By Eric Waldman
ABSTRACT:
Peer-to-peer (“P2Pâ€) technology distributors, particularly Grokster and Streamcast Networks, will not miss the year 2005. In June of that year, the United States Supreme Court handed down one of the most anticipated copyright cases in recent memory. In MGM Studios Inc. v. Grokster, the Court held that a distributor of software may be liable for acts of infringement by third parties who use the software if that distributor has taken “affirmative steps to foster infringement†regardless of the device’s lawful uses, a test now known as “active inducement.â€
Grokster and Streamcast Networks are two P2P companies whose software was used by individuals to distribute copyrighted works. The Court found that the defendants could be liable for inducing copyright infringement. After the decision, the only content found on Grokster’s website contained a couple of paragraphs, one of which read, “[t]here are legal services for downloading music and movies. This service is not one of them.†The decision not only made a statement to Grokster, but also to all P2P companies who actively induce infringement.
But what is the big fuss about P2P and why are the music and motion picture industries so concerned? P2P technology allows users to communicate and transfer files directly to each other, rather than through a central server. In 2004, P2P communication represented 60% of all internet traffic. The Recording Industry of America (“RIAAâ€), a trade group that represents the U.S. recording industry, contends that much of this traffic is used to transfer copyrighted music illegally, and has brought numerous lawsuits against individuals and P2P technology distributors across the country. The Court in Grokster cited MGM’s research, which indicated that 90% of the files available on Grokster were copyrighted works.
Since the Grokster decision, the RIAA has begun to target P2P distributors who actively encourage copyright infringement using their software. Some of these targets include companies such as BitTorrent, Direct Connect, BearShare, LimeWire, WinMX, Warez, and eDonkey.
While Grokster answered many questions, it also left a few questions open. How will a company know when they are actively encouraging copyright infringement? What steps can a company take to prevent them from becoming another Grokster? David Post raises other questions, such as what if a company has no actual knowledge of specific infringements and does not “actively encourage or induces their users to infringe…The opinion for the unanimous court is silent on the question; there’s no need, it says, to resolve this question now†because of all the evidence of Grokster’s active inducement.
The issue presented here is whether popular P2P companies, in particular BitTorrent, will be held liable under Grokster’s active inducement test. Under this test, the Supreme Court would probably not hold the creator of BitTorrent technology liable.
Instead, the Court would probably hold liable the Torrent search engines or index sites that facilitate the distribution of copyrighted works. In order to fully analyze this liability and discuss what steps a company may take to avoid this liability, an overview of the decisions prior to Grokster, the Grokster decision, and its aftermath will provide helpful background to make a prediction.
CITE AS:
Eric Waldman, Note, Going Straight: Whether P2P Technology Can be Legitimized in the Wake of the Grokster Decision, 15 SYRACUSE SCI. & TECH. L. REP. 1 (2007).
NOTE: Footnotes in this abstract were omitted.