The Sony Rule
The Grokster case has been characterized as the Copyright Industry’s attempt to overthrow the Sony rule.
The Sony rule was articulated in the case of Sony v. Universal Studios in which the Copyright Industry of
the day attempted to outlaw VCRs.
"I say to you that the VCR is to the American film producer and the American public as the
Boston strangler is to the woman home alone."
- Jack Valenti (then and current President of the MPAA) in 1982 testimony to the House of Representatives.
The Supreme Court declined to outlaw VCRs, and instead offered technologists a bright line rule to follow
in developing future disruptive technologies: as long as the technology that you develop is merely capable
of non-infringing uses, then it will be legal to sell or distribute your technology, regardless of how your
customers may actually use it. This is the Sony rule. This is the rule that makes it legal to make iPods
and personal computers.
File Sharing in a Post-Napster World
A couple of decades later, post-Napster P2P file sharing services like Kazaa and Morpheus burst on the scene,
facilitating copyright infringement on a scale equivalent to VCR to use. The P2Ps attempted to recapture Napster
glory by avoiding the two fatal flaws of Napster – 1) centralized indexing server; and 2) no revenue model.
The P2Ps accomplished this by distributing software that allowed file sharers to connect directly to each other,
rather than connecting through a centralized server. Consequently, P2Ps are not running a service so much as
distributing software. To generate revenue, the P2Ps put adware and/or spyware into their software and thereby
get advertising income.
In an attempt to stop the P2Ps, the Copyright Industry sued Grokster et al on the theory that the Sony rule only excused secondary liability for technology in which the principal use was non-infringing.
A New Theory is Spawned
Regarding this issue, we get this from the court:
- Sony stands for capable of non-infringing uses
- Grokster stands for principally used for infringing uses
This is not terribly satisfying, as the VCRs in Sony were principally used for infringing purposes,
and Grokster is capable of non-infringing uses (non-infringing works can be distributed through P2Ps as
easily as infringing works).
Finding itself stuck between the Sony rule and the perceived egregious conduct of P2Ps, the court found
an out by creating a new theory of secondary liability for copyright infringement – the Inducement Theory.
"Sony’s rule limits imputing 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."
The Inducement Test
The Inducement Test states 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 court goes to great pains to stress that the inducement rule premises liability
on purposeful, culpable expression and conduct, and thus does nothing to compromise legitimate commerce or discourage innovation having a lawful
In applying the Inducement Test, the court looked at:
- Evidence of intent
- Unlawful purpose
- Active steps
The court particulary focused on the last element, and asked the question "
Did Grokster communicate an inducing message to users?" The court indicated that the functions of the messages in the theory of
inducement is to provide by a defendant's own statements that his unlawful purpose disqualifies him from
claiming protection (and incidentally point to actual violators likely to be found among those who hear or
read the message).
The court indicated that proving that an inducing message was sent out was the best, but not only, way of showing
that active steps were taken with the purpose of bringing about infringing acts, and of showing that infringing acts
took place by using the device distributed.
As far as Grokster was concerned, the court had no problem findig such communication.
Unlike Sony, Grokster acted with a purpose to cause copyright
violations by use of software suitable for illegal use, as evidenced by the following:
- 1) endeavored to be Napster replacement;
- 2) no attempt to develop filters to diminish infringing activity; and
- 3) by selling ads, profited from high-volume use
The court intimated that the last item alone would not justify an inference of unlawful intent, but viewed
in the context of this case, an unlawful objective was clear.
The court concluded that evidence of Grokster's words and deeds going beyond distribution as such showed a purpose to
cause and profit from third-party acts of copyright infringement. Consequently, liability for inducing infringement
will not be on the basis of presuming or imputing fault, but from inferring a patently illegal objective from
statements and actions showing what that objective was. In other words, they must hang themselves with their own words.
As a result, another chapter in file sharing history was closed. Instead of being greeted with the promise of vast
amounts of free music, visitors to Grokster are now greeted by the following scary page: