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When is a developer or distributor of technology legally responsible for the copyright infringements of the users of that technology? On the last day of the 2004-2005 term, the U.S. Supreme Court handed down its decision in Metro-Goldwyn-Mayer Studios Inc. v. Grokster Ltd.,125 S. Ct. 2764 (2005), one of the most closely watched copyright cases of recent years. The court, unanimously reversing the 9th U.S. Circuit Court of Appeals’ grant of partial summary judgment in the defendants’ favor, held that the defendants had distributed their software “with the object of promoting its use to infringe copyright,” as shown in the record by “clear expression or other affirmative steps taken to foster infringement”; and held that, as a result, they were not shielded from contributory copyright liability under ” Sonydoctrine.” The Sonydoctrine derives from the 1984 decision in Sony v. Universal Studios, 464 U.S. 417 (1984), in which the court, by a 5-4 majority, held that Sony’s distribution and sale of Betamax VCRs did not render it liable as a contributory copyright infringer. The VCR was, concededly, used by many purchasers to infringe the copyrights in broadcast television shows and movies. It was, however, a “staple article of commerce,” a device “widely used for legitimate, unobjectionable purposes” (such as recording televised broadcasts with the implied consent of the copyright owner, or for the purpose of “time-shifting”-viewing previously broadcast shows at a later, more convenient time). Id. at 426, 442. Because of that, the court held, Sony could not be held liable for the infringing uses to which it was put by purchasers; “the sale of copying equipment, like the sale of other articles of commerce, does not constitute contributory infringement if the product is . . . merely . . . capable of substantial noninfringing uses.” Id. Sonyengendered considerable confusion in the two decades since it was handed down. When are the noninfringing uses of a technology “substantial” enough to make it into the Sonysafe harbor? Need a device be merely “capable” of being used in a noninfringing way, or must it actually be used in such a manner? Was Sonyannouncing a complete immunity from contributory copyright liability for distributors of “staple articles of commerce,” or were there other theories of third-party copyright liability on which an infringement judgment could be based even if one met the Sony“substantial noninfringing use” standard? The 9th Circuit answered some of these questions in its 2001 decision in A&M Records Inc. v. Napster Inc., 239 F.3d 1004 (9th Cir. 2001). The court there held that software developed by Napster Inc.-the first generation of peer-to-peer software, and the direct predecessor of the Grokster and StreamCast systems-was indeed, like the VCR, “capable of substantial noninfringing uses” (e.g., sharing files containing material in the public domain). Id. at 1021. Napster was nonetheless contributorily liable for its users’ infringements because, unlike Sony, it had “actual knowledge of specific acts of infringement.” The copyright holders had provided notice of specific infringing files that were being shared on the Napster system, and Napster could confirm the availability of these files by checking its central database of shared files-and, in the face of that knowledge, it failed to “block access to the system by the suppliers of infringing material” or to “remove the material.” Id. at 1021, 1022. That the software was capable of “substantial” noninfringing uses under the Sonystandard was, in that circumstance, irrelevant; actual knowledge that infringements were taking place, plus the ability to act upon that knowledge and to prevent the infringements, was a sufficient basis for the imposition of liability independent of the Sonysafe harbor. Designing around ‘Napster’ Enter Grokster and StreamCast. They had, in effect, designed around the Napsterdecision; their file-sharing systems had no central databases, and there was no continuing communication between the users of the software and the two defendant companies. They argued, therefore, that they had neither “knowledge” of the specific files that were being shared using their systems (infringing or otherwise), nor any ability to “block” or “remove” the offending files. The 9th Circuit agreed, holding that the ” Napsterexception” didn’t apply to them, and that they could, therefore, avail themselves of the Sonysafe harbor; inasmuch as their systems were “capable of substantial noninfringing uses,” the court affirmed the lower court’s grant of partial summary judgment in the defendants’ favor, absolving them of contributory copyright liability. Metro-Goldwyn-Mayer Studios Inc. v. Grokster, 380 F.3d 1154 (9th Cir. 2004).

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