Social aspects of MGM v. Grokster

Grokster and FastTrack

Prior to MGM v. Grokster's arrival in courts, the FastTrack protocol that Grokster used was very popular for P2P file sharers. An estimated 16 million users worldwide had shared files over the protocol by 2003. The protocol set records the same year with an estimated 2.4 million users concurrently sharing files.

Users began flocking away from Grokster and the FastTrack network during and after the lawsuit. Many cite the lack of anonymity and the proliferation of malicious content like viruses and spyware as the reason for leaving. Indeed, agents acting for the RIAA were responsible for the distribution of some of this bad content. Users also left for better alternatives offered by BitTorrent, a fully distributed file sharing platform developed in 2001. Sites like Suprnova and Pirate Bay became popular by tracking copyrighted content that had once been shared on FastTrack. Users also left for legal alternatives offered by online music stores. 

Applications using the FastTrack protocol still exist today, but their traffic has dropped sharply due to decreased quality of content, proliferation of malware, and lack of anonymity protection. Many of these applications, such as Kazaa and iMesh, have been modified so that users can no longer share copyrighted content.  Others like KCeasy and Appolon support file-sharing on multiple protocols (such as Gnutella, OpenFT, and Ares Galaxy), possibly as an effort to distance themselves from a single protocol and thus liability for inducement.

Post-Grokster 

With the Supreme Court ruling that distributed 'second generation' P2P networks can be liable for inducement, the stage was set for new types of protocols and standards for Grokster's 1+ million users to adopt. BitTorrent's fully decentralized nature, already widespread use, and ease of adoption (both by content providers and users) made it a safe harbor for those looking to download copyrighted content. 

The diaspora away from centralized networks like Napster early in the decade, and again from semi-decentralized protocols like FastTrack, represents an evolution in the landscape of P2P file sharing. Users inherently favor protocols that are widely distributed and decentralized, since these protocols help increase anonymity, aid the ease of distribution, and attract widespread amounts of content. 

Those looking for a legal alternative would eventually turn to services like iTunes Music Store and Amazon Music. These services offer high quality digital music for charge, and have content-locking protection called DRM to prevent the files from being shared over a P2P network. Such services eventually became very popular - by January of 2009, the iTunes music store had sold over 6 billion songs, making the service the world's largest legal music retailer. Also early in 2009, the iTunes music store announced the removal of DRM from their entire music catalogue.

Public opinion of file-sharing

Since the Napster-era of file sharing, public opinion has been widely divided over the merits of sharing copyrighted content over a P2P network or protocol. Opponents argue that sharing material without holding the copyright is illegal and akin to stealing, while proponents of P2P file sharing argue that anything offered in unlimited supply can't be stolen. Still others argue that, legal or not, freely available content is just too tempting to pass up. The jury is still out as to whether file sharing has affected music industry sales (see the sources section for differences in opinion).

A poll taken in 2005 prior to the Supreme Court ruling of the Grokster case asked an American audience to classify their beliefs on file sharing. The poll found that 45% of those asked felt that file sharing should be illegal, while 39% thought it should be legal, with another 16% unsure. The numbers were skewed when broken down by certain classifications like age and amount of internet use:

Support for allowing file sharing services was much higher than average among: 

• Younger Internet users aged 12-29 (54% allow, 34% outlaw) 
  
• Those who own MP3 players (55% vs. 35%) 
  
• Broadband users (48% vs. 38%) 
  
• Those who downloaded music – free or paid – sometime in the past (63% vs. 27%)
  
• Those in the North East (43% vs. 33%).

Support in other countries shows a difference of opinion. A similar poll of young voters (18-21) in Sweden showed that 75% of those polled agreed with the statement: "I think it is OK to download files from the Net, even if it is illegal."

While opinion is split over the ethical qualms of file sharing, the actual file sharing numbers suggest differently. Another poll in 2006 found that 32 million Americans over the age of 12 have downloaded at least one feature length movie, 80% of which did so using a P2P network. A February 2008 poll by the LA Times blog found that 64% of those polled used file sharing methods to download content 'on a regular basis'. In the same poll, only 4% felt concerned that they were going to be sued. This is despite the fact that since 2003, the RIAA has sued thousands of students for sharing copyrighted material. 

Sources

[1] Americans divided over file sharing 

[2] File 'sharing' or 'stealing'?

