The Grokster Case: a Win for File Sharers!

How the Ruling Turned Out

It's been nicknamed the "Grokster Case", and it has been a major battle in the world of file sharing. Coming to a dramatic end this June 2005, Grokster Case resulted in a pivotal U.S. Supreme Court ruling: two file-sharing software manufacturers were found guilty of promoting file piracy. At the same time, the Supreme Court also indirectly ruled that file sharing itself is not illegal. So while the MPAA and RIAA are claiming this is a massive win for the entertainment industry, it really is a massive win for the world of P2P file sharing.

Allow me to explain.

In a case spanning several months, the US entertainment industry (in the form of MGM movies, and backed by the MPAA and RIAA) claimed that Grokster.com and StreamCast.com were liable for copyright damages because they encouraged the illegal sharing of movies. These two manufacturers were actively marketing software products that assisted in the downloading of pirated movies and songs.

In their defense, Grokster and StreamCast claimed the Supreme Court 1984 "Betamax" defense. This Betamax ruling asserts that a VCR manufacturer is not responsible for a VCR user copying movies illegally.

This June, the Supreme Court ruled against Grokster and StreamCast, stating that they could not hide behind the Betamax ruling because they actively promoted file sharing.

Here is the Supreme Court ruling, paraphrased:

1) StreamCast and Grokster not only provided the software to pirate files, they also actively promoted pirating. This promotion was in the form of active marketing steps and on-screen statements that described users downloading copyrighted content using their products.

2) By these on-screen statements and their other active steps promoting piracy, StreamCast and Grokster gave up any right to a Betamax Decision defense.

3) The Supreme Court effectively ruled in this Grokster Case: "file-sharing companies can be sued if they actively encourage piracy".

Here's the rub: what this Supreme Court decision also defined in its MGM vs. Grokster ruling:

4) Although file sharing tools can be used illegally, the file sharing software itself is not illegal, nor is the general activity of file sharing.

5) Manufacturers of file sharing tools are not responsible for how users use those products, unless the manufacturer takes active steps to encourage direct infringement.

Next: How All This Legalese is Good for Music and Movie Downloaders.