Grokking the Grokster Decision

By Pamela Jones
Editor of Groklaw

August 25, 2004

The best way to understand what a case means if, like me, you aren't a lawyer, is to ask some. In the recent decision [ ] in MGM v. Grokster et al, filed on August 19, it's easy to do so, because there were amici briefs filed by law professors on both sides of the question. There is no better way to understand what a case is about than to read such briefs. The Electric Frontier Foundation, which represented StreamCast Networks, Inc., one of the victorious defendants, has made the legal documents available [ ].

On MGM's side, 9 law professors submitted an amicus brief [ ] explaining why they felt the lower court had made a mistake in granting Grokster and StreamCast a partial summary judgment and requesting that the Ninth Circuit Court of Appeals reverse the decision. On the other side, 40 law professors submitted an opposing amicus brief [ ], supporting the lower court's decision and urging the Ninth Circuit Court of Appeals to affirm it. Both groups tried to persuade the three-judge panel that the law was on their side.

All of this goes to show you that the law is not reliable like math. You don't ever want to plot a course to Mars based on legal opinions, because you might not arrive safely at your destination. You can always find a lawyer somewhere who will argue a side, both sides, or all sides of any issue. In the Grokster case, some of the finest lawyers in the world contributed their thoughts, on both sides, making it one of the most interesting and significant cases of the year.

The appeals court decision was extraordinary, in that they accepted what can best be described as arguments you can find in Larry Lessig's book, "Free Culture," argued most ably by EFF's Fred von Lohmann for StreamCast and Michael Page of Keker & Van Nest for Grokster. The oral arguments are a delight to listen to, and EFF has them available as Ogg [ ], WMA [ ] and MP3 [ ] files. Groklaw has made an unofficial transcript [ ] of the proceedings.

The court decided to draw a line in the sand and tell the Hollywood copyright forces that their push to extend and morph copyright law beyond its current borders, in effect to rewrite the Supreme Court's 1984 Sony- Betamax decision [ ] (Sony Corporation of America v. Universal City Studios, Inc., 464 U.S. 417, 104 S. Ct. 774, 78 L. Ed. 2d 574 ), so as to make it easier to go after contributory infringers, was unacceptable. Sony held that as long as a technology has substantial non-infringing uses, it can't be held liable for copyright infringement by users. The Hollywood copyright forces were trying to get the court to accept instead the new idea that if infringement levels reached a certain percentage, then manufacturers and programmers could be held liable.

Remembering that this is the same appeals court that upheld Napster, it's an extraordinary development and, in my opinion, a most significant victory, particularly for programmers, who stood to lose a great deal had the case gone the other way. Why? Because the copyright forces wanted to hold distributors of software tools -- and that means programmers too, not just companies -- liable for the infringements of end users.

It was nothing less than an attempt, as the ruling put it, to get the judiciary to fashion a new way to go after distributors and programmers for vicarious and contributory copyright infringement. Why? Simply because, as the law professors on MGM's side delicately put it, such a transmogrification would satisfy "the policy interests of indirect liability -- particularly for online infringement, where locating, suing, enjoining and recovering from millions of direct infringers is extremely difficult and inefficient."

In short, MGM and the music industry wanted the courts to make it easy for them. Going after the actual infringers on P2P systems is hard and expensive. So, they asked the court to let them go after those making and distributing software that some might use for the infringement instead. The conceivable consequences of such an expansion of vicarious liability were set forth in oral argument by Mr. Page:

To expand the law of vicarious liability, to attach liability to anyone who in theory could have acted as a policeman, leaves no border on it at all and leaves every technology vendor, every inventor, every merchant at the mercy of copyright holders who want to look around and go, 'You could have done something about this. You're liable.'

The court refused, based on the Sony-Betamax case, telling them to get Congress to fashion a more nuanced remedy than any court can give. Distinguishing the technology of Napster from that of Morpheus and Grokster (the centralized server in the former), the court noted that 10% of files shared on the systems are non-infringing, which is, in the words of Judge Noonan in the oral hearings, "a lot of files".

