MGM Studios, Inc. v. Grokster, Ltd.

MGM Studios, Inc. v. Grokster, Ltd.
Supreme Court of the United States
Argued March 29, 2005 Decided June 27, 2005
Full case name	Metro-Goldwyn-Mayer Studios, Inc., et al. v. Grokster, Ltd., et al.
Docket no.	04-480
Citations	545 U.S. 913 (more) 125 S. Ct. 2764; 162 L. Ed. 2d 781; 2005 U.S. LEXIS 5212; 75 U.S.P.Q.2d (BNA) 1001; 33 Media L. Rep. 1865; 18 Fla. L. Weekly Fed. S 547
Case history
Prior	Motion to dismiss denied, 243 F. Supp. 2d 1073 (C.D. Cal. 2003); summary judgment granted in part to defendants, 259 F. Supp. 2d 1029 (C.D. Cal. 2003); plaintiffs' motion to dismiss counterclaims granted in part, 269 F. Supp. 2d 1213 (C.D. Cal. 2003); affirmed, 380 F.3d 1154 (9th Cir. 2004); cert. granted, 543 U.S. 1032 (2004).
Subsequent	Remanded, 419 F.3d 1005 (9th Cir. 2005); summary judgment opinion on remand, 454 F. Supp. 2d 966 (C.D. Cal. 2006).
Holding
Producers of technology who promote the ease of infringing on copyrights can be sued for inducing copyright infringement committed by their users. Ninth Circuit Court of Appeals vacated and remanded.
Court membership
Chief Justice William Rehnquist Associate Justices John P. Stevens · Sandra Day O'Connor Antonin Scalia · Anthony Kennedy David Souter · Clarence Thomas Ruth Bader Ginsburg · Stephen Breyer
Case opinions
Majority	Souter, joined by unanimous
Concurrence	Ginsburg, joined by Rehnquist, Kennedy
Concurrence	Breyer, joined by Stevens, O'Connor
Laws applied
Copyright Act of 1976

MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005), is a United States Supreme Court decision in which the Court unanimously held that the defendants, peer-to-peer file sharing companies Grokster and Streamcast (maker of Morpheus), could be sued for inducing copyright infringement for acts taken in the course of marketing file sharing software. The plaintiffs were a consortium of 28 of the largest entertainment companies (led by Metro-Goldwyn-Mayer studios).

Background

The case is frequently characterized as a re-examination of the issues in Sony Corp. v. Universal City Studios, a decision that protected VCR manufacturers from liability for contributory infringement. MGM and the other plaintiffs argued that makers of file sharing technology should held liable for their users' copyright infringements. In Sony, the court held that a copying technology could not be barred if it was "capable of substantial noninfringing uses."

The entertainment companies appealed to the Supreme Court after losing at two lower courts. The United States District Court for the Central District of California originally dismissed the case in 2003, citing the Sony precedent. On appeal, the Ninth Circuit Court of Appeals upheld the district court's decision after acknowledging that peer-to-peer ("P2P") software has legitimate and legal uses.

Computer and Internet technology companies such as Intel, and trade associations including firms such as Yahoo! and Microsoft, filed amicus curiae briefs in support of the file sharing companies, while the RIAA and MPAA both sided with MGM. Napster, having lost a similar lawsuit about its users' contributory copyright infringement, filed a brief in support of the copyright owners. Billionaire Mark Cuban partially financed Grokster's fight before the Supreme Court.

Oral arguments

During oral argument, the Supreme Court justices appeared divided between the need to protect new technologies and the need to provide remedies against copyright infringement. Justice Antonin Scalia expressed concern that inventors would be chilled from entering the market by the threat of immediate lawsuits. Justice David Souter questioned how the interpretation of the law the plaintiffs argued for would affect devices like copy machines or the iPod.

