Grokster Loses Appeal! Peer-to-Peer Technology Struck Down!

OK, it hasn't happened yet, I admit — the MGM v. Grokster case hasn't even been argued before the Supreme Court yet (that comes in March), and the Court won't issue its decision until later in the Spring. But I've just spent the weekend going through the briefs that have been submitted thus far, and I'm now making book: the Court reverses the Court of Appeals (which held that Grokster was not "secondarily liable" for the copyright infringements of its users), 7-2. (Amazingly enough, this represents both the odds I'm giving and the final vote count). I'm not saying that's the right result, or the best outcome; in fact, the reason I was reading all these briefs is that I've been asked to help out on some of the amicus briefs on Grokster's side. [The EFF, incidentally, has a wonderful collection of the submissions on both sides]

While this outcome could be a disaster for P2P file-sharing technologies (and the record companies will undoubtedly trumpet it as such, with many in the press likely following along), it probably won't be. The Court has an easy "out" here, and my experience has been that when they're presented with an easy out they usually grab it. The Ninth Circuit in this case affirmed the grant of summary judgment to Grokster, holding that on any reasonable version of the facts, Grokster could not be held liable for "contributory copyright infringement" because the software involved is "capable of substantial non-infringing uses" under the Sony v. Betamax case. The record company plaintiffs want the Court to "tighten up" the Sony standard, and to say, in effect, that the non-infringing uses that these P2P networks have are not "substantial" enough under Sony.

That would be a disaster for technology providers — but I don't think that's what the Court will say. Instead, I think the Court will send the case back to the Ninth Circuit and say: you were right that, under Sony, the non-infringing uses here are substantial enough so that, standing alone, providers of these p2p technologies can't be held liable for the copyright infringements of network users. But — and here's the critical part — on these facts, it doesn't stand alone; there's evidence in this record that Grokster and the other defendants actively encouraged and induced its customers to infringe copyrights, and that inducement of this kind is not protected by the Sony safe harbor. The Court will then instruct the Ninth Circuit to re-open the case and evaluate whether or not this evidence is enough to hold the defendants liable on an inducement, or "aiding and abetting," theory of liability.

The record companies will claim victory, but it will be a Pyrrhic one — it will just cause the next generation of P2P providers to be more careful about what they say in their promotional and advertising material, secure in the knowledge that if they just shut up about it, they'll be allowed to go about their business without fear of copyright liability.

Anyway, you heard it here first.