Full case report

Metro-Goldwyn Mayer Studios Inc v Grokster Ltd

Reference 27/06/2005
Court Supreme Court of the United States of America

Judge Souter, Ginsberg, Kennedy, Breyer, Stevens, O'Connor JJ and Rehnquist CJ

Date of Judgment 27 Jun 2005


Summary

USA – Copyright Infringement – Peer-to Peer Software – Liability for Third Parties’ Infringement


Facts

Appeal by a group of film studios, recording companies and other copyright owners against a decision of the 9th Circuit holding that distributors of peer-to-peer software were not liable for copyright infringement carried out by users of the software who were copying music and other copyright works unless the distributor had actual knowledge of specific instances of infringement. The Respondents were distributors of software (Grokster;Morpheus) that enabled users to share files with other users and copy them peer-to-peer. Like Napster, this software allowed the copying to take place from the computer of one user directly to another user’s computer without any copying taking place on the distributors server. Unlike Napster (which enabled users to find each other via its website), the software enables users to ‘find’ each other directly without using a central website. The 9th Circuit upheld the summary judgment for the respondents applying Sony Corp of America v Universal City Studios.


Issue

Under what circumstances the distributor of a product capable of both lawful and unlawful use is liable for acts of copyright infringement by third parties using the product.


Held

(1) A person who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for resulting acts of infringement by third parties. (2) Although there was a tension between supporting creativity through copyright protection and promoting technological innovation by limiting liability, the argument for imposing indirect liability was powerful, given the scale of the infringing downloads. (3) The 9th Circuit had misapplied Sony Corp (VCR manufacturers not liable for third party infringement). Sony Corp did not mean that simply by virtue of the fact that a product is capable of lawful use, the producer could not be held contributorily liable for a third parties’ infringing use even when an actual purpose to cause infringing use was shown. Where there was direct evidence of active steps to encourage infringement, the court should not ignore that evidence.


Comment

This decision is a major blow to the distributors of technology that enables peer-to-peer file swapping. The Supreme Court placed a great deal of emphasis on the evidence that the distributors intended to promote infringement. Matters referred by the Court included the fact that the distributors were aiming to satisfy the market of former Napster users and that no attempt had been made to develop filtering tools or otherwise diminish infringing activity using their software. This seems a slightly artificial distinction between this type of software and video cassette recorders. It is apparent from the judgment that the scale of the infringement greatly influenced the courts decision. Despite the emphasis by the court on the evidence of intention, it is questionable whether the result would have been any different even in the absence of such evidence.


Links

File-sharing ruling fuels worries - BBC News
File-sharing suffers major defeat - BBC News
Internet 'pirates' face new battles after court defeat - The Times
Judgment