Digital Rights Network

On the 27th of June 2005, the Supreme Court overruled the US District Court for the Central District of California and the US Court of Appeals for the Ninth Circuit by unanimously declaring that Grokster Ltd was liable for copyright infringement perpetrated by users of its software.

Grokster had argued that it was not liable according to the precedent established by the Sony vs Universal Studios case in 1984: the so-called Sony safe-harbour principle. According to this principle, a device manufacturer is not liable for copyright infringement accomplished by the use of its device as long as the device is also "capable of substantial non-infringing uses." The arguments put before the Supreme Court in the MGM vs Grokster case largely revolved around the meaning of the word "substantial" in that phrase.

Although the court produced a unanimous verdict against Grokster, none of the actual opinions produced made definite statements about liability in such matters. The deciding factor seemed to be that Grokster had actively encouraged copyright infringement. Three judges implied that Grokster would have been liable even if it had not deliberately induced illegal activity but the others did not.

There is disagreement over the possible implications of this verdict for file-sharing software developers. Some say that as long as the developers do not openly encourage illegal uses of their software then they will be protected by Sony safe-harbour. Others say that this verdict has given judges in future cases the ability to declare "inducement" at will and find against file-sharers. The actual opinion of the Supreme Court is too vague to definitely support either opinion.

For more details, see the EFF's page about the case.