Supreme Court Slaps Swapping
File-sharing companies can be sued for contributory
copyright infringement.
By Patrick Vuong
The days of using free file-sharing services to download unauthorized copies of movies and songs might be going the way of the floppy disk and dot-matrix printer.
On June 27, the Supreme Court sided with Hollywood instead of Silicon Valley in Metro-Goldwyn-Mayer v. Grokster, saying file-sharing software companies Grokster and StreamCast are liable for copyright infringement committed by people using their services to share bootlegs of the latest summer blockbuster or hit song.
In what some experts called the most significant technology case of the digital age, the 9-0 ruling reversed decisions in lower courts — including the 9th Circuit Court of Appeals — that said file-swapping companies can’t be held responsible for what users do with their software.
The Supreme Court said software companies can be liable for contributory infringement if their primary intent is to facilitate illegal downloading. “The record is replete with evidence that from the moment Grokster and StreamCast began to distribute their free software, each one clearly voiced the objective that recipients use it to download copyrighted works, and each took active steps to encourage infringement,” Justice David Souter wrote in the decision.
The unanimous ruling is the latest victory for the entertainment industry in its war to end cyber piracy through file-sharing technology — also called peer-to-peer networks because they allow users to communicate and share files directly with each other rather than through a centralized server.
Metro-Goldwyn-Mayer Studios and most major movie companies, recording labels and groups of copyright holders jointly sued Grokster and StreamCast, claiming they were losing millions of dollars in revenue from billions of illegal downloads.
“Today is a good day for music fans and the 17,000 … members of the recording academy,” said Neil Portnow, president of the National Academy of Recording Arts and Sciences, in a statement. “By unanimously upholding the rights of creators, the Supreme Court has defended an environment for legal online music services to thrive.”
But critics say the ruling will have a chilling effect on companies creating digital technology and will stunt advancements. The Consumer Electronics Association, which opposed MGM’s suit, said the Supreme Court decision leaves the future of digital innovations in murky legal waters. “Content creators may potentially find any act as an ‘infringement to induce’ and shut down a new product or service with the threat of a lawsuit,” CEA President Gary Shapiro said. “Who knows how many innovative products and services now face a premature death as a result of this ruling?”
LegalWorks, a Thomson corporation that is part of the West Education Group, is holding a copyright briefing session in Los Angeles on July 14 and in New York on July 18 to address these issues. Registration information is available at www.legalwks.com.
In their arguments, attorneys for the file-swapping companies relied heavily on a 1984 Supreme Court decision regarding Sony Betamax, an early video cassette recorder. The court ruled the Betamax could be “capable of commercially significant noninfringing uses,” such as recording TV shows for later viewing.
Souter said the Betamax example was misapplied in the file-sharing case. “MGM’s evidence in this case most obviously addresses a different basis of liability for distributing a product open to alternative uses,” Souter said. “Here, evidence of the distributors’ words and deeds going beyond distribution as such shows a purpose to cause and profit from third-party acts of copyright infringement.”
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File-sharing companies such as Grokster now are liable for copyright infringement committed with their services.
