What does the decision mean?

Perhaps answering the question of what the decision means is made easier by reviewing a few things it does not mean. The decision does not mean that MGM and the other plaintiffs have "won" the lawsuit or that the defendants have been found liable. It merely means that the case will proceed, perhaps to trial, although settlement is probably more likely than not. The case will have no direct legal impact on P2P providers not named in the lawsuit. In order to have other providers found liable, they would have to be named. It is possible that the plaintiffs would amend their complaint to name other defendants, but I think given the cost involved, this is not a strong possibility. If the plaintiffs ultimately succeed in this suit against the two named defendants, the success will certainly encourage others to cease their activity.

On a practical level, the Supreme Court's decision will likely have several results. Given that the Court's decision does not bode well for potential defendants in future lawsuits, it is improbable that P2P providers will cease distributing their software immediately, but they most certainly began looking immediately at their activity and comparing it to that of the defendants in this case. In light of this lawsuit, several P2P providers had begun to make efforts to protect themselves by insuring that their products were not viewed as intentionally aiding infringement. These efforts will be stepped up considerably in the next days and weeks.

The Court's decision did not fully spell out any standards to be used to determine when a provider has the "object of promoting" copyright infringement, but does provide for some reasonable assessment of what legitimate providers can do and what defendants and others in their situation must do.

It is important to note that the Court concluded that the mere facts that a provider's software is or could be used for illegal infringement, even a showing that such infringement is the primary use, and that providers profit from this are not sufficient to find liability. Liability depends on an actual showing of intent to induce or encourage illegal downloading of copyrighted material.

This brings up the question of what the defendants in this case, as well as the other members of the "Big Seven" and other P2P providers can do to escape liability. It will probably not be enough to cease the direct appeals to former Napster users or other solicitation that extols the infringing capability. Indeed, it will probably be insufficient for providers to attempt to hide their intent with public disclaimers or even information about the illegality of infringing on copyrights. The appeals to Napster users and other overt actions to encourage infringement are only one means of showing intent. Although in this case, it was of paramount importance and would make the required proof much easier in future cases, such overt actions would not be necessary to show inducement. As the Supreme Court held, there are several avenues by which the conclusion of inducement can be reached.

A very important question is whether and to what extent the decision will affect legitimate providers and uses of P2P. One of the cornerstone assertions by the defendants and others in this case was that P2P had legitimate uses and that holding providers liable would be a set back to such legitimate uses and to development of technology to improve the ability to share files legitimately. In the immediate aftermath of the Court's decision, many have echoed this refrain. I believe it is misplaced. By requiring a showing of intent, legitimate use and the development of future technology is both protected and encouraged. Fears that such use and development will be curtailed are the result of incomplete analysis of what the Court actually held. In the aftermath of the Court's decision, it was predictable that providers and users who will in fact be affected by the ruling on illegal infringement will trumpet this concern.

There are two other things this decision does not mean. First, this is not the end of litigation involving P2P. This case may drag out for several more years before a final decision is reached. Other lawsuits may arise. There will undoubtedly be some "fine tuning" of the Court's decision that may more clearly provide notice to developers and distributors of P2P software what the limits of liability are.

The final thing this decision does not mean is that, even after it is played out in full and defendants and similar providers are no longer operating as they do now, the difficult problems arising from copyright protection in an era of rapid technological development will not be solved. As I stated in my first article on this issue:

"And, of course, if the final decision effectively sounds the death knell for file sharing as we know it today, it will not close the book on the issue. Many thought, some might say foolishly, that with the demise of Napster and programs like it, sharing of music and movies would be severely curtailed. It is of course more rampant than ever, due to the imaginative resourcefulness of developers and users. There is no reason to think that they will not meet the new challenge if the defendants in this case are forced to shut down."

Nothing in the Supreme Court's decision persuades me that my assessment expressed in that article was in error.