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Waiting for Grokster: The Supreme Court Considers File-Sharing Copyright Infringement

JURIST Guest Columnist Eugene Quinn of Syracuse University College of Law says that the US Supreme Court's pending decision in the Grokster case on file-sharing copyright infringement will likely involve a struggle with its landmark 1984 ruling on videotaping technology in Sony v. Universal Studios...

On Tuesday, March 29, 2005, the United States Supreme Court heard oral arguments in MGM Studios v. Grokster, the much anticipated copyright case that pits file-swapping software companies Grokster and StreamCast Networks against the recording industry. At stake in this appeal is whether companies such as Grokster and Streamcast can provide file-sharing software without incurring copyright liability when end users use the technology to commit copyright infringement.

This saga starts not with the Grokster case, but rather dates back to the Internet bubble, when anything “dot-com” promised instant success. At that time an upstart website launched and began to redefine the copyright and economic landscape of the recording industry. It seems hardly possible that only several years ago Napster was an enigma to most, but well on its way to infamy. As anyone who has even passing familiarity with file-sharing knows, Napster was found to be liable for copyright infringement. It has recently re-launched as a legitimate pay-per-download service.

After several post-Napster litigation successes the recording industry faced its first defeat. It was a tremendous setback when on April 25, 2003, a federal judge in Los Angeles handed a stunning court victory to file-swapping services Streamcast Networks and Grokster, dismissing much of the record industry lawsuit against the two companies. In what has been vilified by the industry as a complete reversal of previous victories for the record labels, federal court Judge Stephen Wilson ruled that Streamcast--parent of the Morpheus software--and Grokster were not liable for copyright infringements that took place using their software. After careful review of the decision of Judge Wilson, most copyright experts would agree that this does not in any way represent a reversal of previous decisions at all.

The distinguishing facts present in this case all revolve around exactly how the Grokster file sharing technology actually works. Judge Wilson compared the technological workings of Grokster to those of Napster and concluded that Grokster is quite different, and the Grokster technology cannot be prevented. The key difference between Grokster, for example, and Napster is that Napster acted like a hub for the ongoing file-sharing and copyright infringement. In other words, all infringing traffic passed through Napster. Quite to the contrary, infringing traffic does not pass through Grokster. Grokster only provides software that allows individuals users to trade files among themselves. In short, if you take Napster out of the equation the copyright infringement would stop. Take Grokster out of the equation and file-sharing can and will still continue. Therefore, Grokster argued that it was merely providing a technology that end users could use for either legitimate or illegitimate purposes. Because the technology is capable of legitimate uses, such as trading non-copyrighted works or public domain works, Grokster could not be and was not found liable as a contributory infringer. This well-established rule regarding a technology being capable of use for “substantial non-infringing uses” stems from the United States Supreme Court landmark decision in Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417 (1984).

On Thursday, August 19, 2004, the United States Court of Appeals for the Ninth Circuit affirmed the district court’s partial grant of summary judgment, holding that under the circumstances presented by the present Grokster technology, the distributors of peer-to-peer file-sharing computer networking software may be held contributorily or vicariously liable for copyright infringements by users. A show down in the Supreme Court was on the way.

The legal issue that is expected to be addressed by the Supreme Court revolves around whether the technology in question is capable of substantial non-infringing uses. The decision, which should be rendered over the Summer of 2005, will all but certainly become a landmark copyright decision that will have long reaching implications for the protections afforded to copyright owners in the digital age. Pundits seem to be predicting a wide variety of possible outcomes, but a ruling against Grokster and StreamCast would likely require the Supreme Court to revise substantial parts of the famed Sony case dealing with the Betamax, or at the very least revise the way that district courts and the various Courts of Appeal have interpreted the Sony decision.

In the 1984 Sony case, Petitioner Sony Corp. manufactured home video tape recorders (VTRs), and marketed them through retail establishments, some of which are also petitioners. Respondents were the owners of the copyrights on some of the television programs that were broadcast on the public airwaves. Respondents brought an action against petitioners in Federal District Court, alleging that VTR consumers had been recording some of respondents' copyrighted works that had been exhibited on commercially sponsored television and thereby infringed respondents' copyrights, and further that petitioners were liable for such copyright infringement because of their marketing of the VTRs. The Supreme Court, however, explained that any individual may reproduce a copyrighted work as long as such reproduction is a "fair use." The Supreme Court went on to hold that the recording accomplished by VTRs was only time-shifting in nature and even though 100% of the copyrighted work was copied, the use nonetheless constituted a fair use. As a result, the Supreme Court said that video taping was a fair use, and based that decision at least in part on the fact that video taping devices are capable of substantial non-infringing uses.

In issuing its ruling, the Supreme Court will undoubtedly struggle with its Sony decision. Ever since the Sony decision issued courts have found technology to be non-infringing if it is at all capable of any non-infringing uses. Nevertheless, the distinguishing factor between online file-sharing and the video tape situation is the degree of non-infringing use. Certainly Grokster technology is capable of non-infringing uses, but factually it is the infringing uses that make up the lion share of the traffic, which does seem to be a significant distinguishing factor. Nevertheless, to focus on the amount of infringement would potentially limit technological development and also adds a significant factual issue into play in copyright litigation, perhaps making it much more difficult in the future to win on summary judgment.

Eugene Quinn is a law professor at Syracuse University College of Law, and he is also the Associate Director of the New York State Science & Technology Law Center. Professor Quinn teaches and specializes in the areas of Intellectual Property, Business and Internet Law, and is a member of the patent bar and admitted to practice in New Hampshire

May 02, 2005

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