Grokster: Supremes Not Hot on P2P Lawsuits

Matt O'Conner
WASHINGTON — After round one in the MGM vs. Grokster case before the U.S. Supreme Court, peer-to-peer software companies seem to be ahead on several justice’s scorecards.

At the heart of the case is whether P2P companies should be held liable for revenue entertainment companies claim they are losing due to illegal sharing of copyrighted material by end users.

During animated discussions, several justices voiced concerns that the threat of legal action against software companies could severely impede innovation.

Justice Antonin Scalia said he feared allowing entertainment companies to sue technology makers would lead to a mindset that, “[If] I’m a new inventor, I’m going to get sued right away before I get a chance to do business.”

The Grokster case dates back to 2001, when entertainment companies, including the Recording Industry Association of America and the Motion Picture Association of America, filed suit against Grokster and fellow P2P software maker Morpheus, arguing that companies that produce products that are primarily used for illegal piracy should be held responsible for the actions of their users.

The defendants have maintained that their products also have, and are intended for, legal uses, and that they should not, therefore, be held liable when consumers choose to use their products in unlawful ways.

So far, the P2P companies have won victories in both U.S. District Court and the 9th U.S. Circuit Court of Appeals, and they seem to have won over Justice Breyer, who noted during the discussion that P2P technology offers “some really excellent” non-infringing uses.

Donald Verrilli, an attorney representing the entertainment industry, fired back that of 2.6 billion files traded over P2P networks each month, only a few hundred thousand are legal.

“That’s the whole business,” Verrilli said. “What they’re talking about as lawful is a tiny, teeny little fraction.”

Justice Stephen G. Breyer questioned whether an open door policy on litigation against innovators whose technology has potentially illegal uses would have stifled development of copy machines, VCRs and even the printing press.

Justice David Souter noted that the Apple iPod falls into the same category and how any inventor or developer, given the threat of legal action, could approach the market with confidence.

However, not all justices fell on the side of P2P. Justice Anthony M. Kennedy, for one, worried that software companies are being allowed to build businesses and reap massive profits from what is, in essence, stealing.

“That seems wrong to me,” he said.

A decision is not expected until mid Summer.