INTRODUCTION
Peer-to-peer filing networks (P2P) enable users to directly share or exchange files through software. During the 1990s and 2000s, it became easier for people to copy and distribute certain files, such as movies and music, online. This ability produced the potential for users to engage in copyright infringement.[i] A person can infringe on copyright when “a copyrighted work is reproduced, distributed, performed, publicly displayed, or made into a derivative work without the permission of the copyright owner.”[ii] In MGM Studios v. Grokster, Ltd., media companies asked the courts to hold Grokster and Streamcast (P2P software companies) liable for the copyright infringement that occurred through their software and for their encouragement of infringing behaviors. This wasn’t the first time that the U.S. Supreme Court saw complaints about a technology that had the potential to promote copyright infringement.
THE BETAMAX DECISION
In Sony Corp. of Am. v. Universal City Studios, Inc. (the “Betamax decision”), the studios requested that Sony be held liable for the copyright infringement that their product, the “Betamax” home video tape recorder, enabled.[iii] In their decision, the Supreme Court held that Sony was not responsible for the copyright infringement that Betamax users were engaging in. The reason for this was mainly because the Betamax was being widely used for alternative purposes. It was not intended for, nor did Sony promote the use of the device for, infringement.[iv] Essentially Sony as the manufacturers of the product were not the violators of copyright, “the sale of copying equipment…does not constitute contributory infringement…it need merely be capable of substantial noninfringing uses.”[v] The precedent set by the Sony case, including the coining of the term contributory infringement, strongly impacted the opinions presented in the MGM case. Initially in MGM Studios v. Grokster, Ltd., the Central District Court of California and the Ninth Circuit Court of Appeals ruled in favor of the defendants by utilizing the precedent set by the Betamax case. Later, MGM was able to appeal to the Supreme Court and was ultimately favored by the majority.[vi]
THE GROKSTER DECISION
In June 2005, the U.S. Supreme Court’s decision in Grokster “created a new theory of secondary copyright liability.”[vii] In the Court’s words as written by Justice Souter, “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.”[viii] MGM was able to prove that these software companies encouraged their users to infringe on copyrighted materials. For example, evidence from MGM’s brief provided that “Grokster sent users a newsletter promoting its ability to provide particular, popular copyrighted materials.”[ix] Proof of actions like this allowed the court to conclude that these companies had clearly shown their knowledge of copyright protected material on their platform and that they encouraged users to share or consume it. With the conclusion of this case, the courts seem to have intended to “provide greater protection for copyright holders.”[x] Although it was significant to their justification, it is important to note that the Court ruled differently than in the Sony case because they found the intent of Grokster to “cause the infringement.”[xi]
MGM’S PROPONENTS AND OPPONENTS
Multiple amicus curiae briefs were written in favor of and against MGM’s complaint. Music, film, and property rights associations and companies were proponents of MGM. It became apparent in briefs, such as with Napster’s, that they would benefit financially from the end of easy copyright infringement through the P2P software. Napster’s brief appealed to the Supreme Court stating, “The Ninth Circuit’s Grokster decision…threatens the existence of a nascent industry seeking to provide consumers with new options for the acquisition of music and film without violating the law.”[xii] The United States was a proponent of MGM as well, reasoning that “meaningful and effective protection of intellectual property” was important to support since it “represents a significant portion of the Nation’s economy and exports.”[xiii]
In terms of MGM’s opponents, technology companies argued that a legal rule would restrict innovation while professors of different disciplines argued the benefits of P2P technology in higher education. In Intel’s amicus brief to the court, they determine that imposing this rule of not promoting copyright through products “would result in timidity in innovation and would not serve the copyright law’s purpose of encouraging innovation for the benefit of the public and U.S. economy.”[xiv]
IMPLEMENTATION AND ENFORCEMENT OF THE INDUCEMENT RULE TEST
In the Grokster decision, the Supreme Court redefined contributory infringement and implemented the “inducement rule test.” The majority opinion of the Court made clear that contributory infringement could be defined as, “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.”[xv] This is what made companies like Grokster liable for the infringement that their users committed. In addition to this definition, the court established standards to measure if a party is committing contributory infringement. Three factors are significant to the “inducement rule test” which include: “the defendants’ efforts to satisfy a known market for copyright infringement, their failure to develop filtering mechanisms or other means for reducing infringement, and their choice of a business model that benefitted substantially from infringement.”[xvi]
Cases of contributory infringement, especially, demonstrate the argument that the federal government leaves enforcement in the hands of the copyright holders themselves.[xvii] Although the inducement rule test can and has been used by courts to enforce the precedent set by Grokster, this rule is enforced only when a party chooses to litigate.[xviii] The U.S. Copyright Office explicitly states that they are “not charged with enforcing the law it administers,” but still details the requirements to pursue a legal dispute if someone believes their copyright has been infringed.[xix] Essentially, if a party has registered a copyrighted work prior to the infringement and can provide a certificate for it, they may be entitled to compensation for both damages and litigation fees.