[3] Understanding Peer-to-Peer Networking

[4] Does a Free Download equal a lost sale?

[5] Overview of the FastTrack protocol

[6] Music Downloads: Pirates - or Customers?

[7] Young Voters back File Sharing

[8] Movie Piracy Cost 6.1 Billion

[9] The Effect of File Sharing on Record Sales: An Empirical Analysis

[10] Music Sharing doesn't kill CD sales, study says

[11] Movie File-Sharing Booming: Study

[12] Attacks on Peer-to-Peer Networks

[13] A heretical view of file sharing

How P2P Works

This video gives a basic overview of different P2P software, including Limewire, a variant similar to Grokster. For more technical information you can also read this article on HowStuffWorks.

Weird Al on Filesharing

Technical Aspects

The FastTrack Protocol

Grokster made use of the FastTrack protocol, a "second generation" P2P protocol. This was a semi-distributed system, meaning there was no single centralized server, such as Napster used. But, it is only considered "semi-distributed" since it made use of supernodes to improve the scalability. A supernode is any node on the P2P network that also acts as a proxy server, handling near by connections.  These supernodes reduce the overhead on each individual user, while maintaining the decentralized nature of a distributed network.  

Grokster Compared to Napster

While this system is technically different than that of Napster, where a central server managed queries, the District Court, which handled the Grokster case described the two as “conceptually analogous.” A user could make multiple downloads and uploads from a single computer. Moreover, Unlike Napster, Grokster allowed users to search and share any file type, not just MP3's.

How They Got Caught

Since it was decentralized, taking down a single node would not stop the overall P2P network. This led many to believe that this form of file sharing was free from legal threats. The following argument from the defendants held until their supreme court hearing:

The defendants argued that they merely provided software to users over whom they had no control, and that they had no liability for copyright infringement; they sought summary judgment for dismissal of the action.

However, in the end the supreme court ruled in favor of MGM.  This set the precedent of liability on the file sharing software distributor and programmer, in the form of inducement, a secondary copywrite infringement.  This means that although Grokster Ltd did not break any copywrite violations by distributing or hosting files, their software facilitated the means for their users to do so.

Resources:
[1] From Napster to Grokster
[2] Philip Larson on P2P Filesharing
[3] Tech Law Journal
[4] O'Reilly P2P
[5] IEEE Spectrum

Ethical Responsibilities

Ethical Responsibilities Before MGM v. Grokster:

Before MGM v. Grokster, ethical responsibility fell mainly in the hands of the companies producing file-sharing software. This position of ethical responsibility was due to the outcome of the Sony Corp. v. Universal City Studios, Inc. decision. In this 1984 court case, the supreme court sided with Sony, which was charged with selling a product (Betamax VCR's) that aided users in participating in copyright infringement. The broad decision of this case was that companies creating products that could possibly aid copyright infringment would not be liable if the technology had significant non-infringing uses.

The Sony Corp. v. Universal City Studios, Inc. decision gave significant power to many companies -- and significant ethical responsibility. Companies producing file-sharing technolgies now had protection against major coorporations (such as RIAA, XXX, etc.). As long as they could prove their technology had SIGNIFICANT non-copyright-infringing uses, they would not be liable for any infringements caused by it. This ultimately left them with ethical responsibilty of not taking advantage of this protection by disguising software that was purposely designed to aid copyright infringement.

Ethical Responsibilities After MGM v. Grokster:

After the MGM v. Grokster case, the ethical responsibility shifted into the hands of the major recording industries.

In the court decision, Justice Souter stated that, ""We hold that one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties." This decision gave a whole new set of powers to the recording industries. They now have the power to prosecute a company who distributes its file-sharing technology in the manner described in the court decision. Thus, they now have the ethical responsibility of using this power in truly infringing cases only, and not unfairly against non-infringing companies they believe to be hurting their business.

Sources:
[1] Sony Corp. v. Universal City Studios, Inc. decision
[2] WIDE PAPER #1 MGM v. Grokster: Implications for Educators and Writing Teachers
[3] Eric Goldman Technology & Marketing Law Blog
[4] EFF: MGM v. Grokster

Legal aspects

Background

The 1984 Sony v. Universal case established the "Betamax defense," or the "Sony safe harbor": a manufacturer cannot be found liable for contributory infringement if the device in question is "capable of substantial noninfringing use" [1].



