Dec. 13, 2004 – The US Supreme Court agreed Friday to consider a case likely to have a significant impact on the music, video and electronics industries. The case, Metro-Goldwyn-Mayer Studios v. Grokster Ltd pits recording companies against two online services that enable users to share digital files between computers. The recording industry argues that Grockster and co-defendant StreamCast Networks should be held liable for aiding copyright violations committed by individuals using their services.
The Supreme Courtâ€™s decision to hear the case came as a surprise to many who follow copyright law because two previous cases decided by the Court were thought to have settled the matter. In 1984, in Sony Corporation of America v. Universal City Studios, the Court found that VCRs had "substantial noninfringing use[es]" and thus Sony could not be held responsible if individuals chose to break copyright laws using the companyâ€™s technology. That landmark ruling is widely credited with paving the legal way for a host of technological innovation leading to compact disc burners, MP3 players, digital video recorders and other electronics.
Lower courts have found for Grockster and StreamCast, ruling that the networksâ€™ technology, which allows decentralized sharing directly between users, does not exercise control over the transactions. They also found that the technology had legal uses.
"Defendants distribute and support software, the users of which can and do choose to employ it for both lawful and unlawful ends," wrote federal Judge Stephen Wilson in an April 2003 ruling. "Grokster and StreamCast are not significantly different from companies that sell home video recorders or copy machines, both of which can be and are used to infringe copyrights."
But the recording and film industries, in their appeal to the Supreme Court, issued warnings about the fate of entertainment industry if technologies like Morpheus, which is used by Grockster and StreamCast, are allowed to continue providing internet users the ability to share and copy each otherâ€™s files.
The defendants and their supporters believe the repercussions on technological innovation could be great if the court shuts down the services.