However, at that point, the discretion is completely held in the courts’ hands. Although the inducement rule test may make it easy for a judge to identify the nonexistence of a technology to prevent infringement, a “defendants’ efforts” may not be as easily determined. Due to this sort of broad language in the test, it is not expected that the courts are able to produce similar results from cases with like circumstances. Aside from this issue, the inducement rule has been enforced by the courts in that it has been cited and used as precedent for various cases.
DECISIONS THAT AFFECT IMPLEMENTATION
An example of a significant case that utilized Grokster’s inducement rule test in a court’s decision is Columbia Pictures Industries, Inc. v. Fung.[xx] In Columbia v. Fung, the U.S. Court of Appeals for the Ninth Circuit determined that Gary Fung, the owner of torrent websites such as isoHunt, could be held liable for contributory copyright infringement.[xxi] Though Fung had not directly engaged in the act of “infringement,” he was held responsible for those using his websites to engage in infringing behaviors. The opinion clarified this logic when citing Grokster stating that since “it may be impossible to enforce rights in the protected work effectively against all direct infringers, the only practical alternative” would be to hold “the distributor of the copying device” liable.[xxii] There have been varying arguments about the results of the case.
Most important, some have argued that the court’s reasons for deciding that Fung met the requirements of the inducement rule test are problematic or weak.[xxiii] Hence, in this ruling, it can be argued that the court expanded its power beyond Grokster’s intention. For instance, in the opinion, the court seemingly ignored parts of the test and directly stated that they thought “Columbia’s interpretation of Grokster III [was] the better one.”[xxiv] Although, the inducement test calls for review of specific factors mentioned before, the court reasoned that showing evidence for the first and third factors (the product allows for infringement and infringing behavior is present) proved the fourth automatically (infringement caused by the product).[xxv] This reasoning faced backlash in that it essentially eliminated the need to investigate whether or not the fourth factor could be proved. In this way, Columbia v. Fung exemplified how the Grokster decision was interpreted very loosely when being implemented.
PATTERN OF ENFORCEMENT
Since the Grokster decision is enforced only through litigation by a copyright holder, it can be argued that enforcement is selective. First, some argue that copyright holders might maintain an upper-hand against technology companies.[xxvi] In reality, different cases where a copyright holder brings another company to court with Grokster’s inducement rule as a basis for their argument, do not tend to have predetermined outcomes.[xxvii] In some instances, copyright holders win and in others they lose.[xxviii] To reiterate, the rule created by Grokster is enforced at the courts discretion. However, it is imperative to acknowledge how other major players enforce the rule.
The inducement rule would not be as relevant if it were not for the copyright holders that bring their cases to court, since the rule hones in on contributory infringement and not direct infringement. Copyright holders are selective in their decision to litigate. The high cost and risks of litigation are the ultimate barriers in whether or a party chooses to bring their case to court. Thus, big companies (such as those involved in the Grokster case) with the resources available to lose would likely be able to litigate as opposed to for example, an individual artist. Dan Glickman, former Motion Picture Association of America president, expressed his reasons for pursuing disputes, “You at least send a strong signal that this conduct is illegal and it will not be tolerated and it will be punished.”[xxix] The diverse range of sentiments in terms of how copyright infringement can be addressed is apparent. When litigants use the Grokster rule to fight against contributory infringement, however, some may argue that it is not as effective for them as the Court may have intended it to be.
