Grokster and StreamCast Networks can be held liable for copyright infringements committed by users of their peer-to-peer file-sharing software, the US Supreme Court ruled today.
The decision in the case Grokster vs MGM is a major win for the motion picture and recording industries, which took the case to the nation's highest court after losing in lower courts over the past two years or so.
Lawyers for the plaintiffs - Motion Picture Association of America, the National Music Publisher's Association of America, and the Recording Industry Association of America - asked the court to recognise that the Grokster and StreamCast's Morpheus P-to-P (peer-to-peer) software packages were created primarily to encourage users to illegally trade copyright songs and movies.
They argued that while users are responsible for copyright violations, P-to-P vendors share a secondary liability.
The issue before the Supreme Court in the case focused on a relatively narrow question: whether movie and music companies should be able to sue the P-to-P distributors for the copyright violations of their users.
The Supreme Court ruling thus gives movie and music companies the ability to sue P-to-P distributors and sends the case back to a lower court.
Those who supported Grokster argued the case has broader implications, saying if copyright owners are able to sue inventors of new technologies for the sins of their users, few technology companies would be safe.
The case centres around the Supreme Court's 1984 Sony Betamax ruling, in which judges rejected claims of a movie studio brought against Sony, maker of the Betamax VCR. The court ruled against Universal City Studios, saying that makers of technologies with significant uses other than infringing copyrights were not liable for their users' copyright violations.
The entertainment industry had lost its previous attempts to sue Grokster and StreamCast Networks.
The 9th US Circuit Court of Appeals, citing the 1984 Betamax decision, ruled back in August that the P-to-P vendors were not liable for their users' copyright violations.