April 24, 2014

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Grokster Case Lumbers On; Judge To Issue Permanent Injunction

Remember the Grokster case? In which the Supreme Court found the filesharing companies Grokster and StreamCast liable for indirect copyright infringement, for “inducing” infringement by their users? You might have thought that case ended back in 2005. But it’s still going on, and the original judge just issued an interesting ruling. (Jason Schultz has a two part summary of the ruling.)

The issue now before the judge is what relief to grant the copyright-owner plaintiffs against StreamCast, which is the only defendant still standing. It’s apparently a given that the judge will eventually assess monetary damages against StreamCast. And you’d think these damages would be enough to kill StreamCast, so it’s not clear why StreamCast hasn’t just thrown in the towel, shut its doors, and handed over all its assets to the plaintiffs. Instead, StreamCast fought on, so the judge had to decide what kind of injunction, if any, to impose on StreamCast – that is, what rules would govern StreamCast’s future behavior.

The judge first considered the question of whether he could impose on StreamCast obligations (beyond payment of damages) that go beyond what the law requires of ordinary companies. Would he just award money damages and sternly command StreamCast not to break the law again; or would he go further and impose a permanent injunction? After a detailed legal analysis, he concluded that a permanent injunction was appropriate. StreamCast had actively promoted itself as a haven for infringement and “that bell cannot be unrung”.

The copyright-owner plaintiffs had asked for an injunction requiring StreamCast to apply all feasible anti-infringement technologies and to stop all infringment. StreamCast had built its own filtering technology which it said was effective enough, and much cheaper and more practical than commercially available alternatives.

The judge first rejected the plaintiff’s proposal that StreamCast be required to stop all infringement using its software. He recognized, correctly, that that would be impossible, so that such an injunction would be a death sentence for StreamCast.

Instead, the judge will require StreamCast to set up a filtering system that reasonably balances effectiveness and cost, with the strong emphasis on effectiveness. The precise details will be worked out with the help of a special master: an independent technical expert to be appointed by the judge. Which means yet more legal process to choose the special master, wait for the special master’s advice, and then order specific action from StreamCast.

All of this may be proper from a legal standpoint, but it seems unlikely to matter in practice. It’s hard to see how StreamCast can sustain a business given the legal and financial strain they must be under, and the likely ruinous monetary damages they’re still facing. I can understand why the plaintiffs might want to keep StreamCast on life support, in the hope of getting legal rulings that prove helpful elsewhere. But why does StreamCast keep fighting?

Comments

  1. Seth Finkelstein says:

    “I can understand why the plaintiffs might want to keep StreamCast on life support, in the hope of getting legal rulings that prove helpful elsewhere.”

    Ah, but the *defendants* might have the exact same hope. _StreamCast_ may be stick-a-fork-in-it-it’s-done. But the same people could go on to set up “StreemCastr” or some such. And this way, they’re playing with the house’s money, since the plaintiffs will probably get all the company’s assets anyway. So spending it on what’s in effect future litigation battles makes sense that way.

  2. billswift says:

    “I can understand why the plaintiffs might want to keep StreamCast on life support, in the hope of getting legal rulings that prove helpful elsewhere. But why does StreamCast keep fighting?”

    Maybe they are being paid by the plaintiffs to keep fighting so the plaintiffs can get those rulings.

  3. Joel Kahn says:

    In case you missed it–another angle on this DRM etc stuff in a fairly recent piece by Cory Doctorow:

    http://www.guardian.co.uk/technology/2007/sep/04/lightspeed

  4. - says:

    Spite?