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Ernest Miller Ernest Miller pursues research and writing on cyberlaw, intellectual property, and First Amendment issues. Mr. Miller attended the U.S. Naval Academy before attending Yale Law School, where he was president and co-founder of the Law and Technology Society, and founded the technology law and policy news site LawMeme. He is a fellow of the Information Society Project at Yale Law School. Ernest Miller's blog postings can also be found @
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August 19, 2004

Grokster Wins Big in 9th Circuit

Posted by Ernest Miller

The Ninth Circuit has upheld the district court decision in Grokster. Read the 26-page decision: MGM v. Grokster [PDF] . Read it. The decision isn't really all that long, it is single column formatted with 8 pages of administive gobbledygook.

A quick read of opinion leads me to think it a great decision that shows a deep understanding of technology and the public policy behind what the decision calls Sony-Betamax. This decision also demonstrates a better understanding of the Napster decision than the court that wrote it, I think, putting it into better context, certainly.


Other coverage (UPDATED 1120PT, 1150PT, 1220PT, 1245PT, 1255PT, 1340PT, 1400PT, 1525PT, 1800PT):

The man who argued the case, Fred von Lohmann, discusses it - read! (More on MGM v. Grokster Ruling).
EFF's press release (EFF Scores Landmark Win for P2P).
Jason Schultz on Copyfight (Powerful Language from the MGM v. Grokster Decision).
Cory Doctorow on BoingBoing ( EFF wins Grokster! Software doesn't have to be easy for Hollywood to wiretap!).
Techdirt (Appeals Court Rules For Grokster).
Ed Felten (Grokster Wins in Appeals Court).
Joe Gratz discussed the issue over dinner last night with blogger luminaries and they agreed this would increase pressure to pass the INDUCE Act (Dinner). More from Gratz on the recurring trope in the case (Victory).
Eugene Volokh (he disagrees about whether P2P "materially contributes" to infringement (Grokster).
Chris Cohen ( The EFF has won the Grokster case!!!).
Andrew Raff on IPTABlog (Ninth Circuit Affirms Grokster Ruling).
Andrew Raff on the INDUCE Act Blawg (Ninth Circuit Affirms Grokster).
Siva Vaidhyanathan points out the decision's extensive reference to the band (Wilco Saves the Day).
Ars Technica (Appeals court upholds legality of P2P software).
Seth Finkelstein analogizes this decision to the LaMacchia case that resulted in the No Electronic Theft Act (MGM v. Grokster appeal victory, and The INDUCE Act Cometh).
Frank Field notes that everyone seems to agree on the key paragraphs in the decision (9th Circuit Affirms Grokster).
Patent attorney Dennis Crouch thinks the opinion is well-written (Grokster not liable).
Dan Gillmor hopes the logic of this decision spreads (Important Copyright Ruling Favors Freedom).
P2P United's press release after the jump.
Slashdot (Your Rights Online: Grokster Wins Big in Ninth Circuit).
American Constitution Society (9th Circuit Panel Allows Peer to Peer File Swapping).
Scrivener's Error has some good points to make ([Expletive Deleted] Headline Writers).
Tim Wu, Lessig's guest-blogger, promises analysis here (Grokster Wins).
The Trademark Blog has the best headline (Grokster Advances To Finals).
Public Knowledge's press release (Public Knowledge Statement on Ninth Circuit Decision in the Grokster case).
Derek Slater does a little cleanup (Grokster Leftovers).
IP News Blog (The EFF wins Grokster; A good day with possible consequences?).
Tim Wu, again, on the possibilities of Certiorari to the Supreme Court (Cert.?).
Technology Liberation Front (Don't Get Too Excited).
Wendy Seltzer (MGM v. Grokster: 9th Circuit Affirms Software Makers Not Liable).

Mainstream Press Coverage (Added 1130PT, 1145PT, 1245PT, 1400PT, 1525PT, 1800PT) - They finally get in the act:
C|Net News (Judges rule file-sharing software legal).
Reuters (Court Deals Blow to Movie Studios).
AP (Court: Grokster, StreamCast Not Liable).
WIRED (P2P Services in the Clear).
LA Times (reg. req.) (Studios Lose Round in File-Sharing Battle).
The Register (Court tells RIAA and Congress to let P2P software thrive).
Internet News (P2Ps Score Landmark Legal Victory).
PC World (Peer-to-Peer Companies Win in Court).
Mercury News (Federal appeals court rejects attempt to shut down music file-sharing networks).


