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Interpreting Court's 'Grokster' Ruling In Light of 'Napster' Case Precedent
The recent ruling by the U.S. District Court for the Central District of California upholding the distribution of decentralized peer-to-peer file-sharing software has made the entertainment industry's legal battle to eliminate the free exchange of content over the Internet seem even more insurmountable. Metro-Goldwyn-Mayer Studios Inc. v. Grokster Ltd., 01-08541. While industry executives tout a silver lining in District Judge Stephen V. Wilson's finding that consumers commit direct copyright infringement by using such technology, this nevertheless is the first major ruling against the entertainment business on the file-sharing issue. The odds on the entertainment industry prevailing on appeal are tight because the district court relied primarily on distinguishing the Ninth Circuit's holding in A & M Records Inc. v. Napster Inc., 239 F.3d 1004 (2001). But a close look at Grokster provides some useful ideas for the entertainment industry to consider in its fight.
The plaintiffs in the consolidated case included film studios, record companies and music publishers who alleged that the active defendants Grokster and StreamCast Networks Inc., both of which offer free decentralized peer-to-peer file-sharing software, were liable for contributory and vicarious copyright infringement. The defendants moved for summary judgment to dismiss the case. (StreamCast also moved for further discovery on whether the music publishers owned the song copyrights in question, but the district court denied the motion on the ground that it was undisputed that the publishers owned at least some of those copyrights.)
The district court noted the challenge in applying existing laws to new technology. But the court quickly found direct infringement by consumers. (To reach the contributory and vicarious infringement claims, a district court must first determine whether users are guilty of direct infringement.) In the Napster case, the appeals court had used a traditional fair-use analysis to conclude that the digital retransmission of works didn't constitute a 'transformation' for fair-use purposes. Citing Napster, the Grokster district court simply noted that many Grokster and StreamCast software users make unauthorized copies of copyrighted media files and thus commit direct infringement.
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