Supreme Court Hears Arguments In Grokster Case

Decision expected by summer.

The justices took active roles during oral arguments today (March 29) in the case brought by motion-picture studios, record labels, music publishers and songwriters against Grokster, StreamCast and others involved in file-sharing. The case, Metro-Goldwyn-Mayer et al. vs. Grokster, et al., explores whether companies that provide peer-to-peer file-sharing software should be secondarily liable for copyright infringements by their users.

Richard Taranto, representing Grokster and StreamCast, urged the court to leave matters as they stand -- affirming the decision by the Ninth Circuit Court of Appeals that held the two companies not liable for infringement because they did not have specific knowledge of their users' infringements at a time when the companies could control their use.

After Taranto argued that the technology industry has relied on a rule set out 20 years ago by the Supreme Court in the so-called Sony-Betamax case, Justice Scalia responded, "We are not going to decide this case on the basis of stare decisis," meaning that the court will not simply rely on past cases for its decision but will take a fresh look at the issue.

The justices asked Donald Verrilli, representing the entertainment industry parties, what the new standard of secondary liability should be. He responded that the first question to ask is whether the business is built on infringement and whether the vast majority of use for the technology is infringing. If so, the company would be liable for secondary infringement.

The justices' questions hinted that the court may formulate a legal doctrine that provides flexible standards to protect new businesses. They asked Acting Soliciting General Paul Clement, representing the federal government in support of the entertainment industry parties, how new developers could be protected. He responded that the standard for new technology could be to focus on the capability of the technology for non-infringing uses, while the standard for "mature" businesses could focus on actual infringing uses.

Parties on both sides were optimistic after the proceeding, saying the justices appeared engaged in the discussion. Only Justice Thomas remained quiet; insiders say he rarely asks questions.

A decision is expected before the court adjourns for its summer recess.