MGM, Grokster and the future of file sharing

The US Supreme Court has spoken, and it’s bad news for Grokster and Streamcast: they can be sued because their users have been breaking copyright. However, on first reading of the verdict it doesn’t seem like the end of file sharing; rather, the judges have ruled that if firms’ marketing efforts are based on encouraging piracy, then those firms can be sued if such infringement occurs.

In other words, they haven’t made P2P illegal – but they have made it illegal to sell P2P apps with the message “hey! Use this stuff to download illegal stuff!” That would make Grokster bad, but wouldn’t necessarily be bad news for BitTorrent (although it’s probably bad news for bittorrent hubs).

I’ll no doubt post more when I’ve had time for a proper read of the verdict.

Update, 28 June

The verdict could have been seriously bad news, because one of the things being considered was the Sony Betamax precedent from back in the 80s. In the Sony case the courts ruled that if a technology had “substantial, non-infringing” uses – such as recording programmes so you could watch them later – then the manufacturers couldn’t be held liable for any dodgy uses, such as video piracy. Had the Supreme Court overruled the Sony judgement, it could have been disastrous: for example, we all know people put illegal music on their MP3 players; with no Sony, Apple could have been sued for that. People use computers for piracy. Microsoft, or Dell, or whoever, could have been sued for that.

Thankfully the judges didn’t reverse Sony. What they did do was qualify it: essentially they’ve said “sure, there’s the Sony thing, but you can’t consider these things in isolation. You need to look at the big picture.” So substantial non-infringing use is no longer sufficient defence for P2P firms; they also need to demonstrate that they haven’t been trying to build a business on copyright infringement.

So what does this actually mean? In the short term, probably not very much. The RIAA, BPI et al have gone after individual file sharing users partly because of the difficulty in prosecuting the P2P firms, but I’d be surprised if the lawsuits stopped as a result of the Supreme Court verdict. What’s more likely is that there will be a fresh barrage of lawsuits against P2P developers, and a continuation of the legal assault on teenagers, grandmothers, nuns, orphans and puppies.

In the longer term, things could get messy. As the EFF puts it, “this decision relies on a new theory of copyright liability that measures whether manufacturers created their wares with the ‘intent’ of inducing consumers to infringe.” As Ed Felten writes in Freedom To Tinker, “Legitimate technologists will still worry that a well-funded plaintiff can cook up a stew of product design second-guessing, business model second-guessing, and occasional failures of copyright compliance by low-level employees, into an active inducement case.”

Sometimes the “intent” is obvious, so for example we’ve seen countless firms selling P2P software on the basis that they give you access to lots of illegal music. However, intent is very much in the eye of the beholder: was Apple’s “Rip. Mix. Burn” slogan inducement to infringe copyright law? I’m sure there are record company executives who think it was. As ever, the real winners in this case will be lawyers.