Grokster Wins in Appeals Court

An important decision has been reached.

The 9th Circuit Court of Appeals ruled today that Grokster (along with other vendors of decentralized P2P systems) is not liable for the copyright infringement of its users. Today’s decision upholds a lower court decision, which had been appealed by a group of music and movie companies.

The Court largely accepted Grokster’s arguments, finding that although the vast majority of Grokster users are infringers, Grokster itself cannot be held liable for that infringement.

The Court found Grokster not liable for contributory infringement, because Grokster did not have the necessary knowledge of specific infringement. In light of the Supreme Court’s 1984 Sony Betamax decision, as elaborated in this appeals court’s Napster decision, the court first determined that Grokster’s software has substantial commercially significant uses other than infringment. As a result, contributory infringement would have required that Grokster have knowledge of specific acts of infringement, at a time when Grokster could take action to stop those acts. But Grokster simply distributes its product to consumers, and has no knowledge of how any particular customer uses the product later. If copyright owners tell Grokster about an act of infringement, after that act has already happened, that is not actionable knowledge because it is too late to stop the infringment.

The court also held Grokster not liable for vicarious infringement, because Grokster does not have the right and ability to control its customers’ infringing activity. Grokster has no practical way to kick users off the system or to police the system’s use. The court also ruled that Grokster cannot be required to redesign its software and force its customers to update to the redesigned version.

And a quote from the actual judgement:

As to the issue at hand, the district court’s grant of partial summary judgment … is clearly dictated by applicable precedent. The Copyright Owners urge a re-examination of the law in light of what they believe to be proper public policy, expanding exponentially the reach of the doctrines of contributory and vicarious copyright infringement. Not only would such a renovation conflict with binding precedent, it would be unwise. Doubtless, taking that step would satisfy the Copyright Owners’ immediate economic aims. However, it would also alter general copyright law in profound ways with unknown ultimate consequences outside the present context.

Further, as we have observed, we live in a quicksilver technological environment with courts ill-suited to fix the flow of internet innovation. The introduction of new technology is always disruptive to old markets, and particularly to those copyright owners whose works are sold through well-established distribution mechanisms. Yet, history has shown that time and market forces often provide equilibrium in balancing interests, whether the new technology be a player piano, a copier, a tape recorder, a video recorder, a personal computer, a karaoke machine, or an MP3 player. Thus, it is prudent for courts to exercise caution before restructuring liability theories for the purpose of addressing specific market abuses, despite their apparent present magnitude.

As Slashdot notes: It is a very strong decision, basically bringing the Sony-Betamax decision into the modern age.