THE WIDE RESEARCH CENTER @ MICHIGAN STATE UNIVERSITY

This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

James E. Porter, PhD
Martine Courant Rife, MA, JD
The WIDE Research Center
Michigan State University

Date posted: June 28, 2005

URL for full article and discussion: http://www.wide.msu.edu/widepapers/grokster/

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WIDE PAPER #1 MGM v. Grokster: Implications for Educators and Writing Teachers

SUMMARY

Yesterday, in an apparent loss for promoters and users of peer-to-peer filesharing technologies, the US Supreme Court unanimously (9-0) overturned the Ninth Circuit Court of Appeals ruling in the case of MGM v. Grokster, a case testing whether companies running filesharing services (like Grokster and StreamCast) could be held indirectly liable for the copyright infringements of people using their software for peer-to-peer filesharing.

The Court found that Grokster and StreamCast (the licensers of the Morpheus software) were not “merely passive recipients of information about infringing use” of their software. Rather “each took active steps to encourage copyright infringement”; the companies “promoted and marketed themselves as Napster alternatives.” In other words, the companies promoted copyright infringement and sold their services on that basis. The Court found this behavior egregiously blatant, and that was the primary basis for its finding.

It is important to understand the reasons supporting the Court’s opinion. The Court did not rule against peer-to-peer technology per se. Rather the problem, as the Court saw it, was in the way that the companies marketed their filesharing software – explicitly as a way to circumvent and subvert copyright holders’ rights. This decision leaves open the possibility that other companies could develop and market P2P filesharing technologies, as long as such companies are sure to promote noninfringing uses.

The Court went to great lengths to distinguish its Grokster decision from its 1984 ruling in Sony v. Universal. Although the Court upheld its position in Sony, reinforcing that mere knowledge that a product or technology might potential be used to infringe is not a sufficient basis for indirect liability, it did broaden what constitutes “inducement” of copyright infringement, leaving some ambiguity on an important point: To what extent must distributors filter, reprimand, educate, or police copyright infringement on their sites?

What are the implications of this case for educators and writing teachers?

The recording and film industries (e.g., RIAA, MPAA) are likely to read the Court’s opinion as broadly as possible and may use it to go after another type of filesharing intermediary: the university. Clearly universities are not promoting copyright infringement by their students, as were Grokster and StreamCast – and universities could just as easily use the Court’s opinion in Grokster to defend its practices. However, the recording and film industries are likely to use the ruling as a basis for litigation holding universities responsible for copyright infringements by students – and such action could well have an unfortunate chilling effect on universities.

On a more general level, what the case implies for writing teachers is that you cannot show disregard for the rights of copyright holders. Copyright holders DO have rights, and those rights must be respected. You cannot encourage and promote copyright infringement. You cannot “turn a blind eye” to copyright infringement, even by others, if it is occurring in/across/through an electronic space that you are responsible for - that is, you have set up an electronic “intermediary space” (e.g., your class web site, your blog). At the same time, you are not responsible for infringements by others if you are acting in good faith to promote respect for copyright and if the intermediary service or server you are sponsoring clearly is intended for “substantial noninfringing purposes.”

DISCUSSION OF CASE

On June 27, 2005, the Supreme Court handed down its unanimous opinion in the Grokster case, Metro-Goldwyn-Mayer Studies Inc., et al. v Grokster, Ltd., et al. (MGM v. Grokster). The case was argued before the Court on March 29, 2005, having come up on certiorari from the 9th Circuit Court of Appeals. Before the Supreme Court was the issue of whether technology distributing companies Grokster and StreamCast were liable for the infringing uses, mainly by private (young) individuals, of their free P2P filesharing software.

The issue in this case concerned contributory/secondary/vicarious liability, because it is difficult for entities like MGM and other big media copyright holders to locate and go after private individuals who are infringing on their copyrights. In the August 19, 2004 lower court opinion (MGM v. Grokster), the 9th Circuit held in favor of Grokster, relying on the 1984 case Sony Corp. of American v. Universal City Studios, Inc (the so-called Betamax case). The 9th Circuit stated that because, unlike the scenario in A&M Records v. Napster wherein the centralized supernode provided by Napster allowed the company to have actual knowledge of infringing uses, the de-centralized configuration of Grokster et al. shielded those companies from liability (i.e., the difference between actual and constructive knowledge). The 9th Circuit granted Summary Judgment in favor of Grokster, et al., stating that no liability exists when the product distributed is capable of “substantial non-infringing uses” unless the distributor has actual knowledge of the specific instances of infringement and fails to act on that knowledge. The 9th Circuit did not focus on “intent” to cause infringement or on the marketing strategies of Grokster.

