Bad Glacier

I finally got around to reading the Ninth Circuit’s decision in MGM v. Grokster (pdf file here). It’s not long and fairly straightforward, but here’s my short summary anyways. A longer summary is “below the fold”, as they say “in the biz”, as they say… well… no one actually says that.

Short version: Unlike Napster, which used its own servers to keep track of users and to store lists of the files being shared, Grokster and StreamCast don’t have the ability to block users or to monitor the files being traded on their networks. Because of this, they cannot be held contributorily or vicariously liable for copyright infringement by users of their software. The court then tells MGM to stop crying or the court will give them something to cry about.

Long version below:

Contributory and vicarious infringement are two (similar, but) separate ideas. Let’s take ‘em one at a time.

Contributory infringement requires three elements: direct infringement by a primary infringer (the users, in this case); knowledge of the infringement by the defendant; and “material contribution” to the infringement by the defendant.

The first part is easy. No one even tries to claim that infringement doesn’t take place on Grokster networks.

The second prong, knowledge of the infringement, is where the Sony-Betamax case (actually Sony Corp. of America v. Universal City Studios, Inc.) comes in. In that case, the Supreme Court whipped out the doctrine of “staple article of commerce” from patent law, which says that contributory infringement does not exist when a product is “capable of substantial” or “commercially significant noninfringing uses.” In Sony-Betamax, the Supreme Court found that VCRs satisfied this requirement. In the (first) Napster case, the Ninth Circuit said that this requirement, when satisfied, affected the second requirement of contributory liability, knowledge of the infringement. When a product has substantial or commercially significant noninfringing uses, the burden falls on the copyright owner(s) to show that the defendant had “reasonable knowledge of specific infringing files.” If you remember the Napster days, this is where the record companies had to send Napster lists of file names to remove from their servers.

The next part is awesome, because it’s about Wilco! In a Ninth Circuit opinion! How cool is that? (Answer: very cool.) If you don’t know the story, Wilco was let go from their label after recording their album Yankee Hotel Foxtrot. They then released the album on P2P networks and streamed it from their web site. The resulting hype (and the fact that the album kicks ass) helped them get a new record contract. Between this type of thing and the fact that public domain works can be transferred over P2P, there seems to be a pretty good case for substantial noninfringing use.

Of course, MGM disagrees. Sort of. They don’t really try to argue against this stuff. Instead, they say that since the large majority of file-sharing is infringement, no “substantial” noninfringing use occurs.

The court immediately smacks the shit out of this one. MGM’s argument “misapprehends the Sony standard” because “a product need only be capable of substantial noninfringing uses.” That’s a bitch-slap if I’ve ever read one.

So MGM has to prove that Grokster had “reasonable knowledge of specific infringing files,” but that’s not all! Because of requirement three, “material contribution to the infringement,” Grokster must have this knowledge before the infringement occurs. You can see where this is going. Because of its design, Grokster can’t know about infringing files because it doesn’t know about any of the files on its network. Grokster does not provide access to its network as a service provider would, and they cannot regulate user accounts, so no material contribution occurred.

And that takes care of contributory infringement. Sorry, MGM.

Vicarious copyright infringement also requires three elements: direct infringement by a
primary party (same as before); direct financial benefit by the defendant (Grokster gets ad money, so this isn’t contested); and the right and ability to supervise the infringers.
The court uses two examples to illustrate the third concept. A dance-hall operator would be considered vicariously liable, while a landlord would not, because the landlord does not have the right and ability to supervise infringing conduct, while the dance-hall operator does.

Again, Grokster’s design makes blocking users or supervision of infringing conduct impossible, so this part of the test does not apply. Contrast this with Napster, who could not only block user accounts, but also reserved the right to do so for any reason. Because of this, the court determined that Napster did have the right and ability to supervise infringing conduct.

Again, MGM tries to shift the point, and again, MGM gets smacked down They try to argue that Grokster and StreamCast can either shut down the entire network or upgrade their software to actively prevent copyright infringement. This goes far beyond supervision, according to Judge Thomas: “the Copyright Owners confuse the right and ability to supervise with the strong duty imposed on entities that have already been determined to be liable…”

MGM also asks the court to make up some law by saying that Grokster shouldn’t be able to actively ignore such obvious infringement. They stop just short of rolling around on the floor in a temper tantrum over the total unfairness of their mommy refusing to let them have another cookie Grokster being able to say, “we have no ability to supervise user conduct,” and getting off scot-free.

Seriously, though, this argument may have some merit in the eyes of the Supreme Court Justices. The briefs for the Supreme Court case will discuss it more thoroughly, so I’ll deal with it then.

Anyways, the Ninth Circuit flat-out refuses to take this argument seriously, and the district court is affirmed. Game over. As they fly away in their getaway helicopter, MGM is heard to yell, “You’re lucky your Ninth Circuit buddies showed up when they did! You won’t be so lucky next time, Grokster! We’ll get you if it’s the last thing we do!”

This entry was posted on Tuesday, February 22nd, 2005 at 10:14 pm and is filed under Law!. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.