Update: Press Release from USACM is below.
Original Post 6/27/05: At 10:30 this morning things looked bleak for the technology industry as headlines raced across the wire “Grokster Loses in Unanimous Decision.” Now that the dust has settled a bit, the Supreme Court’s decision actually looks quite balanced. (Justice Souter wrote the opinion of the court, while Justices Breyer and Ginsburg wrote the concurrences 1, 2).
The Justices did rule 9-0 against Grokster by overturning the 9th Circuit’s summary judgment that the Sony “safe-harbor” rule protects Grokster from any liability in this case. In doing so, however, the Court upheld the heart of Sony by not trying to quantify the tipping point of when a technology’s infringing uses outweigh its non-infringing ones, thereby creating liability for the developer. To many in the technology industry, such a vague test would have been devastating. The Justices stated:
” … because we find below that it was error to grant summary judgment to the companies on MGM’s inducement claim, we do not revisit Sony further, as MGM requests, to add a more quantified description of the point of balance between protection and commerce when liability rests solely on distribution with knowledge that unlawful use will occur. It is enough to note that the Ninth Circuit’s judgment rested on an erroneous understanding of Sony and to leave further consideration of the Sony rule for a day when that may be required.”
(The Sony rule was at the heart of this matter, as it states companies that develop technology that can be used both for infringing and non-infringing purposes cannot be held liable strictly for producing the technology. For more background on Sony see the EFF’s website.)
The court did blast both Streamcast and Grokster’s behavior. It made numerous findings that the defendants went out of their way to encourage downloaders to share copyrighted material or be in a position to facilitate this activity. (Streamcast is the other defendant in the case.) In short, the court said bad actors, even if they are not directly infringing on copyright, cannot hide behind Sony, stating:
” … 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.”
But the court did seek balance in this standard:
“The inducement rule, instead, premises liability on purposeful, culpable expression and conduct, and thus does nothing to compromise legitimate commerce or discourage innovation having a lawful promise.”
In doing so, the court creates an “inducement standard” that seems to be predicated on a company’s specific actions (i.e. sending out e-mails to its customers telling them how to download or use copyrighted material) or its business model. It seems likely that technology companies and innovators may find this standard too vague and still open to debate and interpretation. Further, given the current litigious nature of the copyright environment, the discovery process inherent in determining a company’s or developers intent may still be a burden on innovation. In fact, Ed Felten has some thoughtful things to say on freedom-to-tinker about the issues that this ruling raises for technology developers.
But the court’s decision could have been much worse, and its focus on behavior instead of technology is one that many in the community will likely find comforting, and it is a position that USACM has advocated for on many different technology issues.
This week we will try to post Congress’ take on the issue. Also, rumor has it that there will be a hearing on the subject in the House Judicary Committee on Thursday. We’ll try to cover that hearing as well.
Continue reading “Grokster Ruling: Supremes Preserve Betamax Standard, Turn Toward “Active Inducement””