Before the Grokster case reached the Supreme Court, Grokster had already won in two lower courts. In 2003, U.S. District Judge Stephen Wilson ruled that Grokster was protected from contributory infringement by the Sony safe harbor, stating that "Grokster and StreamCast are not significantly different from companies that sell home video recorders or copy machines, both of which can and are used to infringe copyrights" [2]. This ruling was appealed, but the United States Ninth Circuit Court of Appeals again ruled in Grokster's favor [1]. The Supreme Court eventually agreed to hear the case.

MGM v. Grokster

The Supreme Court, in MGM v. Grokster, overturned the decisions of the lower courts and ruled 9-0 in favor of MGM. The Court announced a new form of secondary liability -- inducement -- separate from the "traditional" secondary liability doctrines of contributory infringement and vicarious liability. Inducement was described thus:

[O]ne who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties. [1]

Moreover, the Court determined that the Sony safe harbor does not apply to inducement, and, therefore, did not apply to the Grokster case:

[W]here evidence goes beyond a product's characteristics or the knowledge that it may be put to infringing uses, and shows statements or actions directed to promoting infringement, [the Betamax defense] will not preclude liability. [1]

In the opinion, Justice Souter wrote:

In sum, this case is significantly different from Sony and reliance on that case to rule in favor of StreamCast and Grokster was error. Sony dealt with a claim of liability based solely on distributing a product with alternative lawful and unlawful uses, with knowledge that some users would follow the unlawful course... MGM's evidence in this case most obviously addresses a different basis of liability for distributing a product open to alternative uses... There is substantial evidence in MGM's favor on all elements of inducement, and summary judgment in favor of Grokster and StreamCast was error. On remand, reconsideration of MGM's motion for summary judgment will be in order. [3]

The Court found enough evidence to justify a trial on inducement, and sent the case back to the lower courts. Grokster was eventually forced to shut down.



Consequences

By finding that the Betamax defense did not apply to Grokster's case, and to inducement claims in general, the Supreme Court "did little to clarify the debates surrounding the Betamax defense" [1]. They also did little to resolve controversies surrounding contributory infringement and vicarious liability; in two concurring opinions, the Justices split on their interpretations of how the Sony safe harbor applies to these theories.

Fred von Lohmann, a supporter of Grokster, thinks that the Court "missed an opportunity to clarify the traditional secondary liability doctrines... As a result, software developers are left to puzzle their way through the uncertainties and contradictions left by the Sony, Napster, and Aimster rulings, as well as... MGM v. Grokster" [1].

While the Supreme Court ruled 9-0 against Grokster, some have questioned whether MGM "really won" the case. MGM hoped that the Supreme Court would overturn the Betamax defense established in Sony v. Universal, and "didn't want to win on an active inducement theory" [4]. Pamela Samuelson writes:

If there are no overt acts of inducement and no proof of specific intent to induce infringement, and if the Sony safe harbor continues to shield technology developers from contributory liability, MGM will find itself on the losing side of challenges to technology developers for infringing acts of their users. [4]

Indeed, the legal precedents set by MGM v. Grokster can actually hurt -- not help -- the media companies in their fight against peer-to-peer file-sharing software.

Sources:
[1] http://www.cs.duke.edu/courses/cps182s/spring09/readings/papers/p2p_copyright_wp_v5_0.pdf
[2] http://www.law.com/jsp/article.jsp?id=1051121796114
[3] http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?court=US&navby=case&vol=000&invol=04-480#opinion1
[4] http://www.cs.duke.edu/courses/cps182s/spring09/readings/papers/p19-samuelson.pdf

Grokster on CNBC in 2003

Los Angeles Times writer Jon Healey and Grokster President Wayne Rosso on CNBC in 2003. The previous week, a Los Angeles federal court judge ruled that Grokster and StreamCast were protected from contributory infringement by the Sony safe harbor.

The decision was appealed in late 2003. In 2004, the United States Ninth Circuit Court of Appeals again supported Grokster. This ruling was also appealed, and the Supreme Court agreed to hear the case.

In MGM v. Grokster, the Supreme Court reversed the decision, ruling that Grokster could be found liable for a new type of secondary infringement -- inducement -- and that the Sony safe harbor did not apply.

Starting points

Wikipedia article
Copy of the decision
New York Times article
Summary on Oyez
EFF opinion
IEEE opinion