Nice Questions Unanswered: Grokster, Sony's Staple Article of Commerce Doctrine, and the Deferred Verdict on Internet File Sharing

Abstract:     
When is the developer or distributor of a copying technology legally responsible for the copyright infringements committed by users of that technology? Over the past twenty years or so, development and deployment of digital copying technologies (personal computers, CD and DVD burners, iPods and other portable music devices, the Internet itself, etc.), and tools for Internet file sharing and file distribution, have thrust that question into the center of a high-profile public debate. That debate gave rise to the most closely watched copyright case of recent years, MGMStudios Inc. v. Grokster, Ltd. The Ninth Circuit Court of Appeals had held that defendants Grokster and StreamCast, the developers and distributors of peer-to-peer file-sharing software, were shielded from copyright liability by the so-called Sony doctrine (also called the Betamax case), interpreting that doctrine to mean that distributors of copying technology that is capable of commercially significant noninfringing use are shielded from liability for the infringement committed by users of the technology, unless the distributors had specific knowledge of infringement obtained at a time at which they contributed to the infringement and had failed to act upon that information. The Supreme Court unanimously reversed, holding that because Grokster and StreamCast had distributed their software with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, Sony did not protect them from liability, whether or not their software was capable of commercially significant noninfringing use. The unanimous decision in the copyright holders' favor is, obviously, a big loss for Grokster Inc. and StreamCast, Ltd.; its broader implications for Internet file-sharing practices and file-sharing technology, however, are much less clear; to try to understand what they might be, we rewind the tape, back to Sony in 1984 . . .

Number of Pages in PDF File: 28

Keywords: internet, peer-to-peer filesharing, copyright, intermediary liability

JEL Classification: K11

Accepted Paper Series