The opinion was written by Justice Souter and is specific to Grokster and StreamCast as opposed to broadly covering all peer-to-peer software. At issue was whether the software creators were responsible for the users putting that software to illegal use. The measure for this has been the 1984 decision of Sony v. Universal City Studios which said VCRs were legal even though they could illegally copy broadcast content because they also had legitimate uses (timeshifting television for personal use).
The problem in this instance is that they found that Grokster and Streamcast was used about 90% of the time for copyright violations and the companies knew it and did nothing to stop it. But even that wasn't enough to rule against them. The decision said: "companies can't entice users to violate copyright, if they do, and the users do, then they are liable for the users actions." The court found they encouraged this illegal use in part by:
- courting former napster users and discussing this a lot in internal communications
- "Grokster distributed an electronic newsletter containing links to articles promoting its software's ability to access popular copyrighted music." though I'm concerned about precisely what the links part means.
- "And both companies communicated a clear message by responding affirmatively to requests for help in locating and playing copyrighted materials. "
"Here, evidence of the distributors' words and deeds going beyond distribution as such shows a purpose to cause and profit from third-party acts of copyright infringement. If liability for inducing infringement is ultimately found, it will not be on the basis of presuming or imputing fault, but from inferring a patently illegal objective from statements and actions showing what that objective was." So they overturned the summary judgment and sent it back to the courts for reconsideration.
Overall that seems pretty reasonable though it leaves folks wondering about BitTorrent which is used more than the others for distributing large files (e.g., linux distributions) as well as for copyright violations, though the creators don't condone that use. Also this decision seems to suggest that radar detectors should be illegal though that's not copyright protection.
Justice Ginsburg wrote a concurring option with Rehnquist and Kennedy joining her. The lower court interpreted Sony to mean "a product need only be capable of substantial noninfringing uses." and she thinks that's insufficient. While Grokster and Streamcast agreed the overwhelming use was infringing, they said there were legitimate uses and therefore their software was "capable of substantial noninfringing uses". Ginsburg though says the valid uses presented were minor, hearsay, or on networks other than Grokster and Streamcast, which she rightly says, is irrelevant to this case. She ends with "If, on remand, the case is not resolved on summary judgment in favor of MGM based on Grokster and StreamCast actively inducing infringement, the Court of Appeals, I would emphasize, should reconsider, on a fuller record, its interpretation of Sony's product distribution holding." In other words, merely being capable of noninfringing uses shouldn't be enough, there needs to be a substantial amount of noninfringing use.
Justice Breyer, joined by Stevens and O'Connor, wrote another concurring opinion, that disagrees with Ginsburg's opinion. He agrees that they don't have to revisit the Sony decision now, for this case, but disagrees that it needs reinterpretation. He says a law (like the Sony decision) must strike a balance between effective copyright protection and allowing unrelated areas of commerce. He thinks the "capable of commercially significant noninfringing uses" standard is a good one, and goes on to point out that at the time of the Sony decision, the estimate was that "of all the taping actually done by Sony's customers, only around 9% was of the sort the Court referred to as authorized". The court also found "that, in any event, unauthorized time-shifting often constituted not infringement, but 'fair use'."
He notes that the 10% of noninfringing uses of Grokster is very similar to the 9% of authorized VCR use in Sony. He also notes that the word "capable" implies not a fixed line of 10% but rather something that allows more legitimate uses over time is good too. In the same way that judges couldn't foresee the growth of legal video rental and sales businesses, judges can't be expect to foresee future noninfringing uses of peer-to-peer technologies, and shouldn't restrict their development.
He says the Sony rule is clear, strongly technology protecting, forward looking, and understands the limits of judges. If changed as Ginsburg proposes then defendants would have to provide much more detailed evidence and the burden on them would be high, potentially stiffling technology innovation. Sony has been the law for some time, and copyright holders have other tools available to them including "intent to infringe (of the kind the Court describes)" and direct suits against those that wrongfully copy. And he says that they could try making legal ways to sell music online more attractive and cites walmart.com selling songs for $0.88 each. "Consequently, many consumers initially attracted to the convenience and flexibility of services like Grokster are now migrating to lawful paid services (services with copying permission) where they can enjoy at little cost even greater convenience and flexibility without engaging in unlawful swapping."
I have to say Breyer's opinion seems dead on and yet again I'm not impressed with Ginsberg's opinion.
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