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MGM vs Grokster - The Lover's P2P Quarrel
March 28, 2005
Thomas Mennecke
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On March 29th, 2005, legal representatives from Grokster and MGM will present their arguments before the United States Supreme Court. At issue is whether Grokster can be held responsible for copyright infringement. Copyright holders contend that Grokster should be held directly responsible for the infringing activities of its users.

While Napster quickly fell to the RIAA (Recording Industry Association of America) in 2001, this has not been the case for Grokster. Unlike Napster, Grokster functions on a decentralized network, specifically FastTrack. While Napster maintained centralized indexing servers at their headquarters, the FastTrack network distributes this functionality throughout the community via "SuperNodes."

SuperNode functionality is built into the Grokster software. Anyone with a fast enough computer and internet connection can become a SuperNode.

Since Grokster cannot control these SuperNodes, two Federal courts have negated the copyright industry's claim that P2P developers are liable for copyright infringement. The only course of action left for the copyright industry is their upcoming appeal to the United States Supreme Court. Below we present to you, in perhaps a more jovial fashion, the conflict and arguments that surround each party.

Grokster: How was your day?

MGM: I'm not talking to you, Grokster...

Grokster: I'm sorry, what's wrong dear?

MGM: Don't play stupid with me, you know exactly what's wrong...

Grokster: Honey, I swear, all I asked was how your day is going.

MGM: Well, where should I begin? I woke up this morning, and noticed that you were stealing almost all of my most popular music and movie files.

Grokster: That's ridiculous honey. I have been sitting here programming all day. In fact, I don't think I've left the house all morning.

MGM: I'm sure you would like me to believe that, and I'm sure you would like to convince everyone else of that also. But whether you would like to admit it or not, you're helping millions of individuals each day to violate my copyrights.

Grokster: And what exactly does that have to do with me? Like I said, all I have done is sit here and program all morning. How do the actions of my users have anything to do with me? I don’t keep track of them, they aren't my children you know...

MGM: It has everything to do with you. You have full knowledge of the infringing properties of your service. This makes you libel as a contributory infringer. Your software is designed to assist in the massive infringement of copyrighted material, and is constantly being upgraded to aide in this end.

Also, you are guilty of vicarious liability. With all the advertising and third party software that coexists with the software, you have been making millions of dollars in revenue. You have been gaining financial advantage by exploiting my copyrights. And I haven't seen a dime.

Grokster: Money? Is that what it boils down to with you? Let me tell you something. First, stop using such misleading words as "service." We do not provide a service, we write software that creates a network. Those are two very big and distinct differences.

Second, what is this about contributory and vicarious liability? Because my software can be used to violate your copyright, I am guilty of this?

What you describe also paints a picture for just about every other piece of technology out there...iPods, CD writers, DVD writers, etc. To protect people like me from people like you, the 9th Circuit Court agreed with the Supreme Court’s Universal vs Sony Betamax decision in 1983. The Supreme Court ruled in 1983 that Sony's Betamax recorder was legal, which absolved Sony of contributory copyright infringement, as it does me. The Supreme Court ruled this way because the Betamax recorder was "capable of substantial or commercially significant noninfringing uses.”

In addition, the 9th Circuit Court of Appeals ruled that I was not guilty of vicarious infringement because I do not control the indexing of files. Napster did control the indexing of files because their servers were centrally located. Since no communications exist between me and my users, save for the transmission of advertising, we are not guilty under this provision either.

MGM: I really can’t believe you're trying to pull that Sony Betamax crap with me right now. That's so typical of you.

Let me first say that you're right, the Supreme Court did find in 1983 that Sony's Betamax was capable of "substantial or commercially significant noninfringing uses.”

However, there are some big differences. All the gadgets you mention, iPod, CD Writers, etc, DO have substantial noninfringing uses. Video recorders DO have noninfringing uses. But do you expect me to use that logic with your software?

Let’s put things in perspective. According to some estimates, over 2 billion files are transferred over P2P networks every month. In addition, over 90% of those files are copyrighted works. I find it very hard to believe that any of those other electronic devices are used 90% of the time to distribute millions of copyrighted files each day.

You have obvious knowledge of copyright infringement. Why else have you stuck Napster metatags into your website to redirect web traffic? Hmmm? Why else did you choose a name so similar to Napster?

