545 U.S. 913 (2005)
Respondents Grokster, Ltd. and StreamCast Networks, Inc. distribute free software products that enable computer users to share electronic files through peer-to-peer networks.1 Grokster's software employs FastTrack technology while StreamCast distributes Morpheus software that relies on Gnutella technology.2 Users of either product can send requests for files directly to the computers of others on the network, with results communicated back and files downloaded directly from peers' computers without any central server intercepting the content.3
A group of copyright holders including motion picture studios, recording companies, songwriters, and music publishers, referred to collectively as MGM, sued Grokster and StreamCast in the United States District Court for the Central District of California.4 MGM alleged that the companies knowingly and intentionally distributed their software to enable users to reproduce and distribute copyrighted works in violation of the Copyright Act.5 MGM commissioned a statistician to conduct a systematic search, and his study showed that nearly 90% of the files available for download on the FastTrack system were copyrighted works.6 Well over 100 million copies of the software in question are known to have been downloaded, and billions of files are shared across the FastTrack and Gnutella networks each month.7
Grokster and StreamCast concede the infringement in most downloads, and it is uncontested that they are aware that users employ their software primarily to download copyrighted files.8 From time to time, moreover, the companies have learned about their users' infringement directly, as from users who have sent e-mail to each company with questions about playing copyrighted movies they had downloaded, to whom the companies have responded with guidance.9 MGM notified the companies of 8 million copyrighted files that could be obtained using their software.10
After the notorious file-sharing service, Napster, was sued by copyright holders for facilitation of copyright infringement, StreamCast gave away a software program of a kind known as OpenNap, designed as compatible with the Napster program and open to Napster users for downloading files from other Napster and OpenNap users' computers.11 The evidence that Grokster sought to capture the market of former Napster users is sparser but revealing. Grokster launched its own OpenNap system called Swaptor and inserted digital codes into its Web site so that computer users using Web search engines to look for "Napster" or "[f]ree filesharing" would be directed to the Grokster Web site. StreamCast monitored both the number of users downloading its OpenNap program and the number of music files they downloaded.12 It also used the resulting OpenNap network to distribute copies of the Morpheus software and to encourage users to adopt it.13 Internal company documents indicate that StreamCast hoped to attract large numbers of former Napster users if that company was shut down by court order or otherwise, and that StreamCast planned to be the next Napster.14
Finally, there is no evidence that either company made an effort to filter copyrighted material from users' downloads or otherwise impede the sharing of copyrighted files.15 Grokster and StreamCast receive no revenue from users, who obtain the software itself for nothing.16 Instead, both companies generate income by selling advertising space, and they stream the advertising to Grokster and Morpheus users while they are employing the programs.17
After discovery, the parties on each side of the case cross-moved for summary judgment.18 The court nonetheless granted summary judgment in favor of Grokster and StreamCast as to any liability arising from distribution of the then current versions of their software.19 The Court of Appeals affirmed.20 The Supreme Court granted certiorari.
Whether one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties using the device?21
One who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, going beyond mere distribution with knowledge of third-party action, is liable for the resulting acts of infringement by third parties using the device, regardless of the device’s lawful uses.22
Yes. The established facts demonstrate that Grokster and StreamCast each clearly voiced the objective that recipients use the software to download copyrighted works and took active steps to encourage infringement from the moment they began distribution.23 After Napster was sued, StreamCast distributed OpenNap software to capture Napster's user base and promoted itself as the best Napster alternative through internal documents and advertisements, while Grokster launched Swaptor and used codes to divert Napster searches to its site.24 Neither company attempted to develop filtering tools, and both profited from advertising revenue that increased with the volume of use, which the record establishes was overwhelmingly infringing.25
This evidence of purposeful, culpable conduct satisfies the inducement standard and overcomes any protection from lawful uses of the software.26
Grokster and StreamCast are liable under the inducement theory for the copyright infringements committed by users of their software.27
Related opinions on this issue
Joined by Rehnquist, C. J., And Kennedy, J.
Justice Ginsburg concurs in the judgment but emphasizes that the record also supports contributory liability because the software products were overwhelmingly used to infringe and the evidence of noninfringing uses was merely anecdotal, insufficient to meet Sony's substantial noninfringing use standard on summary judgment.28 She notes that the District Court and Ninth Circuit relied on declarations that did not sharply distinguish between the specific software at issue and peer-to-peer technology generally, and that MGM's evidence of 90 percent infringing files dwarfs any noninfringing activity.29 Ginsburg explains that the case differs markedly from Sony because there has been no finding of fair use and little beyond anecdotal evidence of noninfringing uses.30
The declarations submitted by Grokster and StreamCast provided only anecdotal evidence of authorized or public domain works and failed to demonstrate a reasonable prospect of substantial noninfringing uses developing over time.31 She emphasizes that the overwhelming volume of infringing files shown by MGM's evidence precludes summary judgment under Sony's standard.32 On remand, the Court of Appeals should reconsider its Sony product-distribution holding on a fuller record.33
Joined by Stevens And O’connor, Jj.
