MGM Studios, Inc. v. Grokster, Ltd.

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MGM Studios, Inc. v. Grokster, Ltd.
Seal of the United States Supreme Court.svg
Supreme Court of the United States
Argued March 29, 2005
Decided June 27, 2005
Full case nameMetro-Goldwyn-Mayer Studios, Inc., et al. v. Grokster, Ltd., et al.
Docket no. 04-480
Citations545 U.S. 913 ( more )
125 S. Ct. 2764; 162 L. Ed. 2d 781; 2005 U.S. LEXIS 5212; 75 U.S.P.Q.2d (BNA) 1001; 33 Media L. Rep. 1865; 18 Fla. L. Weekly Fed. S 547
Case history
PriorMotion to dismiss denied, 243 F. Supp. 2d 1073 (C.D. Cal. 2003); summary judgment granted in part to defendants, 259 F. Supp. 2d 1029 (C.D. Cal. 2003); plaintiffs' motion to dismiss counterclaims granted in part, 269 F. Supp. 2d 1213 (C.D. Cal. 2003); affirmed, 380 F.3d 1154 (9th Cir. 2004); cert. granted, 543 U.S. 1032(2004).
SubsequentRemanded, 419 F.3d 1005 (9th Cir. 2005); summary judgment opinion on remand, 454 F. Supp. 2d 966 (C.D. Cal. 2006).
Holding
Producers of technology who promote the ease of infringing on copyrights can be sued for inducing copyright infringement committed by their users. Ninth Circuit Court of Appeals vacated and remanded.
Court membership
Chief Justice
William Rehnquist
Associate Justices
John P. Stevens  · Sandra Day O'Connor
Antonin Scalia  · Anthony Kennedy
David Souter  · Clarence Thomas
Ruth Bader Ginsburg  · Stephen Breyer
Case opinions
MajoritySouter, joined by unanimous
ConcurrenceGinsburg, joined by Rehnquist, Kennedy
ConcurrenceBreyer, joined by Stevens, O'Connor
Laws applied
Copyright Act of 1976

MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005), is a United States Supreme Court decision in which the Court ruled unanimously that the defendants, peer-to-peer file sharing companies Grokster and Streamcast (maker of Morpheus), could be held liable for inducing copyright infringement by users of their file sharing software. [1] The plaintiffs were a consortium of 28 entertainment companies, led by Metro-Goldwyn-Mayer studios.

Contents

Background

Entertainment industry lawsuits against new technologies that enable the copying of copyrighted content date back to the 1980s, when the movie industry sought court injunctions against the sale and use of VCRs. In Sony Corp. v. Universal City Studios in 1984, [2] the U.S. Supreme Court ruled that a technology manufacturer cannot be held liable for its users' copyright infringement if widespread unauthorized copying is unlikely, and if the technology enables significant non-infringing uses as well. [3]

The advent of file sharing via the Internet in the late 1990s, and its enabling of easy and more widespread copying of copyrighted materials, inspired new arguments from the entertainment industry because copying technology had progressed since the 1980s. The Sony precedent was partially modified by the Ninth Circuit in A&M Records v. Napster (2001), which addressed the ease of sharing music files online, and how the designers of the technology could be held liable for contributory copyright infringement and vicarious copyright infringement if such behavior was the primary use of the technology and the company benefited from it. [4]

Just a few years later, Internet technology had progressed to the point that trading large video files, including those for entire movies, had become viable via popular services including Grokster. [5] The MGM v. Grokster case is frequently characterized as a re-examination of the issues in Sony precedent, in light of rapidly progressing technologies and consumer behaviors. MGM and the other plaintiffs argued that makers of file sharing technology should held liable for their users' copyright infringement, via the contributory and vicarious infringement doctrines. [1]

The entertainment companies appealed to the Supreme Court after losing at two lower courts. The United States District Court for the Central District of California originally dismissed the case in 2003, citing the Sony precedent. [6] On appeal, the Ninth Circuit Court of Appeals upheld the district court's decision after acknowledging that peer-to-peer ("P2P") software has legitimate and legal uses. [7]

Computer and Internet technology companies such as Intel, and trade associations including firms such as Yahoo! and Microsoft, filed amicus curiae briefs in support of the file sharing companies, while the RIAA and MPAA both sided with MGM and the other entertainment companies. Napster, having lost its similar lawsuit about its enabling of users' copyright infringement, filed a brief in support of the entertainment companies. [8] Billionaire Mark Cuban partially financed Grokster's legal battle. [9]

