April 24, 2014

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Grokster Wins in Appeals Court

The 9th Circuit Court of Appeals ruled today that Grokster (along with other vendors of decentralized P2P systems) is not liable for the copyright infringement of its users. Today’s decision upholds a lower court decision, which had been appealed by a group of music and movie companies.

The Court largely accepted Grokster’s arguments, finding that although the vast majority of Grokster users are infringers, Grokster itself cannot be held liable for that infringement.

The Court found Grokster not liable for contributory infringement, because Grokster did not have the necessary knowledge of specific infringement. In light of the Supreme Court’s 1984 Sony Betamax decision, as elaborated in this appeals court’s Napster decision, the court first determined that Grokster’s software has substantial commercially significant uses other than infringment. As a result, contributory infringement would have required that Grokster have knowledge of specific acts of infringement, at a time when Grokster could take action to stop those acts. But Grokster simply distributes its product to consumers, and has no knowledge of how any particular customer uses the product later. If copyright owners tell Grokster about an act of infringement, after that act has already happened, that is not actionable knowledge because it is too late to stop the infringment.

The court also held Grokster not liable for vicarious infringement, because Grokster does not have the right and ability to control its customers’ infringing activity. Grokster has no practical way to kick users off the system or to police the system’s use. The court also ruled that Grokster cannot be required to redesign its software and force its customers to update to the redesigned version.

The money quote comes near the end of the opinion:

As to the issue at hand, the district court’s grant of partial summary judgment … is clearly dictated by applicable precedent. The Copyright Owners urge a re-examination of the law in light of what they believe to be proper public policy, expanding exponentially the reach of the doctrines of contributory and vicarious copyright infringement. Not only would such a renovation conflict with binding precedent, it would be unwise. Doubtless, taking that step would satisfy the Copyright Owners’ immediate economic aims. However, it would also alter general copyright law in profound ways with unknown ultimate consequences outside the present context.

Further, as we have observed, we live in a quicksilver technological environment with courts ill-suited to fix the flow of internet innovation. The introduction of new technology is always disruptive to old markets, and particularly to those copyright owners whose works are sold through well-established distribution mechanisms. Yet, history has shown that time and market forces often provide equilibrium in balancing interests, whether the new technology be a player piano, a copier, a tape recorder, a video recorder, a personal computer, a karaoke machine, or an MP3 player. Thus, it is prudent for courts to exercise caution before restructuring liability theories for the purpose of addressing specific market abuses, despite their apparent present magnitude.

Comments

  1. joe says:

    At a dinner/cocktail last night with a few EFF, etc. folks, it was pointed out that nothing will rocket the INDUCE Act through congress faster than a ruling like this. So, while it is a good day… tomorrow may not be.

    Nothing short of lots of money, public outcry and/or highly visible and easily understandible protest will seem to halt protectionist momentum after this ruling, I can imagine.

  2. The Importance of... says:

    Grokster Wins Big in 9th Circuit

    The Ninth Circuit has upheld the district court decision in Grokster. Read the 26-page decision: MGM v. Grokster [PDF] . Read it. The decision isn’t really all that long, it is single column formatted with 8 pages of administive gobbledygook….

  3. The Importance of... says:

    Grokster Wins Big in 9th Circuit

    The Ninth Circuit has upheld the district court decision in Grokster. Read the 26-page decision: MGM v. Grokster [PDF] . Read it. The decision isn’t really all that long, it is single column formatted with 8 pages of administive gobbledygook….

  4. racergreg says:

    joe, I truly hope you are wrong. This is a significant decision that (at least for now) puts the brakes on **AA’s takeover of the world.

    As an aside, the last part of that decision sounds like it came out of Lessig’s book Free Culture. I’m really glad to hear the court use this language!

  5. Chris says:

    The final page of the decision almost seems written to address Congress, not the parties before the court…

    Indeed, the Supreme Court has admonished us to leave such matters to Congress. In Sony-Betamax, the Court spoke quite clearly about the role of Congress in applying copyright law to new technologies. As the Supreme Court stated in that case, “The direction of Art. I is that Congress shall have the power to promote the progress of science and the useful arts. When, as here, the Constitution is permissive, the sign of how far Congress has chosen to go can come only from Congress.

    464 U.S. at 456 (quoting Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518, 530 (1972)).

    Myself, I don’t have a Congressional representative. But if you do want or don’t want particular legislation passed, then you should note that Congress will reconvene September 7th, sitting through roughly October 1st. And after that, some of them are off to get re-elected. Right now might be a good time to pick up the phone and call their local office. Let them hear your voice — literally. Email can be deleted in a fraction of second, but your presence, even on the phone, cannot be dismissed so easily.

    You WILL get their attention if the Representative asks, “Why isn’t that letter typed yet?”, and the answer is “I keep getting calls from different people about the INDUCE Act.”

  6. Philips A.K.A. Anonym says:

    I am pleased to hear – at last – some reasonable words coming from U.S. legal system. We here in Europe watching this process knowing that sooner or later it might hit Europe too.

    As poster Joe has pointed out, this might spurs introduction of regulations like INDUCE act or alike. I can only hope that you americans will not make a mistake most of Europe did: old regulations are left in tact for decades, sometimes centuries. This is ridiculous – but protectionism sometimes takes place. People used to live with it – and later no politician can really risk his rating to change something. (Schroder has lost his ratings already – so what is going on in Germany is really the only chance for reforms.)

    I have observed the same pattern in “fossil petrols vs. bio petrols” discussions: bio petrols have a chance to break well established system of fossil oil industry. And current system of fossil oil is preserved in part to avoid sudden break – to not to make all investments made last decades turned into dust. Factories, refinement facilities might take billions of investments & decade to build.

    We can only hope that current “vocal minority” A.K.A. **AAs (as in “tyranny of vocal minority”) will not overtake the world: they really not that big, return of investments in entertainment industry is pretty fast (2-3 years), turnover is not big compared to heavy industries – and they are not really any way crucial to our economy. IMHO there is no case for protectionism here. It is important to understand that situations with DRM/INDUCE/etc in U.S. largely inflated by this “vocal minority.”

    P. S. I’m as a bystander can only hope that one day people will try to split entertainment industry & show business from real culture & art. I do care about this topic most of the time, since I do care about culture development in general – I have a lot of friends artists. I know what means “contract with recording company,” and what kind of curse for musicians it can be.

  7. 'dillo says:

    As much as I would *LIKE* to disagree with Joe, I feel that I must side with him.
    You have to expect that sort of response from the EntertainmentIndustrialComplex at this point.
    They’ve been in full “Terminator” mode for a while now, there’s no reason to expect them to come to their senses and just walk away.

  8. From the Crossroads says:

    Copyright laws and the future of software development

    As the guest blogger at Lawrence Lessig’s blog, Tim Wu has put together a very good review of the 9th Circuit Court’s ruling in the MGM v. Grokster case. For those of you not familiar with Grokster, it is peer-to-peer (p2p) file sharing network tool. …

  9. Ravi Nanavati says:

    Doesn’t this mean that there is now a circuit split on this issue? I seem to recall another circuit (the Seventh?) ruling against Grokster/Morpheus. One wonders if this means that P2P will get to the Supreme Court. And given the legal reputation of the Ninth Circuit we may be going in at a disadvantage…