Cengage Advantage Books: Foundations of the Legal Environment of Business 3rd Edition by Marianne Jennings

تمرين 7

Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd. 545 U.S. 913 (2005)
Copyright Infringement? Really, It's Just a Little Peer-to-Peer File Sharing
Facts
Grokster, Ltd., and StreamCast Networks, Inc. (respondents/ defendants) distribute free software products that allow computer users to share electronic files through peer-to-peer networks. Universities, government agencies, corporations, and libraries use this technology.
Grokster and StreamCast do not know when particular files are copied. However, MGM had a statistician do a systematic search of electronic files, and his study showed that nearly 90 percent of the files available for download on the FastTrack system were copyrighted works. Per the Court's opinion, "the probable scope of copyright infringement is staggering."
After Napster was sued by copyright holders for facilitation of copyright infringement, A M Records, Inc. v. Napster, Inc., 114 F. Supp. 2d 896 (N.D. Cal. 2000), aff'd in part, rev'd in part, 239 F.3d 1004 (C.A.9 2001), StreamCast gave away a software program known as OpenNap, designed as compatible with the Napster program and open to Napster users for downloading files from other Napster and OpenNap users' computers. The OpenNap program was engineered "to leverage Napster's 50 million user base." Grokster and StreamCast received no revenue from users, who obtainedmor the software itself for nothing.
The District Court held that those who used the Grokster and Morpheus software to download copyrighted media files directly infringed MGM's copyrights, but granted summary judgment in favor of Grokster and StreamCast as to any liability arising from distribution of the then current versions of their software. The Court of Appeals affirmed. MGM appealed.
Judicial Opinion
SOUTER, Justice
The question is 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.
When a widely shared service or product is used to commit infringement, it may be impossible to enforce rights in the protected work effectively against all direct infringers, the only practical alternative being to go against the distributor of the copying device for secondary liability on a theory of contributory or vicarious infringement.
[T]his Court has dealt with secondary copyright infringement in only one recent case. In Sony Corp. v. Universal City Studios , 464 U.S., at 434, this Court addressed a claim that secondary liability for infringement can arise from the very distribution of a commercial product.
On those facts, with no evidence of stated or indicated intent to promote infringing uses, the only conceivable basis for imposing liability was on a theory of contributory infringement arising from its sale of VCRs to consumers with knowledge that some would use them to infringe. But because the VCR was "capable of commercially significant noninfringing uses," we held the manufacturer could not be faulted solely on the basis of its distribution. Because the Circuit found the StreamCast and Grokster software capable of substantial lawful use, it concluded on the basis of its reading of Sony that neither company could be held liable, since there was no showing that their software, being without any central server, afforded them knowledge of specific unlawful uses.
This view of Sony , however, was error, converting the case from one about liability resting on imputed intent to one about liability on any theory.
Here, the summary judgment record is replete with other evidence that Grokster and StreamCast, unlike the manufacturer and distributor in Sony , acted with a purpose to cause copyright violations by use of software suitable for illegal use.
[N]either company attempted to develop filtering tools or other mechanisms to diminish the infringing activity using their software. This evidence underscores Grokster's and StreamCast's intentional facilitation of their users' infringement.
StreamCast and Grokster make money by selling advertising space, by directing ads to the screens of computers employing their software. As the record shows, the more the software is used, the more ads are sent out and the greater the advertising revenue becomes. The unlawful objective is unmistakable.
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.
The judgment of the Court of Appeals is vacated, and the case is remanded for further proceedings consistent with this opinion.
Case Questions
1. What is the difference between Sony's Betamax and Grokster's software program?
2. What additional grounds for imposing vicarious liability for copyright infringement can be used beyond "other lawful means of use"?
3. List the critical facts that tipped the court's decision against Grokster.