The court accepted the argument that every new technology is met by the music and entertainment industry with cries of theft and predictions of copyright doom along with demands that courts shut down the new technology. This happened with the invention of cassette recorders, VCRs, radio, and cable, as Lessig points out in "Free Culture". But throughout history, US courts have been loathe to kill a new technology just to satisfy the old, vested interests affected by the new tech. Once again, the court has told those clamoring for a judicial remedy that they must seek a remedy in the legislature, if any is to be found.

Jason Shultz, an attorney with EFF, explains the significance of the Grokster decision, particularly to programmers:

One of the biggest wins in Grokster for programmers was the explicit rejection of two principles that the RIAA and MPAA were pushing the Court to adopt in order to 'update' the Sony Betamax rule. If either rule had been adopted for Peer to Peer companies, it would have applied to programmers as well. Both rules would have been disastrous.

1) The first was that makers of technology (including programmers) should be liable for the infringements of their users based on the proportion of users who use the technology to infringe, instead of whether or not the code is merely capable of substantial non-infringing uses. The Plaintiffs argued that since over 90% of P2P users infringed copyright, that was high enough to hold the programmers and distributors liable. This would have been a very dangerous rule for any programmer, especially those who release open source code, because it is almost impossible to predict all the ways in which your users will employ your code. . . . [T]o hold . . . programmers . . . liable for the future, unpredictable and unintended uses of code would change the legal landscape of programming dramatically and make it a very dangerous road to go down. Fortunately, the Court rejected this attempt to 'update' Sony Betamax and stuck with the time-honored rule that any technology with a substantial non-infringing use cannot be held contributorily liable for infringements by end users.

2) The second major victory was an explicit rejection of the RIAA/MPAA's other proposal --- that under vicarious liability, programmers and distributors of technology should be held liable for end user infringements if they could have re-designed their products to allow less infringement, but didn't. In this case, the MPAA/RIAA argued that the P2P companies could have forced updates on users that installed filters into their programs to filter out copyrighted works, but didn't. This 'willful blindness', Hollywood argued, should make the P2P companies responsible for the infringements of their end users. Such a ruling would have been an absolute nightmare for any programmer, not only because again, it is almost impossible to predict all the ways one will use a program to infringe and then preemptively restrict them, but also because the reality is that no venture capitalist will fund a software project in such a world. If programmers and companies are liable unless they make their programs as incapable of copying as possible, very few programs will ever be written. The only pragmatic way to release a program, then, is to get MPAA/RIAA approval beforehand -- essentially handing Hollywood veto power over any new code or program released. Again, the Court rejected this approach, giving programmers protection from both financial ruin and attempts to undermine their freedom to write code as they see fit.

EFF took the case for just these reasons. We saw how Hollywood wanted to change the law and all the bad precedent it would set. So we defended the P2P companies on these principles in order to protect every technology maker, including open source programmers. Under the eyes of the law, even non-commercial open source programmers are no different that P2P companies and without the legal protections in Grokster, all programmers would suffer. Thus, EFF stepped up to the plate to defend the freedom to code for everyone.

They not only stepped up to the plate. They hit a home run. Of course, the losing side has the option of an appeal to the Supreme Court. And, as it happens -- actually, I'm sure it's no happenstance -- there is already an attempt to overturn Grokster's holding, by means of the Inducing Infringement of Copyrights Act of 2004 [ ] [INDUCE], currently working its way though Congress, with the backing of the RIAA/MPAA. It is sponsored by Senators Patrick Leahy and Orrin Hatch, who has said [ ] it is explicitly meant to reverse Grokster, so as to accomplish the very things that the Ninth Circuit Court of Appeals just rejected. Such a law would find companies and programmers liable if they release code that makes it easier for copyright infringement to occur, although in light of this stunning Grokster ruling, they may find it is a harder sell now, since its language, as well as Mr. Hatch's in pushing it, contradicts the Ninth Circuit Court of Appeals' decision.

Yes, that Mr. Hatch, the father of one of the attorneys representing SCO, Brent Hatch. The apple doesn't fall very far from the tree.

In a case like this, it makes sense to distribute the result via the available peer-to-peer networks. So, for those whose browsers are set up for such things, the EFF has published a magnet link and an ed2k link for downloading the decision. It doesn't hurt to boost the clearly non-infringing content available on P2P networks. One thing about the Hollywood copyright sharks: you can be sure they'll be circling back around.

Copyright 2004