no clear standard, and the end result, for now at least, is a lot of uncertainty.

problems with the inducement standard

Will BitTorrent, etc. get sued?
That is a hard question to answer. It is possible that they might be sued under this new standard, but we don't know what would happen if they were. This is not, however, a clear cut sign that companies that make technologies such as BitTorrent that can make legitimate file transfers more efficient would be held responsible if its users break the law with it.

the effects on p2p users today (i.e. none)

effects on future consumers

effects on future innovators (e.g. current students who might design software / technology in the future)