Grokster Wins One for the ISPs

Grokster wins one for the ISPs. The current version of Grokster does not "contributorily infringe"! so said the US District Court for the Central District of California in Metro-Goldwyn v. Grokster (April 25, 2003).

Generally, contributory copyright infringement requires one to demonstrate that an entity-s end-users are themselves engaged in direct copyright infringement (valid copyright plus access plus substantial similarity to the protected work ). The target of a suit for contributory infringement must be shown to have "knowledge of the infringing activity" or "that they induced, caused or materially contributed to the infringing conduct of another."

While individuals are not off the hook, this decision gives ISPs and content providers a clearer road map to stay out of harms way. Individuals must still pause before late night downloads. Verizon and the RIAA have not given up on their subpoenas of individual infringers. (See In Re: Verizon) In fact, the court in Grockster found that some end-users (aka individuals) could be direct infringers.

Content providers and ISPs however can breath a bit easier -- they can only be held to contributorily infringe if whether actual knowledge of specific infringement accrues at a time "when either Defendant materially contributes to the alleged infringement, and can therefore do something about it." Peer-to-peer providers should study this decision as a road map to avoid or limit liability.

Content owners beware! Because of Grokster, it will be harder to nail down the modern-day copying machine that spits out infringing copies at no cost. Copyright owners will have a more difficult time obtaining a TRO and preliminary injunction on the basis of contributory infringement. And going after each individual infringer is not an economical option. Photographers, authors, on-line software distributors must take extra steps to prevent and document the direct involvement of the ISP in the infringing activity. Although a copyright notice is not required for protection, watermark technologies should be evaluated. How will you track your content?

Napster, for example, materially contributed to the infringement because “without the support services defendant provides, Napster users could not find and download the music they want with the ease of which defendant boasts.” The Napster test likened Naptser to a swap meet. When reviewing your liability are you merely a passive conduit or:

Practice Points - Do you provide other services, like parking (virtual or physical), space, advertising, and clientele with the content you serve? Napster did. Napster, Inc. fell afoul because it "supplied the proprietary software, search engine, servers, and means of establishing a connection between users’ computers.” Or are you more like Grokster?

Grokster:

(i) has no access to the source code for the FastTrack software application and cannot alter it; and

(ii) does not operate a central file-sharing network but rather uses "super nodes."

What makes Grokster different is the use and connection of preset with a list of “root supernodes,” each of which functions principally to connect users to the network by directing them to active supernodes." While Napster was in control of the connection, "when users search for and initiate transfers of files using the Grokster client, they do so without any information being transmitted to or through any computers owned or controlled by Grokster."

Reality of Music and the Web. The record industry is going to miss the point if they have not already. Two things must be worked out to forever relegate the CD to the path of shuttered Wherehouse music: empowered artists and the technology to deliver high quality digital downloads. Apples Music Store has solved the second quite elegantly. I have bought more music there than I ever bought at Tower Records. Artists have always known that they were getting ripped off by the records company deal. Empowered artists doing Internet only distribution will make money, please fans and change the industry forever. I for one can not wait. What do you think? Let me know.