SCOTUS cockblocks Grokster/Grokster Decision Thread

[bascule]

WTF SCOTUS, you seem to be on a rampage of bad decision making lately. First Gonzales v. Raich, then the Eminent Domain ruling, and now this crap... and a unanimous decision, at that.

http://money.cnn.com/2005/06/27/technology/grokster/

Maybe we should hold manufacturers of spray paint liable for graffiti...

[hackajar]

Grokster Decision Thread

http://www.eff.org/IP/P2P/MGM_v_Grokster/key_quotes.php

Supreme Court Ruling Will Chill Technology Innovation

Copyright Liability Standard in Grokster Decision Endangers P2P and Other New Technologies

Washington, DC - Today the Supreme Court issued a ruling that could impede makers of all kinds of technologies with expensive lawsuits. The long-awaited decision in MGM v. Grokster states that P2P software manufacturers can be held liable for the infringing activities of people who use their software. This decision relies on a new theory of copyright liability that measures whether manufacturers created their wares with the "intent" of inducing consumers to infringe. It means that inventors and entrepreneurs will not only bear the costs of bringing new products to market, but also the costs of lawsuits if consumers start using their products for illegal purposes.

"Today the Supreme Court has unleashed a new era of legal uncertainty on America's innovators," said Fred von Lohmann, EFF's senior intellectual property attorney. "The newly announced inducement theory of copyright liability will fuel a new generation of entertainment industry lawsuits against technology companies. Perhaps more important, the threat of legal costs may lead technology companies to modify their products to please Hollywood instead of consumers."

The Supreme Court has also ordered the lower court to consider whether peer-to-peer companies Grokster and StreamCast can be held liable under the new standard. StreamCast is confident that it will pass muster under the new, multi-pronged test.

MGM v. Grokster was brought by 28 of the world's largest entertainment companies against the makers of the Morpheus, Grokster, and KaZaA filesharing software products in 2001. The entertainment companies hoped to obtain a legal precedent that would hold all technology makers responsible for the infringements committed by the users of their products. The Electronic Frontier Foundation (EFF), along with StreamCast counsel Matt Neco and Charles Baker of Porter and Hedges, defended StreamCast Networks, the company behind the Morpheus filesharing software.

The entertainment companies lost their case in District Court, then lost again on appeal to the Ninth Circuit Court of Appeals. The lower court rulings were based on the Supreme Court's landmark decision in the 1984 Sony Betamax case, which determined that Sony was not liable for copyright violations by users of the Betamax VCR.

[Voltage Spike]

For more information, see this thread.

[TheCotMan]

http://www.eff.org/IP/P2P/MGM_v_Grokster/key_quotes.php...

Amazing how your thread was magically merged with the one bascule started, but I think that magic eventually stops working. ;-)

For more information, see this thread.

I think hackajar just has bascule on his ignore list, and did not see bascule's thread. (heh heh)
(Sorry the merge broke the thread link Voltage Spike.)

[hackajar]

missed it by 3 min. Could have been posting at same time


[Edit]
Wait scratch that, AM and PM, for some reason "New Post" didn't pick it up.

[d3ad1ysp0rk]

Maybe we should hold manufacturers of spray paint liable for graffiti...

Actually, I'd compare it more to a manufacturer who put "Great for vandalizing property" on the spray can.

This decision relies on a new theory of copyright liability that measures whether manufacturers created their wares with the "intent" of inducing consumers to infringe.

I don't believe this ruling dealt a severe blow to the p2p community at all. Just be smart about your advertising.

[bascule]

Actually, I'd compare it more to a manufacturer who put "Great for vandalizing property" on the spray can.

But it's not as clear cut as that. SCOTUS's decision was based on the fact that Grokster/Streamcast targeted ex-Napster users. They certainly didn't have anything to the effect of "Pirate copyrighted music with our software!" but in fact quite the contrary, loading their software up with disclaimers about how downloading copyrighted music is illegal. If a gun manufacturer launches an ad campaign targeting black inner city youth, are they liable for people killed with their products?

I don't believe this ruling dealt a severe blow to the p2p community at all. Just be smart about your advertising.

This is just an enormous legal clusterfuck, and suddenly demonstration of fair use is no longer enough to get you off the hook. I think this article summed it up nicely:

http://www.forbes.com/technology/200...grokster2.html

NEW YORK - When all nine justices of the U.S. Supreme Court speak with one voice, the very legal firmament trembles.

So will the knees of tech companies looking to build the next great digital entertainment gadget or service, in the wake of today's ruling against file-sharing companies Grokster and StreamCast. The ruling, among other things, will have a chilling effect on companies developing digital media products since they will now have to make sure they can't be sued for contributing or inadvertently encouraging copyright infringement. Their legal bills can't help but increase, and their product and marketing plans are likely to get some alteration.

Welcome to the life in the post-Grokster age of digital media, wrought by today's 9-to-0 decision at the U.S. Supreme Court in the MGM (nyse: MGM - news - people ) versus Grokster case. If there's a chance that their customers could misuse their product in a way that infringes on copyrights held by media companies, manufacturers and service providers will have to show that they're making a concerted effort to stop the infringement once discovered and to prevent it from happening in the first place.

The court said it's not what a product or service can do or how it may be used that makes the company behind it liable under its interpretation of copyright infringement law, but how the company promotes and markets that product or service that matters.

"The record is replete with evidence that from the moment Grokster and StreamCast began to distribute their free software, each one clearly voiced the objective that recipients use it to download copyrighted works, and each took active steps to encourage infringement," Justice David Souter wrote in the court's opinion.

