IN CONSIDERING THE case of Metro-Goldwyn-Mayer Studios v. Grokster, the Supreme Court has a twin mission: to ensure that companies that knowingly and intentionally enable widespread theft of intellectual property are liable for their misconduct, and to make sure that holding such companies accountable does not inhibit development of legitimate products. Grokster and StreamCast Networks are two of the latest Napster-like file-sharing companies to send copyright holders into a tizzy -- and with good reason. Like the old Napster, both distribute software that enables millions of users worldwide to share electronic files -- more than 90 percent of them pirated music and movies.
With so much entertainment now digital, easy file-sharing makes paying for content a kind of honor system, one ever more consumers are opting out of. While many will shed few tears over the lost revenues of big studios and recording companies, this is bad news for those who want to make a living playing music, writing screenplays or making documentaries. If people are to be able to protect their intellectual property, the justices, who heard the case yesterday, cannot tolerate giant trading fairs involving massive quantities of pirated material.
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The march of technology, however, is making it ever harder for the law to put its foot down without endangering innocent, useful products as well. Unlike the old Napster, these companies play no direct role in the illegal trades they enable. They sell and deliver advertising, but if the companies disappeared tomorrow, their software and networks would still function without them.
The companies thus compare themselves to products like the old Sony Betamax, which the court shielded from copyright infringement liability on the theory that non-infringing uses for the product existed. Indeed, non-infringing uses of file-sharing software exist too -- though they don't constitute much of its use so far. If Grokster can nonetheless be held liable for piracy, defenders argue, what about iPods and other new technologies that can be used either for legitimate uses or for piracy?
This caution is a fair one, and it is critical that the court not adopt a broad rule that threatens liability for manufacturers of technologies whose misuse might enable piracy. But Grokster and StreamCast are not simply technologies that can be used for good or ill; they are technologies that were designed and marketed precisely so as to facilitate theft. Both companies positioned themselves to inherit Napster's user base when the courts ordered that company to stop permitting illegal file-sharing. Both have promoted themselves based on the wide variety of materials illegally available. And both have frustrated copyright holders' efforts to police their use. A company that builds its entire business model around facilitating illegality should not be immune from liability because of the possibility of innocent use. Drawing a clear distinction between such a product and an iPod would protect both innovation and intellectual property.