CASE Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd. 1.1 545 U.S. 913 (2005) Copyright Infringement? Really, It's Just a Little Peer-to-Peer File Sharing FACTS JUDICIAL OPINION Grokster, Ltd., and StreamCast Networks, Inc. (respon SOUTER, Justice dents / defendants) distribute free software products The question is under what circumstances the distribu- that allow computer users to share electronic files tor of a product capable of both lawful and unlawful through peer-to-peer networks. Universities, govern- use is liable for acts of copyright infringement by third ment agencies, corporations, and libraries use this parties using the product. technology. When a widely shared service or product is used to Grokster and StreamCast do not know when partic- commit infringement, it may be impossible to enforce ular files are copied. However, MGM had a statistician rights in the protected work effectively against all direct do a systematic search of electronic files, and his study infringers, the only practical alternative being to go showed that nearly 90 percent of the files available for against the distributor of the copying device for sec- download on the FastTrack system were copyrighted ondary liability on a theory of contributory or vicarious works. Per the Court's opinion, "the probable scope of infringement. copyright infringement is staggering." [This Court has dealt with secondary copyright After Napster was sued by copyright holders for infringement in only one recent case. In Sony Corp. facilitation of copyright infringement, A&M Records, v. Universal City Studios, 464 U.S., at 434, this Court Inc. v. Napster, Inc., 114 F. Supp. 2d 896 (N.D. Cal. 2000), addressed a claim that secondary liability for infringe- aff'd in part, rev'd in part, 239 F.3d 1004 (C.A.9 2001), ment can arise from the very distribution of a commer- StreamCast gave away a software program known as cial product. OpenNap, designed as compatible with the Napster On those facts, with no evidence of stated or indi- program and open to Napster users for download- cated intent to promote infringing uses, the only con- ing files from other Napster and OpenNap users ceivable basis for imposing liability was on a theory of computers. The OpenNap program was engineered contributory infringement arising from its sale of VCRs "to leverage Napster's 50 million user base." Grokster to consumers with knowledge that some would use them and StreamCast received no revenue from users, who to infringe. But because the VCR was "capable of com- obtainedmor the software itself for nothing. The District Court held that those who used the mercially significant noninfringing uses," we held the manufacturer could not be faulted solely on the basis of Grokster and Morpheus software to download copy- its distribution. Because the Circuit found the StreamCast righted media files directly infringed MGM's copy- rights, but granted summary judgment in favor of and Grokster software capable of substantial lawful use, it concluded on the basis of its reading of Sony that neither Grokster and StreamCast as to any liability arising from distribution of the then current versions of their soft- company could be held liable, since there was no show- ware. The Court of Appeals affirmed. MGM appealed. ing that their software, being without any central server, afforded them knowledge of specific unlawful uses. CONTINUED