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Grokster Loses
I blogged my feelings about this case in early April.
The bottom line is that the Supreme Court has decided that companies that make technology should be liable if people use the technology to do bad things.
It's a terrible decision, a really bad precedent, and I guess it means more innovation will happen outside the US going forward and less will happen here.
Because you can't stop technology and its a flat world.
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» Don't Misunderstand The Grokster Ruling from Clickety Clack
Don't misunderstand the Grokster ruling. [Read More]
Tracked on Jun 27, 2005 6:29:51 PM
» ON INNOVATION BEING OFF-SHORED FROM THE US, GROKSTER ET AL from *michael parekh on IT*
LET THE PARTY BEGIN...HERE TOO VC Fred Wilson posted the following reaction to the Grokster ruling yesterday:It's a terrible decision, a really bad precedent, and I guess it means more innovation will happen outside the US going forward and less will h... [Read More]
Tracked on Jun 28, 2005 10:36:32 AM
Posted June 27, 2005 in Venture Capital and TechnologyComments
I don't think this decision is as bad as all that.
As I understand it, they set a very high bar for liability: the company has to take affirmative steps to show that it intends the product to be used for illegal purposes for the company to be held liable for the users' infringement.
Absent those affirmative steps, then the safe harbor provisions of the Betamax case still apply.
In other words: if you explicitly promote your technology for use in copyright infringement (as Grokster did, the court ruled), then you are liable for the infringement. But if you only promote it for legal purposes, then you can take advantage of the safe harbor of Sony.
This really shouldn't be a very surprising decision. It essentially preserves the status-quo while closing the option of hiding behind the technical minutae of a particular protocol. The courts have always taken a very dim view of trying to launder illegal behavior behind the implementation details of a technology.
(Disclaimer: I am not a lawyer, nor do I play one on TV)
Posted by: Shivering Timbers | Jun 27, 2005 2:53:14 PM
If Shivering Timbers read is right, this keeps gun manufacturers protected from liability for illegal use of their product.
Interesting case really, keep us in the loop of any challenges, etc...
Posted by: Tony Alva | Jun 27, 2005 3:13:16 PM
I think it's a horrible ruling but where were all the people who complain about the Grokster ruling when similar bad decisions occured holding gun manufacturers liable for the illegal use or misuse of their product? The answer is they were nowhere to be found.
The other bad decision this month was the private property/eminent domain ruling. But hey, in the US we have NEVER had the ability to own our own property. That's a fallacy.
We all are simply renting it from the government. You doubt that? Well, just don't pay your "rental fee" (i.e, Property Tax bill) one year and see what happens to "your property.
Wake up people.
Posted by: Jack Patrick | Jun 27, 2005 3:48:28 PM
I agree, this ruling isn't nearly as bad as it could have been.
It sounds to me just like contributing to the infringing of a patent. If you sell a product which itself does not infringe a patent, but when ~used~ does infringe a patent and does not have any other "substantial" purpose, you are likely liable to the patent owner.
In this case, the software makers could not show a substantial non-copyright infringing use, only a few, peripheral legal uses. Most innovation shouldn't be affected by this ruling.
Posted by: Patent Guy | Jun 27, 2005 4:50:34 PM
real lawyers (well actually lawprofs..) seem to think along the lines of shivering timbers...
the volokh conspiracy has weighed in on grokster : http://volokh.com/archives/archive_2005_06_26-2005_07_02.shtml#1119891303
Posted by: hey | Jun 27, 2005 5:43:49 PM
The "not all that bad posters are basically right,BUT the fact that the court judged the infringin use as a significant factor without reference to intention is troubling.Presumably if enough infringing content was stored on IPods Apple would be liable.
Posted by: Joe agliozzo | Jun 27, 2005 7:06:55 PM
I don't like this ruling, but I like the New London one less. At least they got the 10 Commandments decision right.
I do wonder whether a new model for paying songwriters could be created, and if so, how it would work. They're the ones who are really hurt by file-sharing, since they can't just make money by selling t-shirts and going on tour.
Posted by: Christy | Jun 27, 2005 8:02:17 PM
Joe:
Footnote 12 of the decision reads:
"Of course, in the absence of other evidence of intent, a court would be unable to find contributory infringement liability merely based on a failure to take affirmative steps to prevent infringement, if the device otherwise was capable of substantial noninfringing uses. Such a holding would tread too close to the Sony safe harbor."
In other words, the simple fact that people use the technology for piracy is not enough to make the company liable. The court specifically said that the company has to show that they intended for the product to be used for copyright infringement to be held liable. And Grokster did that in spades.
Posted by: Shivering Timbers | Jun 27, 2005 8:24:02 PM
I am a big supporter of open source software. If Grokster was an open source technology, would MGM really have a case? Against who?
The bittorent technology is being widely used for sharing files illegally. I see a real commercial use for bittorent in the future other than being used to distribute the latest Linux distro and the like.
Enterprise commercial applications that require access to fixed content could benefit from bandwidth sharing. Paris, London, and New York all have the same copy of a PDF file locally cached at their sites. A user in Rome needs access to the file. Boom! The user in Rome gets the file much faster and more reliably perhaps than if connected to a single site. No super expensive high avail hardware is required. If Paris is down one day, no big deal -- the user still gets the data from other sites hosting the files managed by the "bittorent tracker."
It's perfect for applications like medical imaging and PACS. Big files, remote clinics/hospitals, rural areas perhaps. De-duplications rules can be enforced at the tracker level to adhere to HIPAA, etc.
Posted by: Raj Bala | Jun 28, 2005 12:59:01 AM
Shivering timbers has it exactly right. The court has focused on the issue of groksters *intent* which is evidenced by their marketing.
This makes total sense. The protocols really are not important here. The point is that just like you cant kill someone, you cant *tell* someone to kill someone. If they do follow your instructions and kill someone, you are just as liable for murder as they are. But making knives and guns is legal. That is essentially what they ruled.
Sony made "knives and guns", but didnt tell anyone to use them illegally. Like Sony, Grokster made a product with potentially dangerous use(acutally more akin to a machine gun) and actively promoted it for mass murder.
I for one am currently developing a product that could be used illegally. But I am putting in dialog boxes that discourage such behavior and I am putting in tools that allow honest users to "report" illegal and inappropriate files. No large scale piracy or copyright violation will happen on my system. (by the way its not a file sharing network)
I am not afraid. I will not be leaving the country to release my service.
I dont think you will see download.com, or garageband.com et al pulling their services down in fear of any court action. The bottom line here is honest developers were protected. Intellectually dishonest ones better run for the hills.
It is of course true that it is difficult to stop this stuff with the law alone. People will operate in countries with weaker laws, and they will add encyption and annonymizers. But the court can't say a crime isn't a crime because it is hard to catch. That is ultimately a battle for the justice department and the media industry.
But at least the thieves wont be able to create big publicly traded companies on the backs of people who risk lots of time money and effort (and generally loose) creating content. And perhaps, in time, we will create enough of a moral stigma, that having an ipod full of stolen music will, culturally, not be ok.
Posted by: Hank Williams | Jun 28, 2005 7:25:03 AM
So Fred, will you be looking across the pond now for startups? :)
Posted by: Richard Rodger | Jun 28, 2005 7:40:22 AM
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