Supreme Court Ruling: MGM v. Grokster

On Monday, June 27, 2005, the Supreme Court unanimously ruled that file-sharing networks can be sued if they intend for their customers to use the software illegally. The case will return to a lower court where MGM and the other plaintiffs will try to prove their case anew.

In recent years, the major movie studios, music labels and software companies say they have lost billions of dollars in sales to illegal swappers using software distributed by Grokster, Kazaa, Morpheus, LimeWire and others.

While the entertainment industry successfully sued thousands of individual file-traders, it largely failed in efforts to punish file-sharing providers for the actions of their users. Lower courts had ruled that under a landmark Supreme Court decision in 1984, distributors of technologies could not be held liable for illegal acts by customers if the technology has "substantial" legal uses. That case involved Sony Corp.'s Betamax video recording machine.

The Supreme Court is the final court of appeal for the entertainment companies; and even before the court agreed to hear this particular case, copyright owners were considering other options. The Recording Industry Association of America and Motion Picture Association of America last year threw their weight behind a bill intended to drive file-swapping networks out of business. The bill died at the end of 2004, but could be introduced again this year.

The following links provide additional information regarding this issue:

Washington Post articles:
At a Glance: MGM v. Grokster
File-Sharing Firms Can Be Held Liable

Future of Music Coalition:
Statement on MGM v. Grokster and Brand X
Other Organizations' Statements on MGM v Grokster

U.S. Copyright Office: Supreme Court Rules in MGM v. Grokster

The Progress and Freedom Foundation's Congressional Seminar:
July 8, 2005, 12-2pm
Longworth House Office Building, Room 1537, Washington, DC
MGM v. Grokster: What's Next?