Grokster: Well, er-

MGM: I'm not finished! Do you think I forgot about the time when you created that nifty little AudioGalaxy migration tool? When I had those guys shut down, you went right ahead and created a program that easily transferred AudioGalaxy shared files to your service.

Lastly, let me reiterate that the 9th circuit court misapplied the Sony Betamax case. The Supreme Court ruled the majority of the Betamax’s use was for “time shifting” purposes of already free material. In addition, the application of “time-shifting”, or the recording of material for future viewing, has no effect on the artist’s incentive to create. The videocassette recorder, the court found, is not capable of massive copyright infringement and is protected under “fair use” laws since most people use the technology for home use.

I’m afraid that P2P technology and Betamax technology are on opposite ends of the spectrum here. P2P is fully capable of replicating copyrighted works beyond the Supreme Court's vision in 1983. Today, just about anyone can distribute thousands of copies of my material, multiplied by millions. How exactly does that constitute fair use?

Grokster: You really like to play around with that 90% figure, don’t you? Well let’s see, there are over 2 million people on the FastTrack network. Even if you number is correct, that leaves 10% sharing legal content. That equates to around 200,000 people. If you ask me, that is a substantial amount of people engaging in noninfringing activities. If you don’t believe me, let me break it down a bit.

Numerous recording artists, such as Janis Ian, Bela Fleck, John Mayer, Phish, Pearl Jam, and the Dave Matthews Band have authorized their work to be distributed via P2P. Numerous businesses, such as Prelinger Archives, GigAmerica, Reel Mind, and J!ve Media have built commercial businesses by using peer-to-peer file-sharing to promote and distribute hundreds of thousands of authorized copies of music, video, and video-game content. The Linux Operating System is frequently distributed by BitTorrent.

Many independent record labels are now opting to distribute their content via P2P also. Altnet, SnoCap, MashBoxx and BitMunk all have agreements with various independent labels to distribute their work. Should they suffer because you feel your business model is not in agreement with the P2P philosophy?

Lastly, the Supreme Court has shown in the past that it is not necessarily interested in what proportion technology infringes on one’s copyright. In the Betamax case, the Supreme Court ruled in favor of Sony because their technology is “merely capable of substantial noninfringing uses.” While Grokster may be used for infringing uses right now, the future of P2P may not necessarily be this way. The technology must be allowed to develop without stifling innovation.

P2P technology has proven time and again to be a very practical and money saving way to distribute legal content.

MGM: Well that’s really great for those artists and companies, Grokster. It really is. But how does that help my situation? You know what really irks me?

Yes, that 90% figure really is important to me. While I can appreciate that many artists are now using P2P to distribute their work, you are doing nothing to prevent the infringement of my copyrights.

The technology readily exists for you to implement into your software. Several vendors exist that can and will recognize the unique fingerprints of copyrighted work. It will then prevent those files from being shared or distributed across the network. But of course, you won’t do this because it will threaten your business model.

If you did filter copyrighted material, people would simply go to another network. Your former CTO buddy over at StreamCast said “the question is not whether file-sharing companies can filter, but whether they will.” So I suppose the question is why you refuse to filter out copyrighted material?

Grokster: Note that he was the former CTO of StreamCast, not current. I have to strongly disagree with him. First, he said that back in 2003. Back then, perhaps it was easier to filter copyrighted works.

But remember, Napster tried doing this on a centralized network. If searches are routed through a central point, then perhaps it is possible. However, can you imagine trying to do this on a decentralized network? Such a feat would be near impossible. You don’t seem to realize that we do not see what happens on an individual’s computer. Even if we did by some miracle of science develop the technology, it would require individuals to download a new version of the software.

I’m sure that will be real successful. I can see it now “Hey everyone, we have a new version that filters out copyrighted material, download it now!”

MGM: You know, Grokster I wouldn’t be so mad if you at least showed some effort to help me out here.

Grokster: I don’t want to be the bearer of bad news, but both Federal courts have agreed that we are not liable for copyright infringement. I have a strong suspicion the Supreme Court will think so too. I have tried to make amends with you MGM, I really have. But you just don’t want to listen to what I have to say.

MGM: I have listened, but you are so set in your ways that it doesn’t appear we will be able to settle these issues ourselves. I’ll see you in court.

This story is filed in these Slyck News categories
FastTrack :: Grokster
Entertainment Industry :: Other

Arguments for this story were derived from the MGM, Grokster and Napster briefs.

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