What was the Grokster case about?

In June 2005, the Supreme Court delivered its opinion in MGM, Inc. v. Grokster, a case focused on copyright infringement in the digital era. Grokster and some other companies ran peer-to-peer file sharing networks, allowing users to transfer files. Unlike Napster, however, Grokster did not maintain a central server for these transfers to flow through (thus the moniker “peer-to-peer,” since the files go directly from one user to another). Several movie studios and other copyright owners sued Grokster and the other companies for copyright infringement, claiming that they specifically distributed their software to allow end-users to commit copyright infringement.

The Supremes found Grokster and the other companies guilty of having induced copyright infringement. If they had simply distributed their software, even knowing that there was third-part infringement taking place, they may not have been liable. But because they had the intent of encouraging infringement, and built their business around that (because they likely would not have been nearly successful but for the use of their software for infringing purposes), the companies had fostered the eventual infringement and should therefore be liable, according to the Courts’ reasoning. Some worry about the ultimate ramifications of this decision, particularly its focus on alleged inducers’ promotional activities, because the decision did not provide any bright-line test or standard to allow for an easy determination of future cases.