In the present case, the Supreme Court chastised the 9th Circuit, in part for a wrongful reliance on and interpretation of Sony, and remanded the case back to the lower court for reconsideration of the Summary Judgment and the award of possible damages and injunctive relief for MGM et al. (We predict that this case will eventually settle out of court). The Court stated that the previous 9th Circuit decision was erroneous. Clearly in its opinion, of import was the fact that the business model pursued by Grokster et al., was one that encouraged, or “induced,” copyright infringement. The Court noted that any reading of Sony that sees Sony as holding that a substantial non-infringing use component can shield a technology distributor from liability, is an erroneous interpretation, but instead pointed to the fact that Grokster had marketed its product specifically to former Napster customers, had failed to invent filtering tools to prevent infringement, and had an economic/advertising scheme that depended on high volume use. Thus, the Court held that one who distributes devices with the “object of promoting its use to infringe copyright . . . is liable for the resulting acts of infringement by third parties using the device, regardless of the device’s lawful uses.”

IMPLICATIONS FOR EDUCATORS AND WRITING TEACHERS

What are the implications of this case for institutions of higher education in general, for research, for rhetoric and writing, and for writing teachers?

The recording and film industries (e.g., RIAA, MPAA) will read the Court’s opinion as broadly as possible and may use it to go after another type of filesharing intermediary: the university. Clearly universities are not promoting copyright infringement by their students, as were Grokster and StreamCast. However, the recording and film industries are likely to use the ruling as a basis for litigation holding universities responsible for copyright infringements by students. Few if any universities will have the will or resources to fight such litigation – and so the result of Grokster, unfortunately, could be a chilling effect: Universities might crack down on students’ (and teachers’) filesharing practices.

In our view, this would be an unfortunate reaction. The Court’s decision in Grokster could just as easily be used to argue to support the university, because universities are not marketing their services as those intended to avert copyright laws. University servers are clearly intended for substantial noninfringing uses, and most universities actively promote responsible use of copyrighted materials. However, universities fearing litigation may react by clamping down even more on student filesharing — and that is the kind of chilling effect that worries us about this case. (It worried Justice Breyer as well, in his concurring opinion.)

What the case does tell us - on a more general level - is that you cannot show wanton disregard for the rights of copyright holders. Copyright holders DO have rights, and those rights must be respected. You cannot encourage and promote copyright infringement. You cannot “turn a blind eye” to copyright infringement, even by others, if it is occurring in/across/through an electronic space that you are responsible for - that is, you have set up an electronic “intermediary space” (e.g., you are maintaining the server; you are sponsoring the blog; you are running the course web site; you are marketing P2P software; you are teaching your students document design, designs which may include the addition of potentially infringing materials; you are requiring students to create web pages as part of class work). At the same time, you are not responsible for infringement by others if you are acting in good faith to promote respect for copyright and if the intermediary service you are providing is not intended for copyright infringement. In short, as long as your intentions are honest and your behaviors ethical, you do not need to be fearful of this decision.

However, as far as current bountiful conversations about the need to change the US copyright regime, this opinion validates current copyright law as a continuing legitimate protection of content. While Lawrence Lessig may wish for an opt-in regime as the ultimate way to go for US copyright law, we are still in an opt out regime. (An opt-out regime means that we all automatically receive copyright protection on any fixed work unless we opt out by adopting some kind of license, or by donating our work to the public domain. An opt-in system imagines that copyright protection only comes to those who register their work). It is our view that the entities that are working towards upholding access and sharing of information, such as EFF (Electronic Frontier Foundation) and Creative Commons, are now more important than ever. In fact, within 24 hours of the Supreme Court opinion, EFF sent out an email on its mailing list asking for support: “There is no question that there will be a flood of litigation as a result of this decision, as well as congressional hearings. EFF must be there to represent the rights of innovators and consumers in the fights to come. Now, more than ever, we need your support to continue to protect innovation and new technologies in cyberspace.”

Since the case validated a strong view of copyright, not only do we need to continue to support entities such as EFF which are working towards protecting access to information, we need to be sure to continue to educate ourselves, our students, our business partners, and our communities about how they can control the information streams they create, for example by providing easily accessible, clearly written use policies, or by selecting Creative Commons licensing to apply to their own digital work. Creative Commons share-alike licenses could be one significant way to increase access and sharing because the relatively unhindered use of our work becomes dependent on others making the use of their work unhindered.

ISSUES FOR FURTHER DISCUSSION

There are several other issues that we’d like to see addressed as the Grokster opinion spins out. First, What is the current status of Fair Use for educators and researchers? While the Grokster opinion, delivered by Justice Souter, didn’t directly address Fair Use, it did narrow the potential holding of Sony, and Sony validated Fair Use, stating, ““[a]ny individual may reproduce a copyrighted work for a ‘fair use’; the copyright owner does not possess the exclusive right to such a use.” In the Grokster case, the concurring opinions of Breyer, Stevens, and O’Connor, and Ginsberg, Rehnquist, and Kennedy, mention Fair Use in passing as at least a consideration in evaluating whether or not a use is infringing. However, Souter’s opinion makes no mention of Fair Use. This could be viewed as an erasure or erosion of the importance of Fair Use. Educators need to pay attention to this development.

