MGM v. Grokster (2005)

Quick Summary

The Supreme Court said: if a company promotes its tool for copyright piracy, it can be liable for users’ illegal acts. This is the inducement rule. Grokster and StreamCast gave peer-to-peer software like Napster’s idea but without a central server. The Court held that when a distributor’s words or actions push users to infringe, secondary liability can follow—even if the tool also has lawful uses.

Issues

• Can Grokster and StreamCast be held responsible for users’ copyright infringement done through their peer-to-peer software?
• Does Sony Corp. v. Universal City Studios (Betamax) shield them because the software has substantial lawful uses?

Rules

• Inducement: A distributor who intends to encourage infringement—shown by clear words or affirmative steps—is liable for resulting infringements by users.
• Contributory Liability: Purposeful encouragement or assistance to infringing acts can create liability.
• Sony Betamax: Technologies with substantial non-infringing uses are protected unless there is intent to induce infringement.

Facts (Timeline)

Arguments

Judgment

The Supreme Court held that the lower courts were wrong to treat Sony as a complete shield. The proper focus is on inducement. If a distributor promotes infringement—shown by clear statements or steps designed to foster piracy—it may be secondarily liable for users’ acts. The Court reversed the summary judgment and remanded for further proceedings.

Ratio

Inducement Liability: A company is liable when it intends to cause infringement and user infringements follow. Sony protects dual-use technology, but not when the distributor’s purpose is to promote illegal copying.

Why It Matters

• Clarifies how platforms can cross the line from neutral tools to promoters of infringement.
• Guides product teams: marketing, design choices, and user targeting can prove intent.
• Balances innovation with copyright protection by punishing purpose, not mere capability.

Key Takeaways

1. Inducement = intent + encouragement + resulting infringements.
2. Sony survives, but intent defeats the dual-use shield.
3. Ads, messages, or features aimed at piracy can prove intent.

Mnemonic + 3-Step Hook

Mnemonic: “PROMO → PIRACY → PAY”

• PROMO: Distributor promotes infringement.
• PIRACY: Users actually infringe.
• PAY: Distributor faces secondary liability.

IRAC Outline

Issue: Are Grokster/StreamCast liable for users’ copyright infringement despite lawful uses?

Rule: Inducement liability for intentional encouragement; Sony protects dual-use absent inducement.

Application: Evidence of promotion to infringing users and steps fostering piracy pointed to intent.

Conclusion: Summary judgment reversed; case remanded under the inducement standard.

Glossary

Inducement

Intentionally encouraging users to infringe copyrights.

Secondary Liability

Responsibility for others’ infringements due to one’s own actions or assistance.

Sony Betamax

Rule that protects technologies with substantial lawful uses.

FAQs

Related Cases

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Reviewed by The Law Easy.