III. Metro-Goldwyn-Mayer v. Grokster
The case is before the Supreme Court on the petition of the plaintiff music and movie producers. They had filed suit in United States District Court for an injunction and for damages. They argued that the defendants, providers of P2P software, should be held accountable for copyright infringement based on two theories of secondary liability. Secondary liability occurs when someone does not directly commit a copyright infringement but somehow provides the opportunity to others to do so. The two related but distinct theories were contributory infringement and vicarious infringement. The District Court granted partial summary judgment to the defendants, essentially killing the lawsuit. Relying on Betamax and its own decisions in A&M Records v. Napster, [11] the Ninth Circuit affirmed the summary judgment.
Before analyzing the legal issues in the case, the Ninth Circuit first considered the differences between the architecture of the software used by Napster and that used by the defendants in this case, particularly as it relates to indexing of files available to users for download. [12] Napster employed a proprietary centralized index of available files. The collective index was maintained on the servers owned and operated by Napster. The P2P indexing at issue in this case is either a decentralized indexing system with each computer maintaining a list of files available on that computer or a "supernode" system in which a select number of computers act as indexing servers. With the decentralized system, each individual computer is both a client and a server, and a request is broadcast for a search on all of the individual index files. A "supernode" system works by connecting a user with the most easily accessible supernode. Any computer on the network can function as a supernode if it meets requirements such as processing speed.
These differences in indexing were critical to the Ninth Circuit's decision, as will be seen in a brief summary of the Court's analysis of each of the two theories of liability.
Fig. 1: Ninth Circuit Court of Appeals
A. Contributory Infringement
To prevail on a theory of contributory infringement, a plaintiff must prove (1) direct infringement by a primary infringer, (2) knowledge by the defendant of the infringement, and (3) material contribution to the infringement. The Court concluded that direct infringement by the users of the P2P was not disputed and moved to whether the other elements had been shown.
The Court looked to Betamax, a case which began in the early 1980s and was decided by the Supreme Court in 1984, to determine the type and level of knowledge required. In Betamax, Universal Studios had sued Sony, seeking an injunction to halt production and sales of videotaping equipment. The Supreme Court found in favor of Sony, noting that videotaping of television shows was primarily a "time shifting" activity that allowed viewers to watch the shows that were aired for free at a time convenient for them. Thus, the products were capable of substantial or commercially significant noninfringing uses. Therefore, constructive knowledge of specific infringing uses could not be imputed from Sony's knowledge that the recorders could, as a general matter, be used for infringement. [13]
In the Napster cases, the Ninth Circuit applied these principles, but found Napster did have actual knowledge because the plaintiffs had notified Napster of copyrighted material on its central index that was available for download. For that reason, an injunction against Napster was granted and it was effectively shut down. Napster has since been acquired by Roxio, makers of CD recording software, for use as a pay-per-download program. Roxio has recently sold its software division to Sonic, makers of MyDVD and other DVD recording software. [14].
Unlike Napster, however, the defendants here could not have actual knowledge of specific instances of infringement because they maintained no central indexing file. Because it was undisputed that P2P networks are capable of, and indeed are used for, noninfringing purposes and have commercial viability, actual knowledge of specific instances of infringement would be required. Even when plaintiffs notify the defendants of specific infringement which they learn of from their activity in pursuing individual users, notification to the defendants comes at a time when they can do nothing to stop the activity because it has already occurred. Even if the defendants "closed their doors and deactivated all the computers in their control" users of the software could continue to share files.
As for the element of material contribution, the Court again referred to the differences in indexing between Napster and the current defendants. Napster was an integrated service which provided the site and facilities for direct infringement. The defendants in this case do not provide the site and facilities. Rather users connect directly with each other. Thus the plaintiffs had failed to establish, in the Court's view, either of the two elements of knowledge and material contribution, and the theory of contributory infringement could not succeed.
