It's apparent from Uzbradistan's comment on my last post that my writing about Sony and MGM v. Grokster hasn't been that clear. So now that I've read the opinion on Grokster (which was the real point of my recent posts), I'll attempt to explain what the rulings in Sony and MGM v. Grokster mean.
I'll start with copyright infringement generally. Copyright law is a combination of the written law as passed by Congress and of various rules that have come about through court decisions. The written statute defines copyright infringement, but court decisions have created additional forms of infringement.
The copyright statute grants a set of exclusive rights to copyright holders, limited by various exceptions also defined by the statute. If you write a book and I start publishing copies of it without your permission, I am directly infringing on your copyright, as defined by the statute. If, on the other hand, I write a review of your book and quote your book in my review, I am not infringing on your copyright even if I don't have your permission. Again, that's defined by the statute.
Court rulings have created two forms of indirect infringement. These forms of infringement are not defined by the statute. They also do not require violating the exclusive rights of the copyright holder. Contributory infringement occurs when one person "materially contributes" to the direct infringement committed by another. An example of a contributory infringer is a concert promoter. If the performer infringes on copyright by performing songs without the permission of the composer, the promoter contributes to the infringement by creating the audience for the performer. Without the audience, there would be no performance and no infringement, but the promoter does not directly infringe on the copyright of the composer. However, the promoter is still liable for contributory infringement.
Vicarious infringement occurs when someone has the ability to control potentially infringing behavior and receives benefits from the infringement. For example, someone who sells infringing copies of a CD at a flea market directly infringes on copyright. The owners of the flea market vicariously infringe because they are paid by the seller and because they can refuse to allow the seller to operate at the flea market. Like contributory infringement, the flea market owner does not directly infringe on copyright by selling the infringing items. The owner benefits from the infringing action, but does not participate.
Contributory infringement and vicarious infringement are not defined by the copyright statute. They have been defined through court rulings, with the consequence that they are not as clearly and distinctly defined as they might be if defined by statute. Many lawsuits alleging indirect infringement argue both possibilities, leaving the court to determine which applies, if either.
That brings us to Sony v. Universal. Sony invented the Betamax VCR. Universal Studios sued Sony under a theory of indirect infringement. The VCR does not infringe on copyright itself, but purchasers of VCRs can use them to infringe. The Supreme Court ruled that Sony was not liable for copyright infringement. VCRs can be used for infringing purposes, such as copying a copyrighted movie. They can also be used for noninfringing purposes, such as recording a TV program to watch at another time. Since VCRs can be used for noninfringing purposes, Sony was not liable for indirect copyright infringement.
The key holding of Sony is that the creator of a new technology is not liable for copyright infringement if the technology is "capable of commercially significant noninfringing uses." However, the precise meaning of that phrase is unclear. It could potentially include anything from "nonfringing uses are theoretically possible" to "a majority of actual use is noninfringing." Recent court rulings have widely varied in their interpretation of that phrase.
MGM v. Grokster, the first of these cases to reach the Supreme Court, gave the Court an opportunity to define "commercially significant noninfringing use." Alternatively, the Court could have rejected the Sony standard and created an entirely new standard for contributory infringement. Despite its unanimous opinion, the Court failed to clarify this issue. The opinion of the Court did not address this question at all, instead defining a third form of indirect infringement. Justice Ginsburg and Justice Breyer each wrote a concurrence to the opinion. The concurrences battle on the definition of commercially significant noninfringing use.
Ginsburg's concurrence sets a high standard for substantial noninfringing use. While it's not clear how much noninfringing use is enough to avoid contributory infringement, the noninfringing use of Grokster's file sharing software clearly is not enough. She indicates that the proportion of actual noninfringing use to the total use determines whether it is commercially significant, but she does not state what proportion would be sufficient. She would hold Grokster liable for contributory infringement.
Justice Breyer argues the opposite result in his concurrence. He states that a mere theoretical possibility of noninfringing use is not sufficient to avoid liability. However, the evidence provided for noninfringing uses of Grokster's software demonstrates a capability for noninfringing use which is sufficient to avoid liability for contributory copyright infringement.
Three justices signed Ginsburg's concurrence and three signed Breyer's. Three signed neither. This gives a three to three ruling, which has basically no legal force and gives no indication of how the Court might rule in the future. The question of commercially significant noninfringing use remains unanswered. Despite this, the Court ruled unanimously against Grokster. The ruling avoids the question of noninfringing use and creates a new form of indirect liability instead.
The ruling states that Grokster may be held liable for inducing copyright infringement. Inducement can be explained through an analogy. Suppose I sell crowbars, advertising them as "Matt's Crowbars: Good for Construction." If someone buys one of my crowbars and uses it to break into a house, I can't really be held responsible for that. Suppose that instead I advertise them as "Matt's Crowbars: Good for Breaking and Entering." If someone uses one of my crowbars to break into a house, it makes sense to hold me indirectly responsible. By suggesting an illegal action and providing a tool to do it, I am causing, or inducing, that crime to occur.
The question from the Sony decision is how much noninfringing use qualifies as a commercially significant noninfringing use. That question is still unanswered. The question from MGM v. Grokster is what is sufficient to cause inducement. The Court found many inducing actions by Grokster and StreamCast, meaning that how much is enough is totally unclear. The inducement listed in the ruling includes:
Advertising to users of Napster
A name derived from Napster
Advertising showing infringing uses
Technical support to users who are committing infringement
A business model based on use of the software, given that most use is infringing use
Failure to attempt to block infringing use, in combination with the other evidence of inducement
Finding inducement is easy when there's lots of evidence for it. The question is when there's only limited evidence. For example, suppose a manufacturer advertises a use for a product which it believes is noninfringing. Apple advertisements for the iPod and iTunes use the phrase "Rip. Mix. Burn." Apple clearly believes that although it is encouraging copying, the copying is noninfringing. What if the advertised use is ruled to be an infringement? Suppose a court rules that copying songs to an iPod is an infringement. Would Apple be vulnerable to an inducement claim? At this stage, there are no definite answers. Further lawsuits may clarify things. But they may just create more of a muddle.