No More Grokin’ In the Free World

No More Grokin’ In the Free World
originally appeared in Hyperactive Music Magazine, Number 6, Sept/Oct 2005

Geeks and hipsters alike held their breath when the Supreme Court decision in the MGM v. Grokster case came down in late June. The Titans of Technology and Big Media had clashed yet again, but, for such a landmark case, the results were maddeningly middle-of-the-road.

At issue was the filesharing software of Grokster, Ltd., and StreamCast Networks, Inc. (Sharman Networks, of KaZaA fame, was also originally named but escaped involvement because the company is based in Australia). On the other side, a consortium of entertainment industry heavyweights, led by Metro-Goldwyn-Mayer studios, charged that the two defendants were liable for copyright infringements committed by users of their peer-to-peer (P2P) filesharing software. Grokster and StreamCast maintained a see-no-evil, hear-no-evil defense: unlike the notorious Napster, they maintained, their software allowed users to share files directly, without using any sort of centralized server. Grokster and StreamCast argued that, owing to this diffuse configuration, they had no actual knowledge of any illegal filesharing activity and were thus not liable for copyright infringement.

The lower courts had found the defendants’ argument compelling. Looking to the landmark 1984 Sony v. Universal ruling that held VCR manufacturers blameless if their product was used to violate copyright law, they determined that Grokster and StreamCast were not liable for the infringing actions of their software’s users. The standard set by Sony protected technology that could be shown to have “substantial noninfringing uses.” Since Grokster and its like could conceivably be used to share files not protected by copyright, the lower courts found no liability.

If only the matter were so simple. What ultimately led the Supreme Court to overturn the earlier rulings was a matter not addressed in Sony: intent. Grokster and StreamCast, it turns out, employed marketing tactics designed to highlight the illegal uses of their software. Advertising to former Napster users and promoting their products as “Napster alternatives,” the defendants courted a customer base already shown to be reckless of copyright law.

While such practices might inspire even those without legal expertise to cry foul, the Justices bolstered their decision with what many observers are calling tenuous arguments, including a reference to the fact that Grokster modeled its name after Napster. Such points—immaterial to the lower courts’ rulings—were used to reinforce the high court’s finding of criminal intent.

Despite agreeing with the lower courts’ finding that Grokster and StreamCast had “no agreed-upon right… to monitor use,” the Supreme Court’s opinion also takes issue with the defendants’ failure to develop tools to track users’ filesharing practices. While the Court is careful to point out that this hands-off approach is not in and of itself proof of wrongdoing, it does however contend that it “underscores [the defendants’] intentional facilitation” of illegal activity.

This argument has alarmed some privacy advocates. As the Grokster decision continues to be dissected in the blogosphere, many have pointed out the potential implications of the Court’s emphasis on policing filesharing. While falling far short of requiring such monitoring, the Court nevertheless made clear that any failure to do so they regard as suspect. With the concept of intent being at the heart of this decision, the Court’s take on this point could hint at a future legal climate more receptive to highly invasive policies.

The Court’s final evidentiary point was that Grokster and StreamCast had economic incentive to facilitate infringement: since both made money from advertisements streamed directly to users, the success of their businesses rested on high volume. The Court determined that high-volume use could only be infringing use, since, as Justice Souter amusingly pointed out, “While there is doubtless some demand for free Shakespeare [which is not protected by copyright], users seeking Top 40 songs [which are guaranteed to be protected]… are certain to be far more numerous.”

And here is the linchpin of the matter: the Supreme Court was ultimately led to look beyond the protections of Sony by the sheer scope of the infringement in question. “[G]iven the number of infringing downloads that occur daily using respondents’ software,” the Court wrote, “it may be impossible to enforce rights in the protected work effectively against all direct infringers, so that the only practical alternative is to go against the device’s distributor for secondary liability.” Commercial interests clearly matter to this Court, and with the inducement standard, the Justices could rebuke the defendants while still keeping their balance on the tightrope between, as they put it, “the competing values of supporting creativity through copyright protection and promoting technological innovation by limiting infringement liability.”

There is, however, still plenty of wiggle room on that tightrope. Despite the unanimous 9-0 decision, Grokster awards no categorical victory to either side. Hollywood and the RIAA didn’t get the broad-brush application of contributory liability that they sought. The tech sector didn’t get a wildly permissive allowance for noninfringing use. The defendants were reprimanded for marketing practices that were not so smart in the post-Napster world, and, once it’s all said and done, the film and recording industries will likely reap some significant reward. Beyond that, we all got a lot of new grey area. In theory, P2P companies should be able to avoid future trouble with scrupulous business practices. However, as the Grokster ruling hinged in large part on money matters, it is conceivable that deep pockets and savvy lawyering could expand the standard created by this decision.

While the big boys duke it out over questions of inducement and intent, what’s a music-loving little guy to do? As it now stands, the Grokster ruling has few implications for most of us. What was once illegal for Jane- or Joe-Downloader is still illegal. So kick the illicit P2P habit, plunk down some cash over at iTunes for a legal auditory high, and keep your eye on the appeals.