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MGM v. Grokster: Inducement Theory Leaves Unanswered Questions
In MGM Studios, Inc. v. Grokster, Ltd., No. 04-480 (June 27, 2005), the Supreme Court decided that the defendants could be held liable for copyright infringement perpetrated by the users of their respective software. Rather than clarifying the “significant noninfringing use” standard from Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984), to determine whether the defendants could be held liable for distributing a product with knowledge that it could be used to infringe, the Court utilized an alternative approach of finding liability. Turning to common law precedent and patent law, the unanimous Court held that liability may be based on purposeful, culpable expression under an inducement theory of secondary infringement. While some of the potential implications of this decision can be predicted, the full effect will not likely be clear for some time.
Background and Lower Court Decisions
The defendants distribute free software for the purpose of sharing data files over the Internet. This software permits users to exchange files over a peer-to-peer network that connects computers together in the absence of a centralized server. It is virtually undisputed that the majority of the file transfers involve illegal acts of copyright infringement, such as the transfer of copyrighted music or movies. The plaintiffs are owners of various copyrights that have been allegedly infringed through such file sharing. Based on the fact that the defendants had distributed the software that enabled the infringing activity, a claim was brought against them under a theory of indirect infringement. In the district court, both sides moved for summary judgment.
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