The Supreme Court's Ruling on MGM v. Grokster: What It Is and What it Means for You

Looks like we might have to go back to stealing music the original way: Today the Supreme Court has decided unanimously the following:

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.

The defendants, Grokster and the Morpheus (and Morpheus)-hawking StreamCast, seem to have "clearly voiced the objective that recipients use it to download copyrighted works," and "each took active steps to encourage infringement." A lower court will now officially proceed with hearing the cases and meting out retributions.

The courts cite plenty of "smoking gun" documentation that supports both companies' intent of infringement, not unlike the paper trail that Napster left when it went down in 2001. Unlike Napster, however, Grokster and StreamCast don't have central servers containing song and movie titles, so the onus of infringement heretofore has been on the clients themselves (cf. all the RIAA-applauded lawsuits and raids).

So good news/bad news: While the Court did not make a strict ruling against the technology-- concurrent with the Sony v. Universal ruling on the Betamax in 1984 (remember me?), which said a technology developer isn't responsible for illicit uses of its product-- this bit about "clear expression...to foster infringement" is pretty damn vague for one: How can a court judge a developer's intent? Cyber-law prof Ernest Miller is concerned that loophole could hamper technological innovation.

More dangerously, the intent clause could potentially de-classify a developer's engineering meetings, marketing plans, e-mails, and any sort of internal correspondence that might shed light on intent.

At the same time, as Doug Lichtman notes, "Intent-based standards, after all, are among the easiest to avoid":

MGM won on paper today, but my first reading of the opinion makes me wonder whether the victory will have any bite outside of this specific litigation. . . Just keep your message clear -- tell everyone that your technology is designed to facilitate only authorized exchange -- and you have no risk of accountability.

What does this mean for your favorite peer-to-peer file-sharing network? Public Knowledge, another cyber-law blog, sums it up as the following:

In the absence of such clear expression or other affirmative acts fostering infringement, a company that provides peer-to-peer technology is not going to be secondarily liable under the Copyright Act.

Moreover, Tim Wu at Picker MobBlog suggests simple 'good-legal' business models that would "insulate a business from the new 'intent' liability":

1. Making a deal with the recording industry (iTunes)

2. Encryption of content offered (also iTunes)

3. A network optimized to some other explicit purposes (Freenet, privacy and anonymity, or even email -- personal communications)

4. Phone home technologies -- software that is montored centrally.

And what does this mean for you? Surprisingly not much. CNN/Mon ey explains, if your file-sharing service is located outside the U.S. (and therefore outside of U.S. copyright jurisdiction), or is located nowhere and physically/legally can't be shut down, such as the popular BitTorrent client.

Ernest Miller offers more minutiae in Q&A format at Corante.