Below a few highlights and possible impacts regarding the Inducing Infringement of Copyrights Act (IICA, née INDUCE Act) ...

Circuit Split Emphasized

The opinion takes issue with the Seventh Circuit's decision in Aimster in footnote number 9.

We are mindful that the Seventh Circuit has read Sony’s substantial noninfringing use standard differently. In re Aimster Copyright Litig., 334 F.3d 643, 651 (7th Cir. 2003). It determined that an important additional factor is how “probable” the noninfringing uses of a product are. Id. at 653. The Copyright Owners urge us to adopt the Aimster rationale. However, Aimster is premised specifically on a fundamental disagreement with Napster I’s reading of Sony-Betamax. We are not free to reject our own Circuit’s binding precedent. See Montana v. Johnson, 738 F.2d 1074, 1077 (9th Cir. 1984) (holding that only this court sitting en banc may overrule a prior decision by this court). Even if we were free to do so, we do not read Sony-Betamax’s holding as narrowly as does the Seventh Circuit. Regardless, it is not clear that application of the Aimster rationale would assist the Copyright Owners here. Implicit in the Aimster analysis is that a finding of substantial noninfringing use, including potential use, would be fatal to a contributory infringement claim, regardless of the level of knowledge possessed by the defendant. In Aimster, no evidence was tendered of any noninfringing product use.
Some Centralization Okay

Some have taken a broad reading of the Napster decision to mean that any centralization would be impermissible in a peer-to-peer network. The decision narrows such broad interpretations, permitting a variety of centralized services, within bounds:

The Copyright Owners have not provided evidence that defendants materially contribute in any other manner. StreamCast maintains an XML file from which user software periodically retrieves parameters. These values may include the addresses of websites where lists of active users are maintained. The owner of the FastTrack software, Sharman, maintains root nodes containing lists of currently active supernodes to which users can connect. Both defendants also communicate with users incidentally, but not to facilitate infringement. All of these activities are too incidental to any direct copyright infringement to constitute material contribution. No infringing files or lists of infringing files are hosted by defendants, and the defendants do not regulate or provide access.
Wanting to be next "Napster" doesn't make you liable

This is actually quite strong language, particularly in the context of the INDUCE Act. The argument is often made that "trying to avoid liability" is the only purpose of P2P software design. This paragraph puts the lie to that claim, and claims that will be made under the INDUCE Act if it passes:

While Grokster and StreamCast in particular may seek to be the “next Napster,” Grokster I, 259 F. Supp. 2d at 1036, the peer-to-peer file-sharing technology at issue is not simply a tool engineered to get around the holdings of Napster I and Napster II. The technology has numerous other uses, significantly reducing the distribution costs of public domain and permissively shared art and speech, as well as reducing the centralized control of that distribution. Especially in light of the fact that liability for contributory copyright infringement does not require proof of any direct financial gain from the infringement, we decline to expand contributory copyright liability in the manner that the Copyright Owners request.
Put it in Congress' Hands

This is the conclusion of the opinion and basically says changing secondary liability is up to Congress. The proponents of the INDUCE Act are going to jump all over this decision to show that existing secondary liability doctrine is "broken."

Further, as we have observed, we live in a quicksilver technological environment with courts ill-suited to fix the flow of
internet innovation. AT&T Corp. v. City of Portland, 216 F.3d 871, 876 (9th Cir. 1999). The introduction of new technology is always disruptive to old markets, and particularly to those copyright owners whose works are sold through well-established distribution mechanisms. Yet, history has shown that time and market forces often provide equilibrium in balancing interests, whether the new technology be a player piano, a copier, a tape recorder, a video recorder, a personal computer, a karaoke machine, or an MP3 player. Thus, it is prudent for courts to exercise caution before restructuring liability theories for the purpose of addressing specific market abuses, despite their apparent present magnitude.

