Chalk Talk-The Day the Music Died: The Supreme Court's Reversal of MGM Studios, Inc. V. Grokster and Its Impact on Secondary Liability for Copyright Infringement
Heather S. Hall · The Journal of Law of Education · 2006
I. INTRODUCTION Beginning with Napster,1 computer file-sharing software has created a unique obstacle for the recording industry in preventing copyright infringement. The recent Metro-Goldwyn-Mayer Studios, Inc. v. Grokster Ltd. Supreme Court decision (hereinafter Grokster III) makes it clear that distributors of computer file-sharing software can be held liable for copyright infringement committed with their software, even when they have no control over the infringement.2 The software distributed by the defendants in Grokster allowed users to exchange files via a peer-to-peer network (P2P), a decentralized system where users download from other users without using a central indexing system controlled by the software distributors. The Ninth Circuit's MGM, Inc. v. Grokster, Ltd. decision (hereinafter Grokster II) had found that the P2P3 software distributors were not secondarily liable for copyright infringement.4 Previously, courts had held P2P software distributors secondarily liable for the copyright infringement committed by software users.5 Although the Ninth Circuit in Grokster II reached a different result, it applied existing doctrine to do so.6 The Ninth Circuit arrived at the correct result and should not have been overturned by the Supreme Court. To understand the full significance of the decision, a basic understanding of computer file-sharing is necessary. This article will discuss the history of P2P file-sharing litigation, why the Ninth Circuit's decision was correct and what the Supreme Court's reversal of Grokster II means for the future of P2P file-sharing litigation. II. COMPUTER FILE-SHARING AND SECONDARY LIABILITY In computer file-sharing, there are three methods of indexing available files: (1) a centralized indexing system maintaining available files on one or more centralized servers; (2) a completely decentralized indexing system in which each computer maintains a list of files available on that computer only; or (3) a supernode system, in which a select number of computers act as indexing servers.7 The distributors in Grokster use a completely decentralized indexing system.8 When users search for a file, they are searching individual computers, not a database controlled by the distributor of the software. This is known as peer-to-peer file-sharing. Copyright infringement occurs whenever any of the exclusive rights granted to copyright owners through the federal Copyright Act are violated.9 It allows for two separate theories of secondary liability,10 contributory infringement and vicarious infringement.11 To find a defendant liable for contributory infringement, a plaintiff must prove: (a) there was direct infringement by a primary party; (b) the defendant had knowledge of the infringement; and (c) the defendant materially contributed to the infringement.12 To analyze whether a defendant had knowledge of the infringement, courts look at whether the product is capable of substantial non-infringing use. If the product is not capable of substantial non-infringing use, courts impose a standard of constructive knowledge.13 If the product is capable of substantial non-infringing use, the courts employ a stricter standard of reasonable knowledge of specific infringement.14 To find a defendant liable for vicarious infringement, a plaintiff must show: (a) there was direct infringement by a primary infringer; (b) there was a direct financial benefit to the defendant derived from the infringement; and (c) the defendant had the right and ability to supervise the infringers.15 The Ninth Circuit found that the distributors of the software in Grokster were not liable under either theory. Because the software was capable of substantial, non-infringing use, the court applied the standard of reasonable knowledge of specific infringement when determining liability for contributory infringement.16 According to the Ninth Circuit, the software distributors did not have reasonable knowledge of specific infringement. …