Supreme Court of the United States - Case Study Example

Supreme Court of the United s Metro-Goldwyn-Mayer Studios Inc., Et Al., Petitioners, V. Grokster, Ltd., Et Al. No. 04-480. Argued March 29, 2005 Decided June 27, 2005 _____________________________________________ CASE COMMENT _____________________________________________ Facts of the case On the 27th of September the Federal Court in California granted summary judgement in the famous case of "Grokster: peer-to-peer file-sharing" finding Stream Cast Networks liable for copyright infringement. The Court found "over whelming" evidence that "Stream Cast Networks Inc had enticed customers to use its file-sharing software and later a website to download hundreds of thousands of copyrighted works.1" The defendant, StreamCast was an internet company which was unlucky enough to begin its business at a time Napster was being asked to pull down its software and stop its free trafficking of copyrighted songs and videos.2 The plaintiff, GM Studios had also sued Grokster Ltd, Stream Cast and a number of other peer-to-peer file-sharing companies to shut down their peer to peer file sharing activities. The case finally went to the Supreme Court to decide whether MGM and other copyright owners could sue these companies where it was held that they had the power to sue these companies and halt their activities. The reason that was given for this was that it seemed that these file-sharing companies were not innocent by reason of lack of knowledge as they had, "Made public statements that showed they knew people would use their software mainly for committing copyright infringement."3 The court unanimously agreed that "distributors of technology that enables copyright infringement can be found liable for their users' actions, but only if a plaintiff can point to evidence that the distributor took "affirmative steps" to foster infringement."4 The court also said that actual knowledge was required to prove that these ISPs (Internet Service Providers) were liable for the copyright infringement. It is misleading to call this case "Grokster" because this company and the other jointly accused companies opted for an out of court settlement with the plaintiffs and Steam Cast was the only company that decided to go on to contest the case. This company then moved for a summary judgement at the US District Court for the Central District of California, and was not allowed to keep its communications and business plans privileged and confidential. It was found that Stream Cast was guilty of devising the Morpheus software and the Open Nap network to find itself the same consumer base as Napster. Its open advertising to promote its business and blatantly allowed its users to infringe copyrights of Music companies and was even guilty of encouraging and assisting them in such means. The whole business model was based on copyright infringement according to the presiding Judge Wilson5 .The Company was freely distributing this software and relying on sponsor revenues. The fact that it took no "meaningful" steps to halt its activities or prevent its customers from doing so . The only flimsy excuse that the company had was that it had given a warning to its customers in its user-agreement, yet it did little to enforce this agreement. Judge Wilson said in his concluding speech that, "This court finds that no reasonable fact finder can conclude that Stream Cast provided Open Nap services and distributed Morpheus [software] without the intent to induce infringement".6 Legal issues and academic opinion arising from the case The age of information technology has made the internet the copyright infringer's playground. The convenience and low cost at which this has been done has prompted the law enforcement authorities to stand up to the challenges of the protection of intellectual property rights .This problem arose in the case of peer-to-peer (P2P) file-sharing. This judgement has given a new dimension to the law of Copyright. Briefly a P2P network (peer to peer network) allows file sharing between the same users of a network. These networks give free or nominal membership through a free download of their software applications. These networks can either be centrally operated or be based on a mere connection between the users. The companies are more economically feasible to sue, although technically the users of such networks can be sued as well. However the "deep pockets" argument of liability makes it more feasible to sue the company itself! The position in the United States The situation leaves the aggrieved party with the choices of suing for vicarious liability for not effectively monitoring its system and for contributory liability for having constructive or actual knowledge of the infringement. In the recent case of Sony Corp of America v Universal City Studios Inc the court did not impute any constructive knowledge on the part of Sony 7 .Sony was selling recording equipment, which allegedly allowed a user to infringe