A few points on a quick readthrough:

* There seems to be a new test: intent to encourage infringement. "We hold that one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties."

* The ruling is in spite of acknowledgement of substantial, non-infringing uses of peer-to-peer networks: "Given these benefits in security, cost, and efficiency, peer-to-peer networks are employed to store and distribute electronic files by universities, government agencies, corporations, and libraries, among others."

* The court seems to find that the software companies' not storing of any data on central servers doesn't matter because they could just search and find out: "Although Grokster and StreamCast do not therefore know when particular files are copied, a few searches using their software would show what is available on the networks the software reaches." This seems a particularly weak argument to me, particularly given that they later acknowledge that finding information about what goes on in these networks is difficult: "no one can say how often the software is used to obtain
copies of unprotected material...."

* The court gets caught up in the scope of the infringement, calling it "the vast majority of users' downloads" (MGM claimed 90% and even this was disputed), and drawing the conclusion that "the probable scope of copyright infringement is staggering" given the total number of downloads. Note that this same argument could be used to show that the probable scope of non-infringing expression is staggering as well, as any percentage of the use of the "100 million copies of the software in question [...] known to have been downloaded" is going to be staggering.

* Despite the introduction, the real test seems to be knowledge of infringement again, as indicated in the search quote above, and here: "From time
to time, moreover, the companies have learned about their
users’ infringement directly, as from users who have sent
e-mail to each company with questions about playing
copyrighted movies they had downloaded, to whom the
companies have responded with guidance.6 App. 559–563,
808–816, 939–954. And MGM notified the companies of 8
million copyrighted files that could be obtained using their
software."

* The court goes on to give evidence of actively inducing infringement, mostly on its leeching users from OpenNap. And perhaps a little irritation of the courts didn't help anything: "StreamCast even planned to flaunt the illegal uses
of its software; when it launched the OpenNap network,
the chief technology officer of the company averred that
“[t]he goal is to get in trouble with the law and get sued.
It’s the best way to get in the new[s].”"

* The court decries the lack of efforts to filter the material from the networks, even turning down offers to help and blocking the IPs of monitoring individuals.

* II A is very interesting, as they take into account technological innovation but rule that the decision doesn't affect it overly: "The more artistic
protection is favored, the more technological innovation
may be discouraged; the administration of copyright law is
an exercise in managing the trade-off." "As the case has been presented to us,
these fears are said to be offset by the different concern
that imposing liability, not only on infringers but on distributors
of software based on its potential for unlawful
use, could limit further development of beneficial technologies."

* The rule-of-law argument crops up: "The indications are that the ease of copying songs or movies using software like Grokster’s and Napster’s is fostering disdain for copyright protection."

* They offer that someone must be held accountable, and that suing 100 million users proves impractical: "When a widely shared service or
product is used to commit infringement, it may be impossible
to enforce rights in the protected work effectively
against all direct infringers, the only practical alternative
being to go against the distributor of the copying device for
secondary liability on a theory of contributory or vicarious
infringement."

* "One infringes contributorily by intentionally inducing or
encouraging direct infringement," "and infringes vicariously by profiting from direct infringement while declining to exercise a right to stop or limit it,"

* The Sony test is still alive, but unclarified: "It is enough to note that the Ninth Circuit’s judgment rested on an erroneous understanding of Sony and to leave further consideration of the Sony rule for a day when that may be required." This goes back to the intent to infringe--when present, SNIU is not a defense. "Sony’s rule limits imputing culpable intent as a matter of law from the characteristics or uses of a distributed product. But nothing in Sony requires courts to ignore evidence of intent if there is such evidence, and the case was never meant to foreclose rules of fault-based liability derived from the common law."

* They hold to the reproduction terminology: "As mentioned before, Grokster and StreamCast reply by citing evidence that their software can be used to reproduce
public domain works." Distribution is probably a better term for such actions, as (Miller?) has often said, 'copying' means nothing in a world where everything's a copy.

* There seems to be surprisingly little in the ruling debating whether or not Grokster et al. could actually stop infringement. It is taken as a given, instead, which is not at all the case.

* They lay out three features of the intent, and provide evidence for each:
"First, each company showed itself to be aiming to
satisfy a known source of demand for copyright infringement,
the market comprising former Napster users."
"Second, this evidence of unlawful objective is given
added significance by MGM’s showing that neither company
attempted to develop filtering tools or other mechanisms
to diminish the infringing activity using their software."
Third, the more the use, the greater their profit, thus they had incentive to encourage infringement. "This evidence alone would not justify an inference of
unlawful intent, but viewed in the context of the entire
record its import is clear.
The unlawful objective is unmistakable."

So, a summary:
- Sony is intact, and the wording of the test seems to be clarified (there were multiple different versions in the original): "substantial noninfringing commercial uses."
- Clear evidence of intent to encourage infringement makes the Sony test irrelevant.
- Failure to attempt to filter the infringing materials can be held as evidence of infringement, although it is not clear that such failure would be sufficient without the other evidence of intent. This point is the only really disappointing one to me, in that it holds the significant possibility of hampering technological innovation. The entire Internet consists of technologies which could easily be used for infringement (and in many cases are, c.f. USENET, IRC), but that a filtering requirement would kill. Moreover, the more decentralized a network, the more unfortunate a filtering requirement becomes.

Overall, although the unanimity is a little shocking, this is not a terrible thing for the Internet.


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Justice Ginsberg's concurring opinion holds a little differently. The dispute here is over the 9th granting summary judgement. "The District Court declared it “undisputed that there are substantial noninfringing uses for Defendants’ software,
” thus obviating the need for further proceedings. 259 F. Supp. 2d, at 1035. This conclusion appears to rest almost entirely on the collection of declarations submitted by Grokster and StreamCast. Ibid. Review of these declarations reveals mostly anecdotal evidence, sometimes obtained second-hand, of authorized copyrighted works or public domain works available online and shared through peer-to-peer networks, and general statements about the benefits of peer-to-peer technology." In Ginsberg's writings, the question of SNIU appears central. "Even if the absolute number of noninfringing files copied using the Grokster and StreamCast software is large, it does not follow that the products are therefore put to substantial noninfringing uses and are thus immune from liability." I think what he goes on to say is that infringing files are more popular, so even if many different varieties were available, the sharing of the infringing files would still likely dwarf the SNIUses.
"Further, the District Court and the Court of Appeals did not sharply distinguish between uses of Grokster’s and StreamCast’s software products (which this case is about) and uses of peer-to-peer technology generally (which this case is not about)." This is often a problem for me in maintaining SNIU.info. It's clear that P2P has many SNIUs, but finding SNIU on the mainstream P2P networks is difficult.

In short, Ginsberg holds that SNIU is the critical test here, and that more debate is needed to determine whether or not Grokster et al. pass that test.

--Ari