MGM Studios, Inc. et al.
v. Grokster, Ltd. et al.
 Earlier this year, the US
Supreme Court heard the case of MGM Studios, Inc. et al. v. Grokster, Ltd. et al.
The suit deals with the claim made by the plaintiffs -- 28 different entertainment
companies in all, here referred to simply as "MGM" -- that peer-to-peer
file-sharing programs such as Grokster and Morpheus (hereafter, simply
"Grokster") permit the violation of the intellectual property rights of
entertainment companies by allowing and encouraging the easy download of copyrighted
material. Programs such as Grokster are distributed gratis and are paid for by
advertisements that are streamed to users. As the programs increase in popularity and the
number of users grows, the revenue generated from the advertisements grows. Hence, MGM
claims that Grokster knowingly profits from copyright infringement. To understand what the
Court has decided and what it might mean for consumers, we should look at the basic
outline of the case.
MGM filed suit against the software companies, arguing that
the latter are responsible for copyright infringements perpetrated by their users. On the
face of it, this may seem an insupportable claim: It suggests that a company is liable for
the way in which its product is used by a consumer. MGM claimed that the software
companies had profited from the downfall of Napster and had marketed themselves as Napster
alternatives. They also claimed that the software companies were not only aware that their
products were being used for copyright infringement, they were also aware that this was
one of the most popular uses of their products. Thus, the claim wasn’t just that the
products were being used in this way, but that the companies, at the very least, did too
little to stop copyright infringement or possibly even encouraged such use.
The Ninth Circuit Court held that this case was analogous
to Sony Corp. of America v. Universal City Studios, Inc., the original
"Betamax case." In that case, the Court held that a company that produces a
product that could infringe on intellectual rights could not be held liable if the product
had substantial other uses that did not infringe on intellectual rights, unless the
company was also aware of specific instances of infringement and did nothing to stop them.
The Ninth Circuit Court affirmed the decision of the district court of a summary judgment
for the software companies, which meant they were not liable.
The Supreme Court disagreed with the lower courts, holding
instead that the Grokster case differed from the Betamax case in important ways. In the
Supreme Court decision, Justice Souter stated that "the inducement rule, too, is a
sensible one for copyright. We adopt it here, holding 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." Thus Grokster may be liable for its users’
copyright infringements if it can be shown that Grokster promoted its software’s
ability to infringe copyrights or in other ways encouraged such use. We will have to wait
to see whether or not Grokster will meet this criterion for inducement. You can read the Court’s decision for yourself.
This decision may affect you in one of three ways. First,
if you use such programs to infringe a person’s or corporation’s intellectual
property rights, shame on you. I think the entertainment companies are going about matters
related to the digital reproduction of music and films in a very naïve way and, in the
long run, will harm themselves. They seem stuck within a cultural paradigm that is rapidly
being supplanted. But their bad decision gives no one the right to violate their rights.
You might not like how someone uses their property, but that does not give you the right
to do what you want with it.
Second, the Court’s decision could specifically
curtail innovation in peer-to-peer file-transfer software. You might think this a minor
inconvenience, but we should remember that some entertainment companies actually want you
to distribute their goods, as a way of getting their music, books, or films out to as many
people as possible. If the decision stifles innovation in file-transfer software, then MGM
has limited the ability of its competitors to compete. This limitation may be minor, but
it is interesting to note that the decision may go beyond simply protecting MGM’s
rights into protecting its business from competition.
Third, the decision may be a deterrent to innovation in a
larger context. The decision establishes an "inducement theory" of
responsibility. It states that a company will be held liable if it creates its products
with the intent of inducing consumers to infringe on the rights of another, but we’ve
yet to see how that will play out in a trial. Given the large bank accounts of the leading
entertainment companies and the small bank accounts of many startup or privately held
companies, it’s possible that, in order to avoid legal battles, companies will design
their products to fit the desires of the entertainment industry rather than those of
consumers. It would seem that if the entertainment industry didn’t like some
innovation they could tie it up in court, claiming that it induces copyright infringement.
Such a move would likely bankrupt startup companies and so do away with any innovation
that the large companies don’t like.
Some may think these concerns alarmist, and that I have
overstated what is likely to happen. That may be true -- I have yet to fully consider this
new "inducement theory" for copyright infringement. But it gets worse when you
begin to consider the concept of inducement in relation to other types of businesses and
legal problems. This concept of inducement also raises questions about the nature of
personal autonomy in the law.
But thinking of such things is better left to the academic
year; for now, I’m going to enjoy a lazy summer of music (none of which, by the way,
has arrived in my house via Grokster or its ilk). Luckily, even if the Supreme
Court’s decision does stifle innovation, a great deal of audio equipment stays far
away from the thorny issues of copyright infringement. This month we review cables, a
staple of any hi-fi kit. Chris J. Izzo reviews some high-value cables from Harmonic
Technology: the Harmony Wave speaker cables and Precision-Link interconnects.
…Eric D. Hetherington
|