copyright. However this equipment had many legitimate uses as well and so it was help that Sony could not be held to be contributing to copyright infringement. In A&M Records Inc v Napster the supreme court has stressed in line with Grokster there has to be knowledge of any actionable infringement and Napster was held guilty accordingly.Now it seems that company employers with the knowledge that their employees are involved in copyright infringement will also potentially face liability.The Grokster case indeed has confusing implications for software developers and innovators. The Grokster case had slightly different circumstances than Napster as it had contained no central server managing lists of files and operated upon a hybrid network. Groskter had a limited role of merely providing the software for these activities. .The court developed the " substantial non-infringing uses doctrine", 8as applied in Sony, which could have saved Grokster if it hadn't followed such a mass campaign of advertising its infringements. There not any legal or judicial definition of substantial yet as apparent from the considerable academic criticism. Here there was also the development of the inducement rule which "premises liability on purposeful, culpable expression and conduct, and thus does nothing to compromise legitimate commerce or discourage innovation having a lawful promise".9This shows that Grokster was found guilty by way of this rule. Based on the Grokster decision the Lime Wire LLC and Lime Group have also been recently involved in litigation. The position in the EU:United Kingdom In the United Kingdom the test of copyright infringement is when a person "without the licence of the copyright owner does or authorises another to do, any of the acts restricted by the copyright".10 The main English decision is CBS Songs Ltd v Amstrad Consumer Electronics Plc11 where the meaning of authorise was examined in relation to the defendant, Amstrad who was held not to "sanction,approve or countenance an infringing use and that authorise for the purposes of the Copyright Act meant "grant or purported grant, which may be express or implied, of the right to do the act complained of"." 12 Amstrad in line with the Grokster reasoning, argued that it never intended to grant or purport to grant the right to copy. The mere manufacture of a recording device just facilitates copying which may in many cases even be legitimate use. If this was held to be infringement then every company making photocopiers and recording devices should be held liable. Again the case was dismissed due to the lack of "a joint infringer, inducement or persuasion to infringe" in line with the Grokster reasoning almost two decades later. Also Amstrad had no control over its consumer base and did not collect royalties from advertisements like Napster or Grokster. Mere distribution of a software not infringing copyright is not punishable in the UK. Conclusion Academics have pointed out that "the inducement theory in Grokster will have a narrower application in England."13 The inducement must be advertised or openly encouraged. By way of policy the courts are hesitant in stopping new innovation by applying copyright law too rigidly. However it does seem that the UK courts might be more willing to accept the notion of "general inducement" in the future. Although the manufacture of such equipment is not an offence, the supply of such equipment which is given specifically for that purpose to the infringer may cause an offence under Kingdom under s.24 of the Copyright, Designs and Patents Act of the UK.From an analysis of the Grokster case and the US and UK positions it is clear that the courts will look at the notions of "inducement" and substantial infringement to find the alleged defendant guilty .The general sale and purchase of software and devices which might be used for infringement is not an offence in the UK. Bibliography 1. Pamela Samuelson: Legally Speaking: Did MGM Really Win the Grokster Case Available at http://people.ischool.berkeley.edu/pam/papers/CACM%20SCT%20decides%20MGM.pdf. 2. United States: intellectual property - copyright,C.T.L.R. 2007, 13(2), N35 United States: inducement to infringe copyright evident in Grokster suit, C.L.S.R. 2007, 23(1), 10-11 Life after Grokster , Citation:Comps. & Law 2007, 17(6), 43-48 Copyright v Web 2.0: the next digital challenge Citation:E.C.L. & P. 2007, 9(3), 3-5 Music - illegal file sharing (Case Comment) Citation:Ent. L.R. 2007, 18(2), N27 Life after Grokster: analysis of US and European approaches to file-sharing Citation:E.I.P.R. 2007, 29(8), 319-324 On Sony, Streamcast, and smoking guns Citation:E.I.P.R. 2007, 29(6), 215-226 Secondary liability for infringements of copyright-protected works: Part 2 Citation:E.I.P.R. 2007, 29(1), 15-21 Copyright infringement in a borderless world - does territoriality matter Citation:I.J.L. & I.T. 2007, 15(1), 38-53 ________________________________________________________________________ Read More