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13D accessory to infringement

Where to Look in the Law

1909 Act: Not explicitly discussed
1947 Act: Not explicitly discussed
1976 Act: §506 as revised April 27, 2005, broadened the scope of infringement done “willfully” to make it criminal even when not done “for… private financial gain”

What the Supreme Court Ruled


Metro-Goldwyn-Mayer Studios Inc, et al. [includes numerous other movie studios and recording companies*] vs Grokster, Ltd. and StreamCast Networks, Inc.

545 U.S. 913 (6-27-2005) ¤ appealed from the USCA 9th Cir.

“Respondent companies distribute free software that allows computer users to share electronic files through peer-to-peer networks, so called because the computers communicate directly with each other, not through central servers.  Although such networks can be used to share any type of digital file, recipients of respondents’ software have mostly used them to share copyrighted music and video files without authorization. Seeking damages and an injunction, a group of movie studios and other copyright holders (hereinafter MGM) sued respondents for their users’ copyright infringements, alleging that respondents knowingly and intentionally distributed their software to enable users to infringe copyrighted works in violation of the Copyright Act.

“Discovery revealed that billions of files are shared across peer-to-peer networks each month.  Respondents are aware that users employ their software primarily to download copyrighted files, although the decentralized networks do not reveal which files are copied, and when.  Respondents have sometimes learned about the infringement directly when users have e-mailed questions regarding copyrighted works, and respondents have replied with guidance.  Respondents are not merely passive recipients of information about infringement. The record is replete with evidence that when they began to distribute their free software, each of them clearly voiced the objective that recipients use the software to download copyrighted works and took active steps to encourage infringement.  After the notorious file-sharing service, Napster, was sued by copyright holders for facilitating copyright infringement, both respondents promoted and marketed themselves as Napster alternatives.  They receive no revenue from users, but, instead, generate income by selling advertising space, then streaming the advertising to their users.  As the number of users increases, advertising opportunities are worth more.  There is no evidence that either respondent made an effort to filter copyrighted material from users’ downloads or otherwise to impede the sharing of copyrighted files.”

The appeals court held that Grokster “did not materially contribute to their users’ infringement because the users themselves searched for, retrieved, and stored the infringing files, with no involvement by respondents beyond providing the software in the first place.  Finally, the court held that respondents could not be held liable under a vicarious infringement theory because they did not monitor or control the software’s use, had no agreed-upon right or current ability to supervise its use, and had no independent duty to police infringement.”  (Quotations from the summary provided by the Supreme Court)

The Supreme Court ruled that “one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.”  (“Third parties,” in this case, are the users who download copyrighted works without payment, neither by themselves nor by the service providing the connectivity.)

The Court noted that Grokster might have developed filtering software to rid itself of (or lessen) copyrighted files but did not.  The Court noted that Grokster marketed itself as an alternative to Napster once Napster was shut down.  Nonetheless, the first sentence of the verdict referred to the defendant as “the distributor of a product capable of both lawful and unlawful use.”

Two of the justices issued supplementary remarks, each of these two being joined by two additional justices (not the same two justices on each of the two supplements).  The additional remarks indicate that the justices were looking ahead at how peer-to-peer (P2P) networking would reshape aspects of the distribution of copyright-eligible works:

“Such legitimate noninfringing uses are coming to include the swapping of: research information (the initial purpose of many peer-to-peer networks); public domain films (e.g., those owned by the Prelinger Archive); historical recordings and digital educational materials (e.g., those stored on the Internet Archive); digital photos (OurPictures, for example, is starting a P2P photo-swapping service); ‘shareware’ and ‘freeware’ (e.g., Linux and certain Windows software); secure licensed music and movie files (Intent MediaWorks, for example, protects licensed content sent across P2P networks); news broadcasts past and present (the BBC Creative Archive lets users ‘rip, mix and share the BBC’); user-created audio and video files (including ‘podcasts’ that may be distributed through P2P software); and all manner of free ‘open content’ works collected by Creative Commons (one can search for Creative Commons material on StreamCast)… .

“As Sony [meaning: the verdict in the Sony ‘Betamax’ case] itself makes clear, the producer of a technology which permits unlawful copying does not himself engage in unlawful copying—a fact that makes the attachment of copyright liability to the creation, production, or distribution of the technology an exceptional thing.”  (Justice Breyer writing on a side issue, joined by justices Stevens and O’Connor)

EXTERNAL LINKS: Listen to the arguments made before the Supreme Court, including answers from the lawyers to questions posed by the justices: one hour in MP3.   The host of this audio also has a page on the case.  Host offer recordings of the arguments before the Supreme Court on numerous cases from recent years.

* Petitioners were: Metro-Goldwyn-Mayer Studios Inc.; Columbia Pictures Industries, Inc.; Disney Enterprises, Inc.; Warner Bros. Entertainment Inc. (as successor-in-interest to the Filmed Entertainment Division of Time Warner Entertainment Company, L.P.); New Line Cinema Corporation; Paramount Pictures Corporation; Twentieth Century Fox Film Corporation; Universal City Studios LLLP (formerly known as Universal City Studios, Inc.); Arista Records, Inc.; Atlantic Recording Corporation; Rhino Entertainment Company; Bad Boy Records; Capitol Records, Inc.; Elektra Entertainment Group Inc.; Hollywood Records, Inc.; Interscope Records; LaFace Records, Inc.; London-Sire Records Inc.; Motown Record Company, L.P.; The RCA Records Label, a unit of BMG Music doing business as BMG Entertainment; Sony Music Entertainment Inc.; UMG Recordings, Inc.; Virgin Records America, Inc.; Walt Disney Records; Warner Bros. Records Inc.; WEA International Inc.; Warner Music Latina Inc.; Zomba Recording Corporation; Jerry Leiber, individually and doing business as Jerry Leiber Music; Mike Stoller, individually and doing business as Mike Stoller Music; Peer International Corporation; Songs of Peer, Limited; Peermusic, Limited; Criterion Music Corporation; Famous Music Corporation; Bruin Music Company; Ensign Music Corporation; Let’s Talk Shop, Inc. doing business as Beau-Di-O-Do Music.
    The following relationships among these companies is established in the court documents.  TIME WARNER INC. is parent to: New Line Cinema Corporation; Warner Bros. Entertainment Inc. (as successor-in-interest to the Filmed Entertainment Division of Time Warner Entertainment Company, L.P.).  SONY CORPORATION AND BERTELSMANN are joint parents to: LaFace Records, LLC; Arista Records, LLC; The RCA Records Label; Sony BMG Music Entertainment.  SONY on its own is parent to: Columbia Pictures Industries, Inc.  WALT DISNEY COMPANY is parent to: Disney Enterprises; Hollywood Records; Walt Disney Records.  VIACOM is parent to: Paramount Pictures Corporation.  WMG is parent to: Atlantic Recording; Rhino Entertainment Company; Elektra Entertainment Group Inc.; London-Sire Records Inc.; Warner Bros. Records Inc.; WEA International Inc.  VIVENDI UNIVERSAL S.A. is parent to: Interscope Records; Motown Record Company, L.P.; and is also co-owner (with General Electric Company) of: Universal Studios LLLP.




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