The music industry suggested that iPods have a substantial and legitimate commercial use in contrast to Grokster, to which Souter replied, "I know perfectly well that I can buy a CD and put it on my iPod. But I also know if I can get music without buying it, I'm going to do so." On the other hand, the justices seemed troubled at the prospect of ruling that Grokster's alleged business model of actively inducing infringement and then reaping the commercial benefits was shielded from liability.

Opinion of the Court

The opinion of the court was authored by Justice Souter, who wrote: "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."

While the Court unanimously concurred that Grokster could be liable for inducing copyright infringement, there was considerable disagreement over whether the case is substantially different from the Sony case, and whether the precedent established by Sony should be modified. On the one hand, Justice Ginsburg, joined by Kennedy and Rehnquist, claimed that "[t]his case differs markedly from Sony" as there was insufficient evidence of uses which were non-infringing. On the other hand, Justice Breyer, joined by Stevens and O'Connor, claimed "a strong demonstrated need for modifying Sony (or for interpreting Sony's standard more strictly) has not yet been shown," primarily because "the nature of ... lawfully swapped files is such that it is reasonable to infer quantities of current lawful use roughly approximate to those at issue in Sony." These justices concurred in the judgment on the narrow ground of Grokster's alleged inducement of its customers to use the product illegally.

The majority of the Justices would have either expanded or contracted the Sony precedent. However, the Court as a whole did not choose to reexamine the Sony precedent in the decision, being split into three equal groups. Thus the Sony ruling was reviewed only as necessary to properly detail the issues involved in this case. Justice Souter noted: "in the absence of other evidence of intent, a court would be unable to find contributory infringement liability merely based on a failure to take affirmative steps to prevent infringement, if the device otherwise was capable of substantial noninfringing uses. Such a holding would tread too close to the Sony safe harbor."

Subsequent developments

The Grokster decision has been hailed by legal researchers as striking a fair balance between the need to respect the copyrights of artists, and the benefits of allowing and promoting technological innovation. Conversely, others have criticized the decision for its apparent vagueness, contending that it permits financially powerful organizations such as the RIAA and MPAA to effectively hinder development of new technology by active pursuit of litigation against the developers and distributors.

On November 7, 2005 Grokster announced that it would no longer offer its peer-to-peer file sharing service. The notice on their website said, "The United States Supreme Court unanimously confirmed that using this service to trade copyrighted material is illegal. Copying copyrighted motion picture and music files using unauthorized peer-to-peer services is illegal and is prosecuted by copyright owners." As part of acivil lawsuit permitted by this Supreme Court ruling, Grokster was forced to pay $50 million to the music and movie industries. Stating in 2008, visitors the Grokster website (www.grokster.com) encounter this message: "Your IP address is (your ip) and has been logged. Don't think you can't get caught. You are not anonymous."

Streamcast, however, continued to fight the suit on remand. On September 27, 2006, the U.S. District Court for the Central District of California granted summary judgment in favor of the plaintiffs on Streamcast's liability for infringement, though Streamcast promised to appeal the decision.

Fearing lawsuits similar to MGM v. Grokster, Mark Gorton, the chief executive officer of the firm that produces LimeWire, has said that he plans to stop distributing his file sharing program. He explained this by saying. A lawsuit was brought against LimeWire in Arista Records LLC v. Lime Group LLC (2010), which held that Lime Group LLC induced copyright infringement with its P2P file sharing software LimeWire and issued a permanent injunction. Following that ruling, the download page for the free LimeWire client has a footnote stating: "The download, however, is not a license to upload or download copyrighted material. We urge you to respect copyright and share responsibly."

External links

• Works related to MGM Studios, Inc. v. Grokster, Ltd. at Wikisource
• Text of MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005) is available from: Cornell  CourtListener  Findlaw  Google Scholar  Justia  Oyez (oral argument audio) 
• Copy of the decision from EFF (PDF)
• Transcript of oral argument before the U.S. Supreme Court
• Transcript of oral argument before the Ninth Circuit
• Stanford case page (archive)
• California district court case summary
• Filed Briefs
• MGM v. Grokster: Day 1 - March 30, 2005 MP3 Newswire recap of first