We are also concerned about the general tenor of the case, and the way the Court construed the issues before it. For example, the Supreme Court justices write that the tension in the case is about balancing the values of supporting creative pursuits through copyright protection and promoting innovation in new communication technologies by limiting the incidence of liability for copyright infringement. The Court sees the issue as balancing the interests of “artistic protection” and “technological innovation.” But we are concerned with this interpretation, because it is quite apparent that the “artistic protection” the Court speaks of has little to do with protecting artists, and everything to do with protecting the interests of big media/big business. After all, in the end, the Court places the burden of “filtering” and preventing infringing uses on the technology distributors, not on those who could best bear the costs, i.e., big media.

We are also concerned with a Court that characterizes the conflict before it as one that illustrates how, potentially, “Digital Distribution of copyrighted material threatens copyright holders as never before, because every copy is identical to the original, copying is easy and many (especially the young) people use file sharing software to download copyrighted works.” It concerns us that the Court characterizes the distribution of information as threatening, when it is our view that the withholding of information is the key way control is exercised over individuals and populations. However, importantly, the Court notes that because of the import and breadth of this tension, the public may be drawn “directly” into the discussion of copyright policy. We very much favor greater public participation in the copyright debate.

A last issue that might be addressed within our scholarly community is, What are the cultural and international implications of this? Does the world care about the Grokster decision, and should it? Will international companies arise to take the place of Grokster, knowing they can possibly avert liability under US law? And, if filesharing of copyrighted material through free P2P software becomes “outlawed,” what kind of commercial interests will take its place? For example, per a June 27 interview on “Talk of the Nation,” Wayne Rosso, former president of Grokster, and current CEO of Mashboxx.com (http://www.mashboxx.com/), is overjoyed about the Grokster opinion because Mashboxx.com has a new P2P application ready for release that Rosso claims allows users to legally and “freely” sample music which they can then eventually purchase. However, he says, only copyright holders who register with Mashboxx receive Mashboxx’s protection.

FINAL THOUGHTS

Does this case mean that people will stop file sharing? Justice Breyer’s concurring opinion was particularly worried about “the chilling effect” on the development of P2P technologies – and his concurrence worked hard to deflect some of the possible implications of the main decision. Unfortunately, he only got two other justices to sign on with him (O’Connor, Stevens). Breyer does not want the ruling to discourage entrepreneurs wishing to “bring valuable new technologies to market.” He's worried about the Grokster ruling working against Sony and creating an “additional chill of technological development” and notes that “the record reveals a significant future market for noninfringing uses of Grokster-type peer-to-peer software.” It is these future markets that we as educators and researcher should work to protect.

RELEVANT SOURCES

A&M Records v. Napster, 239 F.3d 1004 (9th Cir. 2001). http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=9th&navby=case&no=0016401&exact=1

EFF listserv email. 27 June 2005.

EFF Resources on P2P File Sharing http://www.eff.org/IP/P2P/

EFF Summary of MGM v Grokster http://www.eff.org/IP/P2P/MGM_v_Grokster/

EFF Summary of Sony v. Universal Studies (aka, the Betamax case) Sony Corp. of America v. Universal City Studios, 464 U.S. 417 (1984) http://www.eff.org/legal/cases/betamax/

Foster, Andrea. (2005, June 28). Campus officials disagree on how the Supreme Court's filesharing decision will affect colleges. The Chronicle of Higher Education. http://chronicle.com/prm/daily/2005/06/2005062801t.htm

IAAL: What Peer-to-Peer Developers Need to Know about Copyright Law by Fred von Lohmann http://www.eff.org/IP/P2P/?f=p2p_copyright_wp_v4.html - an excellent over of all the relevant P2P cases leading up to MGM v. Grokster

MGM v. Grokster, 545 U.S.______(2005). http://www.eff.org/IP/P2P/MGM_v_Grokster/04-480.pdf

MGM v. Grokster, 380 F.3d 1154 (9th Cir. 2004). http://news.findlaw.com/hdocs/docs/mgm/mgmgrkstr81904opn.pdf

Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417 (1984). http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=us&vol=464&invol=417

Supreme Court Oral Transcript. (2005, March 29). MGM v. Grokster. http://www.supremecourtus.gov/oral_arguments/argument_transcripts/04-480.pdf

Talk of the Nation. (2005, June 27). “Supreme Court Rules Against Grokster.” Legal Affairs. http://www.npr.org/templates/story/story.php?storyId=4720206

von Lohmann, Fred (2005, June 27). Supreme Court sows uncertainty. Electronic Frontier Foundation. - a summary of the chief legal issues in the case