Metro–Goldwyn–Mayer Studios (MGM) v. Grokster, 545 U.S. (2005)

Copyright Law started with the printing press. Once copies could be multiplied more rapidly than a scribe could write, someone could charge for making copies of books composed by others. Copyright gives the author the exclusive right to authorize multiplication and distribution of copies. As technology changes, law needs to balance giving the author enough incentive so that he will write and publish his work, promoting investment in new distribution technologies by not allowing copyright holders power to block change in distribution methods, and providing the public with reasonably priced access to cultural materials. For example, at the beginning of the twentieth century, music distribution was revolutionized by the first technology allowing live music without the aid of a trained performer: the player piano. Composers and sheet music publishers were outraged when the U.S. Supreme Court held that manufacturers of player piano rolls were not required to pay copyright royalties (White–Smith v. Apollo Company, 209 U.S. 1, 1908).

A related recurring problem is when someone should be held liable for another’s infringement (‘‘secondary liability’’). The U.S. copyright statute has never been explicit on secondary liability, but the courts have used their common-law power to create two basic doctrines: vicarious and contributory infringement. Person C is liable for contributory infringement when someone else infringes, C knows of the infringement, and C gives the infringer material help. Person C is liable for vicarious infringement when someone else infringes, C makes money from the infringement, and C has the right and ability to supervise the infringer. Under these rules, landlords who rent stores were not held liable if their tenants sell infringing records, but the operator of a department store was held liable for infringement by the person operating the record department as a concession. People running dance halls were held liable when the bands played copyrighted music without paying royalties. The operator of a swap meet was held liable when one of the vendors sold infringing music recordings.

Secondary liability and technological change meet when a copyright holder claims that someone should be liable because he provided equipment or technology used by its purchasers to infringe copyright. The technology provider does not control the customers. Making him liable would chill the development of technology that may provide major social value in the future; for example, such a claim could have been used to ban reprographic copiers or player pianos. In 1984, the Supreme Court considered such a claim brought by major motion picture studios against the manufacturer of the first video home recorder (VCR), Sony v. Universal City Studios (464 U.S. 774).

The Court borrowed a doctrine from the patent statute; it held that providing a device capable of infringing and ‘‘substantial noninfringing uses’’ does not create secondary liability. The noninfringing uses of the VCR included taping programs whose copyright holders did not object and ‘‘time shifting’’—making copies of programs broadcast on free TV for the purpose of seeing the programs at more convenient times. With the legal immunity created by the Sony doctrine, VCRs became ubiquitous and movie studios obtained an unexpected major source of revenue from providing VCR copies of movies for home viewing. The Sony doctrine is also credited with encouraging venture capitalists to back the commercialization of new technologies, including the digital video recorder and various computer applications.

With the development of the Internet, many people began swapping unlicensed music through peer-topeer networks (P2P)—computing uses where the infringing files are scattered among the computers of the users, as opposed to being hosted on a central server operated by a large entity. Napster, the first very popular P2P system, depended on a central index of files available for swapping. Because Napster maintained the index, it was held secondarily liable for its users’ copyright infringement, A&M Records v. Napster (239 F.3d 1004, 9th Cir. 2001). Later P2P software eliminated the need for a central index. Once users had the software, they could continue to swap files even if the software supplier vanished. Federal courts disagreed on how to apply secondary liability rules to these decentralized systems. The central dispute was how to decide when noninfringing uses were sufficiently ‘‘substantial’’ to trigger Sony.

The Supreme Court was expected to clarify the Sony doctrine in a case involving two decentralized P2P systems, Grokster and StreamCast (MGM v. Grokster). Instead, the unanimous Court borrowed another patent doctrine; it ruled that Grokster and StreamCast should be forced to defend the assertion that they had ‘‘induced’’ others to infringe by taking ‘‘affirmative steps’’ for the ‘‘object of promoting’’ users of their software to infringe, such as advertising their services to Napster’s former customers as the ‘‘new Napster’’ and advising their customers on how to copy specific copyrighted songs. Two concurring opinions discussed Sony. Three justices read Sony narrowly; three justices read Sony broadly. Since a legal rule is not law unless five justices agree, the meaning of Sony is still unclear. However, promoters of new technology definitely face a new type of secondary liability based on ‘‘inducement’’ of infringing conduct.

MALLA POLLACK

Cases and Statutes Cited

• A&M Records, Inc. v. Napster, Inc, 239 F.3d 1004 (9th Cir. 2001)
• Sony Corporation of America v. Universal City Studios, Inc., 464 U.S. 774 (1984)
• White–Smith Music Publishing Co. v. Apollo Company, 209 U.S. 1 (1908)

See also Common Law or Statute