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The United States Supreme Court, in a unanimous ruling, disagreed with two lower court rulings. Today’s opinion agrees with the MPAA and RIAA contention that P2P developers are responsible for the infringing activities of its users. The decision is a serious setback for commercial file-sharing companies, who were hoping a favorable Supreme Court decision would give the necessary leverage to negotiate a distribution agreement with the RIAA and MPAA.
The unanimous decision sends the case back to lower court, which had ruled in favor of file-sharing services Grokster Ltd. and StreamCast Networks Inc. on the grounds that the companies couldn't be sued. The justices said there was enough evidence of unlawful intent for the case to go to trial.File-sharing services shouldn't get a free pass on bad behavior, justices said."We hold that one who distributes a device with the object of promoting its use to infringe copyright, as shown by the clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties," Justice David H. Souter wrote for the court.
"We hold that one who distributes a device with the object of promoting its use to infringe copyright ... is liable for the resulting acts of infringement by third parties," Justice David Souter wrote for the court.
In fact, our Kazaa web site and its End User License Agreement (EULA) have always contained explicit direction to users to respect their national copyright laws. And, from day one, Sharman's alliance with Altnet offered copyright owners a means by which licensed and protected copyrighted content could be distributed in a lawful and compensated manner, yet major content owners engaged in a coordinated boycott of that opportunity that we have asserted was in violation of U.S. antitrust laws. We believe that further legal review of this case will also show that Sharman was diligent and aggressive in its lawful efforts to distribute copyrighted music and movies through peer-to-peer distribution, and was thwarted in its efforts to do so by the music and motion picture industries. Content providers were repeatedly asked to license their content and they repeatedly refused. By concertedly refusing to license their movies and music to Sharman and Altnet, the music and movie industries have deprived consumers of the broadest product choices at the least possible cost. Sharman looks forward to proving both that it did not violate the United States copyright laws and that the music and movie industries in fact have violated the United States antitrust laws."
As the commercial systems are shut down, it is likely that users will migrate to open source P2P projects. Indeed, a switch to various open source programs, such as BitTorrent, is already well under way. If Hollywood desires to continue to stem the tide by taking action against certain programs, they will have no choice but to go after the most popular open source projects.
By sidestepping, and thereby preserving, its decision in Betamax and, at the same time invoking a conduct-based standard of contributory copyright infringement liability, the court deftly served the interests of both software and technology developers and copyright content owners, though neither may be entirely satisfied with the end result.
