Grokster seems securely bound and gagged by the structure of the settlement reached with the motion picture studios, record labels, publishers and songwriters (Billboard, Nov. 19). While the terms of the settlement agreement are confidential, the related consent judgment makes it clear that the owners of the peer-to-peer system will be tied to a short leash for the foreseeable future.
Judge Stephen Wilson with the U.S. District Court for the Central District of California signed the Nov. 7 order. The case reached his courtroom after the U.S. Supreme Court unanimously held in June that the company could be held liable if the District Court found that Grokster “induced” users to infringe copyrighted movies and music. Rather than risking a huge judgment, Grokster settled.
The judgment and injunction bind Grokster, Swaptor and the brothers Rung — Daniel, Matthew and Michael. Since they settled rather than letting the court decide the outcome, the entertainment-industry plaintiffs did not have to limit the injunction they wrote to activities that may have fallen under the Supreme Court’s definition of inducement.
And they didn’t. There is a broad range of do’s and don’ts, with the court retaining jurisdiction to enforce them.
On the “do” side of the list, the Grokster parties must pay $50 million. This amount is expected to be shared equally among the three groups: motion picture studios, record labels and publishers/songwriters. The last group was certified as a class, so they must go through certain procedures to determine who among them will share in any money collected.
The Grokster parties must immediately shut down any servers-and stop assisting in the distribution of any software — that enable users to connect to the Grokster system or any other file-trading network. They must also stop operating, or assisting in the operation of, grokster.com, swaptor.com and any computer server, Web site or software that in any way relates to any such file-sharing network as Grokster and Gnutella.
The Grokster parties must revoke the licenses or authority that they granted to any third parties to distribute the software. They must send cease-and-desist notices to any known, unauthorized distributors. They must assign to the plaintiffs all rights or claims that the Grokster parties would have against those who refuse to honor the revocations or the cease-and-desist notices.
On the “don’t” side of the list, the Grokster parties cannot sell or license any significant part of the business, equity, operations or assets of the Grokster system or software unless the purchasing or licensing parties agree that they will be bound by the terms of this judgment and the injunction.
Specifically, they may not sell, give away or distribute any software, source code, object code, technology, domain names, trademarks, brands, assets or goodwill related to Grokster without this agreement.
The Grokster parties are also prohibited from infringing (directly or indirectly) upon any copyrighted works — now in existence or later created — that the plaintiffs own or control under any law worldwide.
Finally, they are enjoined from nearly every act that could even remotely relate to rights under copyright, such as linking to a copyrighted work or assisting other file-trading networks to reproduce, distribute or link to the plaintiffs’ works.
