Number: RL31998
Title: File-Sharing Software and Copyright Infringement: Metro-Goldwyn-Mayer Studios, Inc v. Grokster, Ltd.
Authors: Brian Yeh and Robin Jeweler, American Law Division 
Abstract: In Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., the Ninth Circuit Court of Appeals decision considered allegations of contributory and vicarious copyright infringement by companies which distribute peer-to-peer file-sharing software. The software facilitates direct copyright infringement by its users. It was the first decision to reject infringement claims against and find in favor of companies distributing the software. Other digital media file-sharing software decisions found in favor of the copyright holders, most notably A & M Records, Inc. v. Napster, Inc. and In re: Aimster Copyright Litigation. But in Grokster, the court granted summary judgment for the software companies. The court thus became the first to accept the "substantial, noninfringing uses" defense to copyright infringement liability, a defense developed by the U.S. Supreme Court in connection with use of VCRs in Sony Corp. of America v. Universal City Studios, Inc. In a unanimous 9-0 decision, the U.S. Supreme Court reversed the Ninth Circuit, finding that it had misapplied Sony. It articulated a new standard for the imposition of secondary liability for copyright infringement, namely "inducement." The Court held 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." Although firmly rooted in the common law, the Court imported the "inducement" theory to copyright law much as it had adopted the safe harbor from infringement liability in Sony from patent law.
Pages: 12
Date: July 18, 2005