Oral arguments

During oral arguments, the Supreme Court justices appeared divided between the need to protect new technologies and the need to provide remedies against copyright infringement. Justice Antonin Scalia expressed concern that inventors would be chilled from entering the market by the threat of immediate lawsuits. Justice David Souter questioned how the plaintiffs' interpretation of the law would affect devices like copy machines or the iPod. [1]

The music industry suggested that iPods have a substantial and legitimate commercial use in contrast to Grokster, to which Souter replied, "I know perfectly well that I can buy a CD and put it on my iPod. But I also know if I can get music without buying it, I'm going to do so." [10] On the other hand, the justices seemed troubled at the prospect of ruling that Grokster's alleged business model of actively inducing infringement and then reaping the commercial benefits was shielded from liability. [1]

Opinion of the Court

The opinion of the court was authored by Justice Souter, who wrote: "We hold that one 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 the resulting acts of infringement by third parties." [1]

While the Court unanimously held that Grokster could be liable for inducing copyright infringement, concurring opinions by several of the Justices showed considerable disagreement over whether the case is substantially different from the Sony precedent, and whether that precedent should be modified. On the one hand, Justice Ginsburg, joined by Kennedy and Rehnquist, claimed that "[t]his case differs markedly from Sony" as there was insufficient evidence of non-infringing uses of the technology. [1] On the other hand, Justice Breyer, joined by Stevens and O'Connor, claimed "a strong demonstrated need for modifying Sony (or for interpreting Sony's standard more strictly) has not yet been shown," primarily because "the nature of ... lawfully swapped files is such that it is reasonable to infer quantities of current lawful use roughly approximate to those at issue in Sony." These justices concurred in the judgment on the narrow ground of Grokster's alleged inducement of its customers to use the product illegally. [1]

In the Grokster ruling, the Court as a whole did not reach a decision to formally overturn the Sony precedent, and instead partially applied it to the specific issues raised by the Grokster and Streamcast technologies. Justice Souter noted: "in the absence of other evidence of intent, a court would be unable to find contributory infringement liability merely based on a failure to take affirmative steps to prevent infringement, if the device otherwise was capable of substantial noninfringing uses. Such a holding would tread too close to the Sony safe harbor." [1] Thus, the Grokster ruling was limited to the specific technologies at issue in the case.

Subsequent developments

Legal researchers hailed the Grokster ruling for striking a fair balance between the need to respect the copyrights of artists, and the benefits of allowing and promoting technological innovation. Conversely, others have criticized the decision for its apparent vagueness, contending that it permits financially powerful organizations like the RIAA and MPAA to effectively hinder development of new technology by actively engaging in litigation against the developers and distributors of new technologies. [11]

On November 7, 2005 Grokster announced that it would no longer offer its peer-to-peer file sharing service. [12] As part of a civil lawsuit enabled by this Supreme Court ruling, Grokster was forced to pay $50 million to various companies in the music and movie industries. [13] Starting in 2008, visitors to the Grokster website (www.grokster.com) encountered this message: "YOUR IP address [...] HAS BEEN LOGGED. Don't think you can't get caught. You are not anonymous." [14]

Streamcast continued to fight the suit on remand. On September 27, 2006, the U.S. District Court for the Central District of California ruled in favor of the entertainment companies and held Streamcast liable for the infringement of its users. [15] [16]

Fearing similar lawsuits, Mark Gorton of LimeWire vowed to stop distributing his file sharing program. [11] A lawsuit was brought against LimeWire in 2010. In Arista Records LLC v. Lime Group LLC a district court again ruled in favor of the entertainment industry and an injunction against use of the software. Following that ruling, the download page for the free LimeWire client included a footnote stating: "The download, however, is not a license to upload or download copyrighted material. We urge you to respect copyright and share responsibly." [17]

Related Research Articles

Kazaa Media Desktop. was a peer-to-peer file sharing application using the FastTrack protocol licensed by Joltid Ltd. and operated as Kazaa by Sharman Networks. Kazaa was subsequently under license as a legal music subscription service by Atrinsic, Inc., which lasted until August 2012.

Grokster Ltd. was a privately owned software company based in Nevis, West Indies that created the Grokster peer-to-peer file-sharing client in 2001 that used the FastTrack protocol. Grokster Ltd. was rendered extinct in late 2005 by the United States Supreme Court's decision in MGM Studios, Inc. v. Grokster, Ltd. The court ruled against Grokster's peer-to-peer file sharing program for computers running the Microsoft Windows operating system, effectively forcing the company to cease operations.

