U.S. District Court Rules that Grokster and StreamCast are Not Liable for Copyright Infringement

Recently, in Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., a U.S. District Court for the Central District of California ruled that two companies, Grokster Ltd. and StreamCast Networks Inc. (the "Defendants"), that were distributing file-sharing software, were not responsible for illegal copying committed by users of the software. The Defendants distribute the file-sharing software Groskter and Morpheus, respectively. The Plaintiffs, consisting of members of the motion picture and recording industry, had argued that the conduct of the Defendants rendered them liable for copyright infringement committed by software users. The Defendants argued that they simply provided software to users over whom they had no control and therefore, they were not liable under copyright law. In deciding the case, the Court referred to the Supreme Court's 1984 decision of Sony Corp. of America v. Universal City Studios, Inc., where the movie industry sought to hold Sony liable for video cassette recorders that could be used to make illegal copies of copyrighted works. In that decision, the Court held that the sale of copying equipment did not constitute contributory infringement if the product was "capable of substantial non-infringing uses." In the present case, the Court held that there were substantial non-infringing uses for the software distributed by the Defendants. It cited examples such as distributing movie trailers, free songs, government documents and other non-copyrighted works. The Court found that while the Defendants distribute and support software, users can it for both lawful and unlawful purposes. Absent evidence of active and substantial contribution to the infringement itself, the Court held that the Defendants could not be liable. Representatives from the Recording Industry Association of America and the Motion Picture Association of America have both stated that they will appeal the decision. To view a copy of the decision, visit: http://news.findlaw.com/hdocs/docs/mgm/mgmgrokster42503ord.pdf For more information, visit: http://news.findlaw.com/ap/ht/1700/4-26-2003/20030426070012_11.html Summary by: Nick Wong