Victory for File-Sharing

MGM v. Grokster, now known as the Grokster case, was decided by the United States Supreme Court on June 27th, 2005. The ruling was in favor of MGM where the court found Grokster liable for contributory infringement by third parties who use Grokster’s software for file-sharing. The main defense for Grokster was the Sony case of 1984.

Sony Corp. v. Universal City Studios, Inc. was a huge stepping stone for copyright infringement activities. The United States Supreme Court ruled in favor of Sony Corp. having found Sony not liable for the infringements made by third parties using Sony’s product. The product in question was the Betamax which allowed home audiences of television broadcasts to record any broadcast. The argument made was that this type of recording of a broadcast was an infringement of the copyright held for television shows and/or movies.

The court viewed Sony’s product as allowing home audiences to do two things: 1) “time-shifting” and 2) “building a library.” Time-shifting allowed people the convenience to videotape a broadcast and view it at a better time, because it would have otherwise been missed. This time-shifting theory was said to be in “fair use” in accordance with the Copyright Act of 1976. However, many people used videotaping to build up a library of television shows and movies which would be saved up for a long term; whereas time-shifting was a short term activity where each videotape would most likely be erased when it would be recorded over. There is no “fair use” in videotaping for the purpose of creating and storing a library of copyrighted materials.

Although these infringements had occurred the purpose of the Sony case was to see if Sony was liable for contributory infringement. The Copyright Act of 1976 does not expressly render anyone liable for infringement committed by another; however, the Patent Act expressly brands anyone who “actively induces infringement of a patent” as an infringer, and further imposes liability on certain individuals labeled “contributory” infringers. The Patent Act applies to the Betamax since it was used to infringe upon a copyright then Sony would be liable as a contributory infringer.

Due to the Patent Act, the Betamax had to be “capable of commercially significant noninfringing uses.” By the evidence provided in the case the court found:

Even if it were deemed that home-use recording of copyright material

constituted infringement, the Betamax could still legally be used to

record noncopyrighted material or material whose owners consented

to the copying. An injunction would deprive the public of the ability

to use the Betamax for this noninfringing off-the-air recording.

480 F. Supp., at 468.

Because of this, the Court did find that time-shifting is a fair use. Since time-shifting was the primary use of VTR’s (Betamax), this would settle Sony’s issue of liability under almost any definition of contributory infringement. In the end, Sony was not found liable because the Betamax was capable of commercially significant noninfringing uses.

As the Sony case ruling was the main defense for the Grokster case, it did apply differently. Grokster had software which allowed end-users to share files in a peer-to-peer (P2P) network; it was not a patented product like Sony’s Betamax. Grokster followed the same steps as the Sony case trying to show that its software was capable of noninfringing uses, but the downside to their argument was the advertisement and promotion of piracy. The Betamax defense would have worked except that the conduct of encouraging piracy showed an inducement for users