The Grokster Decision: Lawyers Tussle Over Active Inducement's Meaning

By Cameron
July 21, 2005

Earlier this week, the Congressional Internet Caucus held a good panel discussion about the implications of the MGM v. Grokster decision. (Here is the video — real, windows.) While the debate wades quite deep into the legal weeds at times, it is well worth a review. I’ve summarized a couple of the key points below.

As mentioned in our previous post, the Court created an active inducement standard for determining whether or not a company is liable for users using its product for copyright infringement. Panelists staked out their interpretation of what the Supreme Court said, and each one was clearly laying the groundwork for arguments in future litigation.

The balanced panel consisted of three top lawyers heavily involved in the case:

  • Donald B. Verrilli — covering the “media” interests. (He helped prepare the movie and recording industry’s arguments in the case.)
  • Andrew Greenberg — covering what I guess would be the “the middle ground,” which is where both IEEE-USA and USACM fell on this decision. (He helped write the IEEE-USA amicus brief.)
  • Fred von Lohmann — covering the “pure technology” interests (for lack of a better term) that have expressed concerns about the decision. (He represented one of the defendants in this case in the lower courts.)

One of the most interesting and troubling parts of the debate was each panelist’s interpretation of where to draw the bright line for active inducement. A key question for the technology community has been whether or not a product’s design is part of the bright line.

Not surprisingly there was little common ground between the media and technology interests on this question. Mr. Verrilli argued that a product’s design was “objective criteria” about behavior of defendant. For example, whether or not the company has designed meaningful copyright protection into the product, i.e. filtering. He conceded that a case couldn’t be based solely on a product’s design, but that it “might be the most important criteria” (others being a defendant’s business model and specific conduct). In short, what he said was troubling.

Both Messrs. Greenberg and von Lohmann strongly opposed this interpretation by arguing that a company has to be pretty egregious about marketing its product for copyright infringement and helping its users to do so before design comes into play (which is USACM’s position).

The other part of the discussion centered on what Congress should do. Both Messrs. Verrilli and Greenberg said Congress should monitor court decisions and the technology environment, but probably not legislate unless something goes really awry. I’m sure they would differ on what awry means. Mr. von Lohmann argued that Congress might want to look at two issues: first, fixing the punitive damages in copyright law, so if a company is held liable, the damages don’t immediately put them out of business (as is the case now); second, take the pressure of the P2P issue by reforming the current compulsory licensing regime. Congress is looking at proposals on this issue.

All in all a good discussion that likely will be had over and over again for the next several years. In fact, there might be a hearing next week on this topic — stay tuned.