In computer networks, download means to receive data from a remote system, typically a server such as a web server, an FTP server, an email server, or other similar systems. This contrasts with uploading, where data is sent to a remote server.

<i>A&M Records, Inc. v. Napster, Inc.</i> US legal case

A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004 was a landmark intellectual property case in which the United States Court of Appeals for the Ninth Circuit affirmed a district court ruling that the defendant, peer-to-peer file sharing service Napster, could be held liable for contributory infringement and vicarious infringement of copyright. This was the first major case to address the application of copyright laws to peer-to-peer file sharing.

<i>In re Aimster Copyright Litigation</i>

In re Aimster Copyright Litigation, 334 F.3d 643, was a case in which the United States Court of Appeals for the Seventh Circuit addressed copyright infringement claims brought against Aimster, concluding that a preliminary injunction against the file-sharing service was appropriate because the copyright owners were likely to prevail on their claims of contributory infringement, and that the services could have non-infringing users was insufficient reason to reverse the district court's decision. The appellate court also noted that the defendant could have limited the quantity of the infringements if it had eliminated an encryption system feature, and if it had monitored the use of its systems. This made it so that the defense did not fall within the safe harbor of 17 U.S.C. § 512(i). and could not be used as an excuse to not know about the infringement. In addition, the court decided that the harm done to the plaintiff was irreparable and outweighed any harm to the defendant created by the injunction.

Secondary liability, or indirect infringement, arises when a party materially contributes to, facilitates, induces, or is otherwise responsible for directly infringing acts carried out by another party. The US has statutorily codified secondary liability rules for trademarks and patents, but for matters relating to copyright, this has solely been a product of case law developments. In other words, courts, rather than Congress, have been the primary developers of theories and policies concerning secondary liability.

This is a timeline of events in the history of networked file sharing.

The inducement rule is a test a United States court can use to determine whether liability for copyright infringement committed by third parties could be assigned to the distributor of the device used to commit infringement.

<i>BMG Music v. Gonzalez</i> U.S. court case

BMG Music v. Gonzalez, 430 F.3d 888, was a court decision in which the United States Court of Appeals for the Seventh Circuit ruled that a record company could sue a person who engaged in online sharing of music files for copyright infringement. The decision is noteworthy for rejecting the defendant's fair use defense, which had rested upon her contention that she was merely "sampling" songs with the intention of possibly purchasing the downloaded songs in the future, a practice known informally as "try before you buy".

Arts and media industry trade groups, such as the International Federation of the Phonographic Industry (IFPI) and Motion Picture Association of America (MPAA), strongly oppose and attempt to prevent copyright infringement through file sharing. The organizations particularly target the distribution of files via the Internet using peer-to-peer software. Efforts by trade groups to curb such infringement have been unsuccessful with chronic, widespread and rampant infringement continuing largely unabated.

File sharing is the practice of distributing or providing access to digital media, such as computer programs, multimedia, program files, documents or electronic books/magazines. It involves various legal aspects as it is often used to exchange data that is copyrighted or licensed.

Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984), also known as the "Betamax case", is a decision by the Supreme Court of the United States which ruled that the making of individual copies of complete television shows for purposes of time shifting does not constitute copyright infringement, but can instead be defended as fair use. The court also ruled that the manufacturers of home video recording devices, such as Betamax or other VCRs, cannot be liable for contributory infringement. The case was a boon to the home video market, as it created a legal safe harbor for the technology.

File sharing is the practice of distributing or providing access to digital media, such as computer programs, multimedia, documents or electronic books. Common methods of storage, transmission and dispersion include removable media, centralized servers on computer networks, Internet-based hyperlinked documents, and the use of distributed peer-to-peer networking.

<i>Perfect 10, Inc. v. Amazon.com, Inc.</i> 2007 American legal decision

Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146 was a case in the United States Court of Appeals for the Ninth Circuit involving a copyright infringement claim against Amazon.com, Inc. and Google, Inc., by the magazine publisher Perfect 10, Inc. The court held that framing and hyperlinking of original images for use in an image search engine constituted a fair use of Perfect 10's images because the use was highly transformative, and thus not an infringement of the magazine's copyright ownership of the original images.

<i>Elektra Records Co. v. Gem Electronic Distributors, Inc.</i>

Elektra Records Co. v. Gem Electronic Distributors, Inc., 360 F. Supp. 821, was an important case before the United States District Court for the Eastern District of New York that concerned copyright infringement, which held that secondary persons or entities could be liable for that tort under certain circumstances, and is also called the "'make-a-tape' case".

