The case of MGM (backed by MPAA and RIAA) versus the peer-to peer file sharing Grokster is one of the most important copyright infringement cases in recent times.  The case came about because MGM thought that both Grokster.com and StreamCast.com were liable for copyright damages due to their supposed encouragement of illegally sharing movies.  Both Grokster and StreamCast were actively marketing particular software that aided in the downloading of both pirated movie and songs.  The two sites targeted the earlier ruling in the Supreme Court 1985 Betamax as their defense.  The Betamax ruling asserted that VCR manufacturers are not responsible for a VCR users who copy movies illegally.  The Supreme Court ended up ruling against Grokster and StremCast, saying that they could not hide behind a the 1985 Betamax ruling because unlike the VCR companies, they were actively promoting file sharing.  The fact that the Supreme Court wholly disregarded a past copyright ruling is poignant, because previous rulings on copyright legislature are often factored heavily into new decisions.  Two other points make this case specifically interesting.  Firstly, the Supreme Court highlighted the fact that although file sharing tools have the ability to be used illegally, the file sharing software itself and the activity of file sharing is not considered to be illegal.  Secondly, they state that the manufacturers of the specific file sharing products cannot be held responsible for how users choose to proceed once they have access to the software.  The one exception is when the manufacturer actively promotes or encourages infringement.  Ironically, it seems that although Hollywood thought that they scored hugely in this case, file sharers actually profited from this case as, ultimately, it was decided that file sharing itself is not illegal.

This article is written by the Center for Democracy and Technology, a non-profit interest group that “seeks to promote free expression, privacy, and individual liberty on the open, decentralized internet.” This document “outlines the limits on the scope of secondary copyright liability,” looking at the Grokster decision, the landmark decision in Sony Corporation of America v. Universal City Studios, Inc. (1984), and patent law precedents relating to inducement liability. The goal of this investigation is to make sure that "secondary liability for copyright infringement does nothing to compromise legitimate commerce or discourage innovation having lawful promise.’” The Grokster case and the Sony decision can obviously be looked at be looked at individually, but this article does a nice job of synthesizing the information and explaining how they impact each other.

The article focuses on the new implications of the “inducement test,” what repercussions the situation has for the Sony rule and what this all means for vicarious liability. The article focuses on one key difference in clarification between the Grokster and Sony decisions. The language in the Grokster decisions "suggests that the Sony test focuses on 'substantial' non-infringing uses, not 'commercially significant' non-infringing uses." With Grokster, the emphasis was certainly placed on the commerical uses of the site. Monetary gains became one of the most significant factors of the case, not just ethical or legal implications. Certainly the internet is just as much a business as any other commerical frontier in the world, but more and more - especially illustrated with the Grokster decision - financial viability is the determining legal decision making. For example, today YouTube is currently seen as protected by the safe harbor provison, although some of the content being posted on YouTube today was possibly (or probably) also availible on Grokster. YouTube has been able to position itself not only in a safe harbor in a legal sense, but also in a financial sense by teaming up with companies who own many of the copyrighted works that are being infringed.

Of course the Sony case was also motivated by money, but more than ever before the current world of the web and the sites that are allowed to function within its borders are completely a function of their monetary potential for copyright holders. Grokster was taken to court because it posed a threat to the financial success of copyright holders. YouTube poses a similar threat as well, but thus far has been able to keep in partnership with the people who would be taking them to court in the first place.