Going Straight: Whether P2P Technology can be Legitimized in the Wake of Grokster

By Eric Waldman

Peer-to-peer (“P2P”) 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.”

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.

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