Indeed, the Supreme Court has admonished us to leave such matters to Congress. In Sony-Betamax, the Court spoke quite clearly about the role of Congress in applying copyright law to new technologies. As the Supreme Court stated in that case, “The direction of Art. I is that Congress shall have the power to promote the progress of science and the useful arts. When, as here, the Constitution is permissive, the sign of how far Congress has chosen to go can come only from Congress.” 464 U.S. at 456 (quoting Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518, 530 (1972)).

P2P United's Press Release

P2P UNITED STATEMENT ON NINTH CIRCUIT'S "COMPLETE AND UTTER REJECTION" OF ENTERTAINMENT INDUSTRIES' CLAIM THAT DECENTRALIZED PEER TO PEER SOFTWARE DEVELOPERS ARE COPYRIGHT INFRINGERS

CONGRESS URGED TO HEED COURTS ADVICE TO LET NEUTRAL NEW TECHNOLOGY AND THE MARKET FIND ITS OWN "EQUILIBRIUM" . . . .

WASHINGTON (AUGUST 19, 2004) --- Adam Eisgrau, Executive Director of P2PUnited – the Washington-based trade association of the peer-to-peer technology industry representing the developers of BearShare, Blubster, Grokster, eDonkey and Morpheus P2P software – released the following statement on the Ninth Circuit Court of Appeals' stunning and complete affirmation today of last Spring's Federal District Court ruling that such developers do not infringe copyright by developing and distributing their popular software programs used by tens of millions of Americans:

"The Ninth Circuit's complete and utter rejection today of the entertainment industries' attempts to warp long-standing, pro-innovation copyright law into a weapon against peer-to-peer technology and its developers is a profound and major victory for the American consumer and our economy. Critically, the court cut through and rejected Hollywood's and 'Big Music's' propaganda about
peer-to-peer software and the P2P United member companies sued in this case (Grokster and Streamcast) to find the truth:

∑ peer-to-peer software is not only capable of many important and substantial non-commercial uses that do not infringe copyright, but is also used now for valuable commercial purposes, as well;

∑ decentralized peer-to-peer software programs, like Grokster and
Morpheus, were built to and do comply fully with current copyright law; and

∑ before the time-tested law set down by the Supreme Court in the Sony Betamax case 20 years ago is changed, extreme caution and care is required to avoid killing a revolutionary technology in its cradle."

"While the court acknowledged that only Congress can make the kind of radical change in copyright law that the copyright cartel wanted in this case, it also clearly indicated that having the power to make change does not mean that change should be made. P2P United respectfully urges every Member of Congress to heed the court's strong advice that such radical change would be 'unwise' and, if they read no other part of the Ninth Circuit's opinion, to take the court's following observations to heart:

'The introduction of new technology is always disruptive to old markets, and particularly to those copyright owners whose works are sold through well established distribution mechanisms. Yet, history has shown that time and market forces often provide equilibrium in balancing interests, whether the new technology be a player piano, a copier, a tape recorder, a video recorder, a personal computer, a karaoke machine, or an MP3 player.'

'The Copyright Owners urge a re-examination of the law in the light of what they believe to be proper public policy, expanding exponentially the reach of the doctrines of contributory and vicarious copyright infringement. Not only would such a renovation conflict with binding precedent, it would be unwise. Doubtless, taking that step would satisfy the Copyright Owners' immediate economic aims. However, it would also alter general copyright law in profound ways with unknown ultimate consequences outside the present context.'

"The court is right and neither pending legislation nor more litigation will make a market for the 21st Century that puts the power of peer-to-peer technology to work for the public and for the artists that multi-national copyright aggregators so cynically claim to speak for."

Comments (1) + TrackBacks (0) | Category: Copyright | File Sharing | INDUCE Act


COMMENTS

1. cypherpunk on August 19, 2004 09:57 PM writes...

As usual, I think Seth Finkelstein has hit it on the head this time. For all of your rhetorical slaps at the INDUCE act, this decision is going to do more than anything the copyright cartel could come up with to give that proposal a boost. All the celebration is highly premature, to say the least.

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