Thoughts on first reading the Supreme Court opinions in MGM v. Grokster:

 

        Wow! This looks like a major victory for the studios. First, the Court, per J. Souter, concludes that distributors of a file-sharing “device” can be held liable for contributory copyright infringement if their “object” is to “promote its use to infringe copyright.” The Court purports to be restating the Sony reasoning, but the ground has subtly shifted. The focus is not so much on the measurement (arguably a quantitative measurement) of the amount of non-infringing use, but upon the intent of the distributor. Based upon the evidence presented in this case, the Court unanimously ruled to set aside the summary judgment for Grokster, and to remand the case to the Ninth Circuit.

 

        But the case goes even further. Frequently, when the Supreme Court clarifies one of its earlier rulings, it doesn’t tip its hand about how to apply the “new” understanding to the facts of the case before it, but remands the case to the appellate court for “further proceedings” applying the correct standard. In this case, the Court’s opinion pretty much disposes of further argument, and leaves little by way of fact-finding for the appellate court. For example, the Court states that “The record is replete with evidence that from the moment Grokster and StreamCast began to distribute their software, each one clearly voiced the objective that recipients use it to download copyright works, and each took active steps to encourage infringement” (opinion at p. 6). The Court concludes that “The argument for imposing indirect liability in this case is, however, a powerful one, given the number of infringing downloads that occur every day using StreamCast’s and Grokster’s software” (opinion at 12). And, at p. 23, “The unlawful objective is unmistakable.” What more is there for the Ninth Circuit to decide? There’s not much wiggle-room here.

 

        Although the case is being described as a unanimous one, in one very important respect, it isn’t. In a concurring opinion, Justice Ginsburg, speaking for herself and Justices Rehnquist and Kennedy, suggests that the Ninth Circuit misread the Supreme Court’s Sony decision. Justice Ginsburg further denigrates the evidence presented by Grokster, by characterizing it as “mostly anecdotal evidence, sometimes obtained second-hand.” In the conclusion, this opinion strongly suggests not only that summary judgment in favor of Grokster is wrong, but that summary judgment in favor of MGM might be in order. Justice Ginsburg states that “If, on remand, the case is not resolved on summary judgment in favor of MGM based on Grokster and StreamCast actively inducing infringement . . .” – obviously an invitation to the appellate court to so dispose of the case. If not, then Justice Ginsburg suggests that the Ninth Circuit reconsider its interpretation of Sony – a suggestion that, if it were from the whole Court would be tantamount to a command, but, coming from a concurring judge, is “merely” a very strong suggestion.

 

        The more curious opinion is Justice Breyer’s opinion, joined by Justices Stevens and O’Connor. Although it is self-described as a concurrence, it only concurs in the remand for further proceedings, and varies substantially from the “suggestion” raised by the Ginsburg concurrence. Justice Breyer concludes that the Ninth Circuit was correct in finding that Grokster passed the Sony test (Breyer opinion at p. 4). He also concludes that Sony should not be modified, as he believes Justice Ginsburg has effectively done (Breyer opinion at p. 9). Justice Breyer concludes by “agreeing with the Court” and “joining in its opinion,” though disagreeing with the interpretation of Justice Ginsburg. However, even by the logic of the full Court’s opinion, I don’t see that there’s much room left for the Ninth Circuit to find anything other than infringement in this case. So the Breyer opinion reads more like a dissent, urging the lower courts to be receptive to new technologies, but ultimately deferring to Congress for a legislative resolution of the problem (Breyer opinion at p. 18).

 

        Stepping back for a little perspective, I very much like the approach taken by the Court. Under the Ninth Circuit’s analysis in the Grokster case, with its reconciliation with Napster and Aimster that appeared to go the other way, the focus was upon a technological issue – whether the files being shared were stored centrally (as in Napster) or were decentralized, as in Grokster. I’m not sure that courts are generally well suited to understanding the technological distinctions or that the technical distinctions are the most important aspect in analyzing file-sharing systems. Instead, the Court has now shifted the emphasis away from the technicalities and to the intent of the distributors of the software. Although it may seem that intent is just as difficult to determine, it’s the type of “fact” that courts deal with all the time. The shift in focus is away from technological nit picking, and toward a broader assessment of what’s really going on – whether the distributors intended to induce infringement, and encouraged it (and, by implication, had a profit-motive to benefit from such infringement).

 

            -Edward Samuels, June 27, 2005