Souter noted that both companies sought to market their software to users of the defunct Napster music file-sharing service." The opinion even cited an internal e-mail describing how Grokster executives sought to use marketing campaigns to position its service in such a way as to attract Napster users once Napster ceased to operate as a file-sharing service. In its new incarnation, Napster (nasdaq: NAPS - news - people ) is a legitimate media streaming service.

Lawyers and executives of file-sharing companies Grokster and StreamCast both pledged to continue the fight in the district court. Michael Weiss, chief executive of StreamCast, said his company is "in the fight for the long haul."

But lawyers and independent experts on the case painted a picture in which companies will have to carefully monitor their internal communications, their marketing messages and possibly even the notes they take in meetings, while developing new products and services.

Michael Neco, StreamCast's general counsel, called the Supreme Court's decision "Orwellian," and described lawyers for media companies as "the new thought police."

"The guy in the garage and the guys in the executive suite had better be smart about what they say and do, because every thought and action they take will be subject to discovery by a lawyer," Neco said. "Lawyers are going to get pulled into every aspect of the technology business."

Indeed, last week a Hewlett-Packard (nyse: HPQ - news - people ) executive worried about the impact of a ruling against Grokster.

"If a ruling came down that said that the standard set in the Betamax case isn't good enough and imposed a lot of new legal tests that a device would have to meet in order to not be infringing, that would add a lot of friction and cost to the development process," said Adam Petruszka, director of strategic business development

Bill Rosenblatt, a consultant on digital-media law and author of a book on the subject, Digital Rights Management: Business and Technology (Wiley, 2001), agreed. He said the marketing efforts of technology companies in particular will have the most to worry about.

"The chilling effect will be on tech companies marketing departments rather than on their research and development people," he said. "Drug companies are barred from claiming that a drug cures a disease. What they say is strictly regulated by the Food and Drug Administration. This ruling creates a similar situation for technology companies. What you claim is now subject to liability."

Curiously, however, the justices chose not to meddle with the court's previous ruling from the 1984 Betamax case, which has for years been one of the guiding precedents balancing consumer rights against the rights of copyright holders. In that case, the court found that Sony (nyse: SNE - news - people ) could continue selling its Betamax video cassette recorders so long as there were "substantial non-infringing uses" of the device.

Lawyers for the file-sharing companies argued that the Betamax standard applied to them, and that they weren't liable for the illegal actions of their customers. Lower courts agreed with that interpretation of the Betamax case. That changed today when Justice David Souter wrote simply that such a view "was error."

The court further declined to reexamine the Betamax case, as MGM requested, saying, "It is enough to note that the Ninth Circuit's judgment rested on erroneous understanding" of the Betamax case, and said it would leave further consideration of precedents established by that case to "a day when that may be required."

But by not further clarifying how the Betamax case should be applied in the 21st century, the court is likely opening the door to a torrent of new copyright infringement lawsuits, said Fred von Lohmann of the Electronic Frontier Foundation, which lobbies for tech companies.

"America's entire innovating sector will face a new theory of copyright liability," he said. "The justices didn't clarify the Betamax test. They created a new theory, one that I am afraid will tie up courts for a long time."

[converge]

so.. what next.. irc clients? Those have contributed to far more copyright infringement (at least in the eyes of some) longer than any other p2p. Lets take on the ftp standard and all clients/servers that run it .. that thing is *designed* to let users easily transfer large amounts of data. Or is this a battle of mass distribution? One could argue that usage of irc clients to pirate media has increased exponentially since the inception of mIrc, but not nearly as much as the simplified point and click of Napsteresques. Where does SCOTUS draw its wonderfully ambiguous (faltered) legal line now?

[spahkle]

"Lawyers for the file-sharing companies argued that the Betamax standard applied to them, and that they weren't liable for the illegal actions of their customers. Lower courts agreed with that interpretation of the Betamax case. That changed today when Justice David Souter wrote simply that such a view "was error."

The court further declined to reexamine the Betamax case, as MGM requested, saying, "It is enough to note that the Ninth Circuit's judgment rested on erroneous understanding" of the Betamax case, and said it would leave further consideration of precedents established by that case to "a day when that may be required."

But by not further clarifying how the Betamax case should be applied in the 21st century, the court is likely opening the door to a torrent of new copyright infringement lawsuits, said Fred von Lohmann of the Electronic Frontier Foundation, which lobbies for tech companies."

With one fell swoop of the axe, all content that is recorded on Recording devices will soon belong to the conglomerate vultures... "I don't care if this video is your vacation in Hawaii. You used a technology to record it that by definition is infringing on my Intellectual Property because it exists. Therefore I have every right to seize it. Oh, and by the way, soon we'll cameras in your televisions so we can truly have 'individualized marketing' .. .mwaahahahaha" </sound of jackboots exiting house>

[falconred]

One thing that has been lost in the shuffle in the reporting about Grokster is that this came to the Supreme Court on a motion for summary judgment.

What that means is that Grokster filed a bunch of papers with the court that said: "There is 100% no way that MGM can ever win this case, because you can never ever get money from people who help others infringe copyright through software that also has legitimate purposes."

What the Supreme Court said in response:
"Well, there is at least a 1% chance that MGM could win their case, because we think that you can get money from people who help others infringe if that is the whole purpose of their software. So please continue on trying this case."

The court did not say that Grokster has lost and MGM won. Although their examination of some of the evdience looks bad for Grokster, there's still a lot of life left in this case.

The court expressly did not set out any rules regarding how much is too much when it comes to infringing vs. non-infringing use, or if it really only matters that the software company itself is encouraging infringing use (or for that matter what "encouraging" means). There's plenty of room left for Grokster's lawyers to argue.

Either way you look at it, I think stuff like IRC and BitTorrent are safe under Grokster.