The owners and operators of the Grokster peer-to-peer (P2P) network — the lead and most well-known defendants in one of the Supreme Court’s seminal decisions this year — agreed today (Nov. 7) to shut down operations to settle the three-year-old piracy case with the nation’s major record companies, motion picture studios and music publishers.
The settlement includes a permanent injunction prohibiting infringement, directly or indirectly, of any of the plaintiffs’ copyrighted works. This includes ceasing immediately the distribution of the Grokster client application and ceasing to operate the Grokster system and software. An RIAA spokesperson also said Grokster is to pay the plaintiff companies $50 million in damages.
A consent judgment will be submitted to U.S. District Court for the Central District of California court today for its approval.
Coming just four months after the Supreme Court’s ruling in MGM vs. Grokster, and on the heels of a rapid succession of similar international rulings in Korea, Australia and Taiwan, the music industry today hailed the settlement as an important milestone in the continuing transformation of the online marketplace.
“This settlement brings to a close an incredibly significant chapter in the story of digital music,” said Mitch Bainwol, chairman/CEO of the RIAA. “This is a chapter that ends on a high note for the recording industry, the tech community and music fans and consumers everywhere. At the end of the day, this is about our ability to invest in new music. An online marketplace populated by legitimate services allows us to do just that.”
Grokster’s Web site today posted a warning that the Supreme Court “unanimously confirmed that using this service to trade copyrighted material is illegal.”
Justice David H. Souter rejected Grokster’s claim that only a small percentage of users were trading in copyrighted material on the service.
“While there is doubtless some demand for free Shakespeare, the evidence shows that substantive volume is a function of free access to copyrighted work,” he wrote. “Users seeking top 40 songs, for example, or the latest release by Modest Mouse, are certain to be far more numerous than those seeking a free ‘Decameron,’ and Grokster and StreamCast translated that demand into dollars.”