EVALUATION OF EFFECTIVENESS
Overall, Grokster’s inducement rule has been helpful in that it has provided the courts a test for contributory infringement. Despite the creation of this precedent, which intends consistency when determining liability, the rule has yet to prove that it can tangibly deter copyright infringement. It is true that many peer-to-peer file sharing services were closed as an immediate result of this case.[xxx] On the other hand, many new technologies that enable infringement have been created since 2005 (e.g., iPod), and they have not been scrutinized in the way that technologies, like P2Ps, in the past have been.[xxxi]
It is argued that when Grokster is utilized in a case, “It looks like a subjective standard, with a heightened standard of proof. You can prove it indirectly.”[xxxii] In essence, today Grokster has not been effective in that its vagueness deters or rarifies litigant’s use of it in court. The inducement rule could potentially be applied to many technologies today that might hold companies, such as streaming sites, liable. Nonetheless, it is difficult to use this rule because the copyright holder is uncertain that they will win and litigation costs are high.[xxxiii]
IDEAS FOR REFORM
One suggestion to avoid future contributory copyright infringement is to make it cheaper to integrate recognition software to detect infringed materials into technologies.[xxxiv] In another way, Furchtgott-Roth, director of the Center for Economics of the Internet, argues that there is no direct solution to solving this issue today. Rather, the federal government should consider how it enforces federal copyright laws and question the differences in their adherence; the current asymmetry is “not efficient.”[xxxv] From a different perspective, some technologies like YouTube, are already implementing ways to mediate copyright infringement conflicts. Their Content ID system allows copyright holders to make a claim for YouTube to take down videos that contain protected materials.[xxxvi] This seems to be in everyone’s best interest so that YouTube, industry players and content creators (their economic stakeholders) remain satisfied.[xxxvii]
Overall, the Grokster decision has shown that the law on the books can be updated, however, it does not necessarily contribute to a clear change to the law in action.
Notes
[i]. Galen Hancock. “Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd.: Inducing Infringement and Secondary Copyright Liability,” Berkeley Technology Law Journal 21, no. 1 (2006): 189-212, https://www.jstor.org/stable/24119545.
[ii]. “Definitions,” U.S. Copyright Office, accessed December 3, 2018, https://www.copyright.gov/help/faq/faq-definitions.html.
[iii]. Carol Robertson, “The Pirates of the Internet: Metro-Goldwyn-Mayer Studios v. Grokster, Ltd.” American Bar Association, https://www.americanbar.org/groups/young_lawyers/publications/tyl/topics/poplaw/pirates-internet-metro-goldwyn-mayer-studios-v-grokster.html.
[iv]. “Sony Corporation of America v. Universal City Studios, Inc.,” Oyez, accessed September 26, 2018, https://www.oyez.org/cases/1982/81-1687.
[v]. Sony Corp. of Am. v. Universal City Studios, Inc. (1984) 464 U.S. 417, 442 [104 S.Ct. 774, 789, 78 L.Ed.2d 574, 592].
[vi]. Robertson, “The Pirates.”
[vii]. Hancock, “Metro-Goldwyn Mayer,” 196.
[viii]. MGM Studios Inc. v. Grokster, Ltd. (2005) 545 U.S. 913, 919 [125 S.Ct. 2764, 2770, 162 L.Ed.2d 781, 790].
[ix]. MGM Studios Inc. v. Grokster, Ltd. (2005) 545 U.S. 913, 926 [125 S.Ct. 2764, 2774, 162 L.Ed.2d 781, 794].
[x]. Robertson, “The Pirates.”
[xi]. Robertson, “The Pirates.”
[xii]. Brief of Amici Curiae Napster, LLC, Musicnet, Inc., Cinemanow, Inc. Sea Blue Media LLC d/b/a Cdigix, Movielink, LLC, Tennessee Pacific Group, LLC d/b/a Pass Along Networks, WURLD Media, Inc., and Virtual Music Stores Ltd. In Support of Petitioners, Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., No. 04-480 (9th Cir, 2004).
[xiii]. Brief for the United States as Amicus Curiae Supporting Petitioners, Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., No. 04-480 (9th Cir, January 2005).
[xiv]. Brief for Intel Corporation as Amicus Curiae Supporting Affirmance, Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., No. 04-480 (9th Cir, March 1, 2005).
