|Article Author : Becky
Date : 18th Jul 2005
Comments : 0
Whether we believe it is right or not, many of us have become accustomed to the fact that a large number people download copyrighted material regularly using Peer-to-Peer file-sharing software. As a result, the entertainment industry is losing billions of dollars in revenue, and is suffering from the infringements of many copyrights. Who should be held responsible for this? Is it the fault of the people who misuse the software, or is it perhaps the fault of the software distributors for allowing this to take place? The recent case of MGM Studios, Inc. v. Grokster, Ltd examined these issues.
The Parties Involved
Grokster and other P2P software providers: All distribute free software that allows computer users to share electronic files (including digitised music and motion pictures) through P2P networks. This software allows transfer of any digital file, but has been mostly used by customers to share copyrighted files (e.g. music and video).
MGM and other entertainment companies (24 in total): A collection of song-writers, music publishers and motion picture studios who “own or control the vast majority of copyrighted motion pictures and sound recordings in the United States” (their own description). They sought damages and an injunction against respondents (Grokster) for copyright infringement. MGM accused Grokster of distributing software which enabled users to breach copyright restrictions. They insisted that around 90% of data transferred using P2P software was copyrighted, costing them millions of dollars in lost revenues. They also argued that this type of copyright infringement would not occur if Grokster and similar software distributors did not make it possible.
The Issues at Stake
Peer-to-Peer (P2P) File Sharing: Information in Grokster’s peer-to-peer distribution network does not exist in one place (there is no central server holding all the information), rather, every computer in the network holds information available to all other users in the network. Put another way, in a peer-to-peer network each computer is both a server and client. Members need only to download the relevant software, free of charge, and they may participate in this network to exchange files, which are more often than not copyrighted.
Billions of files are shared across P2P networks each month - a large proportion of which are illegal. If Grokster was made responsible for their actions, the amount of files transferred would be expected to reduce significantly as tighter regulations are enforced.
Both the District Court of California and the Ninth Circuit Court of Appeals ruled in favour of Grokster, much to MGM’s immense disappointment. It was held in both courts that Grokster escaped liability for a number of reasons:
Due to the extent of disagreement which arose as to whether Grokster is protected under the Sony Betamax case, a new test has been developed to determine whether the software in question is protected by the ruling in the Betamax case. The test assesses whether or not the distributors of the software have promoted it as a means of copyright infringement. If such intentions were found, then the ruling of the Betamax case could not be used as precedent.
As long as new innovations do not affect existing copyrights, then this ruling should not affect them. It is seen by the Supreme Court as a fair balance between the benefits gained by allowing and promoting technological innovation and the need to respect the intellectual property rights of artists. However, critics do not quite view it in the same light: they are sceptical that the test will work in their favour due to it’s inherent ambiguity.
There are major concerns, however, that despite the good intentions of the court to strike a fair balance between innovation and copyrights, many investors may be put off. If there is a slight chance that a potential project is at risk from this ruling, then ideas are likely to go no further than the drawing board. This could have huge significance, especially regarding the creation of new digital technologies: Any threat of liability, and the idea dies
Many argue that file-sharing is not the problem which needs to be addressed here, it is the issue of the individuals that abuse it. On the other hand, trying to hold millions of downloaders responsible for their (numerous) actions would be logistically impossible, and so a more preventative approach has instead been used.
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