P2P Firms Didn’t Violate Copyright Laws, U.S. Court Says

SAN FRANCISCO — In a major blow to copyright holders, Grokster Ltd. and StreamCast Networks Inc. have been ruled not legally responsible for the swapping of content through their file-sharing software.

The 9th U.S. Circuit Court of Appeals said Thursday that the two suppliers of the free peer-to-peer software were not liable for illegally swapped music and movies online because they don't have central servers where computer users can access the material.

With the ruling, which could be appealed to the U.S. Supreme Court, the court effectively turned down the music and film industries contention that copyright law should change whenever new technology comes along.

"History has shown that time and market forces often provide equilibrium in balancing interests, whether the new technology be a player piano, a copier, a tape recorder, a video recorder, a personal computer, a karaoke machine, or an MP3 player," Judge Sidney R. Thomas wrote. "Thus, it is prudent for courts to exercise caution before restructuring liability theories."

The case is a big win for all tech companies because it means that they can make available copyright data.

But it doesn’t mirror the Napster case several years ago when it was shut down after the 9th Circuit ruled that its centralized servers, which contained thousands of copyrighted songs, made it legally liable for contributing to copyright infringement.

After that ruling, peer-to-peer technology developed that avoided the need for a central hub, thus limiting the liability of Grokster of Nevis in the Caribbean and Los Angeles-based StreamCast, which both make revenue through pop-ups.

The San Francisco-based 9th Circuit noted that the software firms simply provided software for individual users to share information over the Internet, regardless of whether that shared information was copyrighted.

Thomas, who wrote for the unanimous three-judge panel, said peer-to-peers are worthy distribution systems.

"The technology has numerous other uses, significantly reducing the distribution costs of public domain and permissively shared art and speech, as well as reducing the centralized control of that distribution," he said.

The ruling doesn’t let individuals who download media off the hook. Music and film companies are free to continue suing downloaders who unlawfully appropriate copyrighted movies and music.

Tech defenders hailed the unanimous decision.

“The entertainment industry has been fighting new technologies for a century, only to learn again and again that these new technologies create new markets and opportunities," Fred von Lohmann, a senior intellectual property attorney for San Francisco's Electronic Frontier Foundation, told XBiz. "There is no reason to think that file sharing will be any different."

The case is Metro-Goldwyn-Mayer vs. Grokster, 03-55894.

Copyright © 2026 Adnet Media. All Rights Reserved. XBIZ is a trademark of Adnet Media.
Reproduction in whole or in part in any form or medium without express written permission is prohibited.

More News

FSC Talks Age Verification on Capitol Hill

The Free Speech Coalition (FSC) has published a blog post detailing the organization's talks on age verification on Capitol Hill in Washington.

FTC Warns PayPal, Stripe, Visa, Mastercard Against Debanking

Federal Trade Commission Chairman Andrew Ferguson sent letters on Thursday to the CEOs of PayPal, Stripe, Visa and Mastercard, warning them against debanking practices — including denying access to services due to a customer’s lawful business activities.

AEBN Publishes Report on Ejaculate Trends

AEBN has published a report on ejaculate categories from its straight and gay theaters.

Chaturbate to Hold 'CB15' Creator Retreat in Arizona

Chaturbate will hold its CB15 creator retreat in Scottsdale from April 20-23.

EU Cites 4 Adult Sites for AV Breaches

The European Commission has preliminarily found PornHub, Stripchat, XNXX and XVideos to be in breach of Digital Services Act provisions intended to shield minors from adult content.

ProDx Health Joins SextPanther as New Testing Partner

ProDx Health has joined SextPanther as its new testing partner.

Kazumi Guests on Chaturbate's 'Sex Tales' Podcast

Kazumi is the latest guest on Chaturbate’s “Sex Tales” podcast, hosted by Melissa Stratton and Vanniall, and streaming on the company’s “Camming Life” YouTube channel.

WIFEY Publishes 'Hotwife Paradox' Report

Vixen Media Group studio imprint WIFEY has published a report on the hotwife lifestyle.

Pineapple Support Partners with Better Life Science's 'STD Hero'

Pineapple Support has partnered with Better Life Science brand STD Hero.

Brazil Sets Enforcement Timeline for New AV Rules

Brazil’s National Data Protection Authority (ANPD) on Friday published a timeline outlining planned steps for monitoring and enforcing age verification under the country’s Digital Statute for Children and Adolescents (Digital ECA), which took effect Tuesday.

Show More