Perfect 10, Inc. v. Visa Int'l Serv. Ass'n is a court case in which the pornography magazine Perfect 10 filed a complaint against Visa and MasterCard for copyright infringement and trademark infringement.

<i>Arista Records LLC v. Lime Group LLC</i> 2010 United States district court case

Arista Records LLC v. Lime Group LLC, 715 F. Supp. 2d 481, is a United States district court case in which the Southern District of New York held that Lime Group LLC, the defendant, induced copyright infringement with its peer-to-peer file sharing software, LimeWire. The court issued a permanent injunction to shut it down. The lawsuit is a part of a larger campaign against piracy by the Recording Industry Association of America (RIAA).

<i>Columbia Pictures Industries, Inc. v. Fung</i>

Columbia Pictures Industries, Inc. v. Fung 710 F.3d 1020 No. 10-55946, was a United States Court of Appeals for the Ninth Circuit case in which seven film studios including Columbia Pictures Industries, Inc., Disney and Twentieth Century Fox sued Gary Fung, the owner of isoHunt Web Technologies, Inc., for contributory infringement of their copyrighted works. The panel affirmed in part and vacated in part the decision of United States District Court for the Central District of California that the services and websites offered by isoHunt Web Technologies allowed third parties to download infringing copies of Columbia's works. Ultimately, Fung had "red flag knowledge" of the infringing activity on his systems, and therefore IsoHunt was held ineligible for the Digital Millennium Copyright Act § 512(c) safe harbor.

Contributory copyright infringement is a way of imposing secondary liability for infringement of a copyright. It is a means by which a person may be held liable for copyright infringement even though he or she did not directly engage in the infringing activity. It is one of the two forms of secondary liability apart from vicarious liability. Contributory infringement is understood to be a form of infringement in which a person is not directly violating a copyright but induces or authorizes another person to directly infringe the copyright.

<i>RealNetworks, Inc. v. Streambox, Inc.</i>

RealNetworks, Inc. v. Streambox, Inc., 2000 WL 127311, was a copyright law case of the United States District Court for the Western District of Washington, over the anti-circumvention provisions of the Digital Millennium Copyright Act and whether those provisions are violated by a service that enables Internet users to circumvent the copyright protection controls used by a streaming platform.

References

  1. 1 2 3 4 5 6 7 8 MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005). PD-icon.svg This article incorporates public domain material from judicial opinions or other documents created by the federal judiciary of the United States.
  2. ↑ Sony Corp. v. Universal City Studios , 464 U.S. 417 (1984).
  3. ↑ Towers, Sandi (May 5, 2008). Media and Entertainment Law. Cengage Learning. ISBN   978-1111798642.
  4. ↑ A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (9th Cir., 2001).
  5. ↑ Gregorian, Jamie (2009). "Grokster, BitTorrent, Copyright infringement, and Inducement: How Modus Operandi Can Provide a Functional Standard for Future File-Sharing Cases". Texas Review of Entertainment & Sports Law. 10 (2): 145–168 – via HeinOnline.
  6. ↑ MGM Studios, Inc. v. Grokster, Ltd., 259F. Supp. 2d1029 (C.D. Cal.2003).
  7. ↑ MGM Studios, Inc. v. Grokster, Ltd., 380F.3d1154 (9th Cir.2004).
  8. ↑ A list of briefs filed in the case is available at copyright.gov and eff.org Archived 2008-10-11 at the Wayback Machine .
  9. ↑ Musil, Steven (March 27, 2005). "Mark Cuban to finance Grokster defense". CNET. Archived from the original on July 15, 2012. Retrieved July 20, 2006.
  10. ↑ Linda Greenhouse, "Lively Debate as Justices Address Filesharing", New York Times, March 30, 2005.
  11. 1 2 Zeller, Tom Jr.; Roben Farzad; Saul Hansell (June 28, 2005). "Sharing Culture Likely to Pause but Not Wither". The New York Times. Retrieved July 20, 2006.
  12. ↑ "Grokster". Grokster. Retrieved July 20, 2006.
  13. ↑ Borland, John (November 7, 2005). "Last waltz for Grokster". CNET. Archived from the original on July 11, 2012. Retrieved July 20, 2006.
  14. ↑ "Grokster website". Grokster. Retrieved October 24, 2008.
  15. ↑ "September 27, 2006, Decision Archived October 28, 2006, at the Wayback Machine "
  16. ↑ "StreamCast Up Streaming Creek". InternetNews.com. September 28, 2006. Retrieved September 28, 2006.
  17. ↑ "Download LimeWire" . Retrieved November 11, 2021.
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