High Courts Says Grokster Needs New Market

    June 28, 2005

The Supreme Court of the United States (SCOTUS) handed down a ruling some people seem to be missing at least in part. The court ruled in favor of MGM over Grokster Inc. and Streamcast Networks on basic concept and that concept is the way they packaged their P2P, file sharing product.

While many critics say this makes everything murkier because it’s confusing, it’s not really, when you look at the essence of the decision. The high court said the reason Grokster and Streamcast were liable for damages and the behavior of their users was because they specifically went after an illegal market and they promoted it as such. They purposefully went after the old Napster folks who swapped copyrighted materials illegally. The companies’ intent was what was ruled on here.

Souter said in writing the court’s opinion, “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” — that is, computer users using free downloading software.”

They didn’t discuss BitTorrent. Gnutella specifically wasn’t listed, although Grokster used their product and for that matter neither was Morpheus. It was Grokster and Streamcast who promoted illegal activities as a means to generate revenues through advertising and encourage use of their product. Those companies that promote their product strictly through file sharing and not any particular type of file weren’t brought up on charges here.

Nothing’s Been Solved

On the other hand, the court really didn’t answer the crucial question here and that has to do with intellectual properties and their protection. Because the court didn’t address these specifically, they didn’t really solve anything. File swapping will continue, probably unabated by the court decision. While some illegal file swappers and certainly Grokster and Streamcast rue the decision, they still may not be liable anyway.

In the decisions by lower courts that brought this case to the SCOTUS, a summary judgment was issued, meaning the court and groups involved didn’t go through a trial, the judges just issued a decision based on the Sony case from 1984. SCOTUS said this ruling was misapplied. The high court sent this case back down and ordered a trial be held. So, in all actuality, this case isn’t done by a long shot and could even get back to SCOTUS again.

In the end, much of this is a losing battle for the recording and motion picture industries, at least on their current path. As file sharing continues to proliferate in the U.S. and abroad, many people will continue to take illegal, free content over paying $50 for two people at the movies or paying $15 for a CD with one song they want.

John Stith is a staff writer for WebProNews covering technology and business.