[xv]. MGM Studios Inc. v. Grokster, Ltd., 919.
[xvi]. Hancock, “Metro-Goldwyn Mayer,” 203-204.
[xvii]. Furchtgott-Roth, “The Asymmetric.” As opposed to other laws and their enforcement agencies like consumer protection and the Federal Trade Commission’s enforcement.
[xviii]. Harold Furchtgott-Roth. “The Asymmetric Enforcement of Federal Copyright Laws,” Hudson Institute, May 19, 2014. https://www.hudson.org/research/10301-the-asymmetric-enforcement-of-federal-copyright-laws.
[xix]. “Stopping Copyright Infringement,” U.S. Copyright Office, accessed December 3, 2018, https://www.copyright.gov/help/faq/faq-infringement.html.
[xx]. Columbia Pictures Industries, Inc. v. Gary Fung, 710 F. 3d 1020 (9th Cir. 2013).
[xxi]. Columbia Pictures Industries, Inc. v. Gary Fung, 1025.
[xxii]. Columbia Pictures Industries, Inc. v. Gary Fung, 1033.
[xxiii]. Mike Masnick, “IsoHunt Still Guilty Of Contributory Infringement,” Techdirt (blog), March 21, 2013 (12:23 p.m.), https://www.techdirt.com/articles/20130321/12104822407/
isohunt-still-guilty-contributory-infringement.shtml; Furchtgott-Roth, “The Asymmetric.”
[xxiv]. Columbia Pictures Industries, Inc. v. Gary Fung, 1037.
[xxv]. Masnick. “IsoHunt Still Guilty.”
[xxvi]. Tom Zeller Jr. “Sharing Culture Likely to Pause but Not Wither,” The New York Times, June 28, 2005. https://www.nytimes.com/2005/06/28/technology/sharing-culture-likely-to-pause-but-not-wither.html.
[xxvii]. A “copyright holder” is usually a company, artist, or something alike whereas “another company” is usually a website, file sharing software, or technology company.
[xxviii]. Furchtgott-Roth, “The Asymmetric.”; For examples of cases with different outcomes see: Universal Commun. Sys. v. Lycos, Inc., 478 F.3d 413, 420 (1st Cir. 2007); Top of Form
Sarvis v. Polyvore, Inc., No. 12-12233-LTS, 2015 U.S. Dist. LEXIS 39448, at *1 (D. Mass. Mar. 2, 2015).Bottom of Form
[xxix]. Renay San Miguel. “The Problem with File Sharing,” MIT Technology Review, February 15, 2006, https://www.technologyreview.com/s/405316/the-problem-with-file-sharing/.
[xxx]. Pamela Samuelson. “Three Reactions to MGM V. GROKSTER,” Michigan Telecommunications and Technology Law Review 13, no.1 (2006): 18, accessed October 29, 2018, http://www.mttlr.org/wp-content/journal/volthirteen/samuelson.pdf.
[xxxi]. Linda Greenhouse, “Lively Debate as Justices Address File Sharing,” The New York Times, March 30, 2005. https://www.nytimes.com/2005/03/30/technology/lively-debate-as-justices-address-file-sharing.html.
[xxxii]. Rick Sanders, “You’re No Fung Anymore: There Really is Such Thing as Red Flag Knowledge in Copyright Law,” The IP Breakdown (blog), March 28, 2013, https://ipbreakdown.com/blog/youre-no-fung-anymore-there-really-is-such-thing-as-red-flag-knowledge-in-copyright-law/.
[xxxiii]. Furchtgott-Roth, “The Asymmetric.” Points to the idea that “It is not just small companies that avoid litigation; the cost-benefit analysis for copyright litigation rarely leads to litigation.”
[xxxiv]. Pamela Samuelson. “Three Reactions,” 11.
[xxxv]. Furchtgott-Roth, “The Asymmetric.”
[xxxvi]. Josh Jackson, Ph.D. (UC Berkeley Media Studies Lecturer), interview by Alexa Gil, November 1, 2018, transcript available for reference. See: “What is a Content ID claim?,” YouTube Help, accessed November 1, 2018. https://support.google.com/youtube/answer/6013276?hl=en.
[xxxvii]. Josh Jackson, interview.
foundations of law and society 