Justice Breyer concurs in the judgment on the inducement holding but writes separately to explain why the evidence satisfies Sony's test for substantial noninfringing uses, with roughly 10 percent of files noninfringing in a manner comparable to the 9 percent authorized time-shifting in Sony.34 He highlights the potential for future legitimate uses such as public domain works, shareware, and user-created content, arguing that Sony's forward-looking capability standard protects technology development absent the active inducement shown here.35 Breyer maintains that the roughly 10 percent figure here aligns with Sony's 9 percent and that the rule's clarity protects innovation by shielding distributors of dual-use technologies unless they actively induce infringement.36
He argues that modifying or strictly interpreting Sony would chill technological development without clear copyright benefits.37
Whether the Ninth Circuit correctly applied Sony Corp. of America v. Universal City Studios, Inc. to hold that distribution of software capable of substantial noninfringing uses precludes contributory liability absent actual knowledge of specific instances of infringement?38
Sony addressed a claim that secondary liability for infringement can arise from the very distribution of a commercial product.39 Sony held that because the VCR was capable of commercially significant noninfringing uses, the manufacturer was not liable.40 Sony did not displace other secondary liability theories such as inducement derived from common law fault-based principles.41
No. The Ninth Circuit misread Sony as barring contributory liability whenever a product is capable of substantial lawful use, even when independent evidence shows an actual purpose to cause infringing use.4243 The established facts reveal that the Ninth Circuit relied on the software's decentralized architecture to find no actual knowledge of specific infringements and granted summary judgment.44 The Supreme Court clarified that Sony's staple-article rule does not preclude liability where statements or actions are directed to promoting infringement beyond mere distribution with knowledge of third-party action.45 The record of promotional efforts targeting former Napster users and the absence of filtering efforts provide the requisite evidence of intent that Sony does not foreclose.46
The Ninth Circuit erred in its application of Sony, and the judgment is vacated with remand for further proceedings consistent with the inducement theory.47
Related opinions on this issue
Joined by Rehnquist, C. J., And Kennedy, J.
Justice Ginsburg concurs and would direct the Court of Appeals on remand to reconsider its Sony product-distribution holding on a fuller record, stressing that the evidence of noninfringing uses was insufficient to support summary judgment and that the case differs markedly from Sony because there has been no finding of fair use and little beyond anecdotal evidence here.48 She explains that the declarations submitted by Grokster and StreamCast provided only anecdotal evidence of authorized or public domain works and failed to demonstrate a reasonable prospect of substantial noninfringing uses developing over time.49 Ginsburg emphasizes that the overwhelming volume of infringing files shown by MGM's evidence precludes summary judgment under Sony's standard.50
Joined by Stevens And O’connor, Jj.
Justice Breyer concurs in the overall judgment but disagrees with any strict reading of Sony that would require more concrete evidence of noninfringing uses, explaining that the 10 percent figure here aligns with Sony's 9 percent and that the rule's clarity protects innovation by shielding distributors of dual-use technologies unless they actively induce infringement.51 He argues that Sony's capability standard is forward-looking and accounts for potential future legitimate uses such as public domain materials and shareware.52 Breyer maintains that modifying or strictly interpreting Sony would chill technological development without clear copyright benefits.53
Whether respondents Grokster and StreamCast can be held liable under theories of contributory or vicarious copyright infringement based on the record evidence of their users' direct infringement?54
One infringes contributorily by intentionally inducing or encouraging direct infringement, and the inducement theory requires evidence of intent to bring about infringement, distribution of a device suitable for infringing use, and actual infringement by recipients of the device on a substantial scale.55
Yes. The established facts establish direct infringement by users on a gigantic scale, with billions of files shared monthly and nearly 90 percent copyrighted, and the companies were aware of this primary use through user emails and MGM notifications of eight million files.56 Grokster and StreamCast actively encouraged the infringement through Napster-targeted promotions and business models dependent on high-volume infringing use for advertising revenue, satisfying the elements of intent and actual infringement required for inducement liability.57 Although the Court does not reach vicarious liability, the evidence of direct infringement and the distributors' purposeful conduct supports reversal of summary judgment on the contributory claim.58
Substantial evidence supports MGM on all elements of the inducement theory, so summary judgment for Grokster and StreamCast was error.59
Related opinions on this issue
Joined by Rehnquist, C. J., And Kennedy, J.
Justice Ginsburg concurs in the judgment and stresses that the evidence supports liability on contributory grounds as well as inducement.60 She notes that the products were overwhelmingly used to infringe and that the declarations offered by the defendants provided insufficient evidence of substantial noninfringing uses to warrant summary judgment under Sony.61 Ginsburg explains that the case differs markedly from Sony because there has been no finding of fair use and little beyond anecdotal evidence of noninfringing uses.
The declarations submitted by Grokster and StreamCast provided only anecdotal evidence of authorized or public domain works and failed to demonstrate a reasonable prospect of substantial noninfringing uses developing over time. She emphasizes that the overwhelming volume of infringing files shown by MGM's evidence precludes summary judgment under Sony's standard.
Joined by Stevens And O’connor, Jj.
Justice Breyer concurs in the judgment on the inducement holding but writes separately to defend Sony's substantial noninfringing use standard against stricter readings.62 He explains that the roughly 10 percent noninfringing files here parallel the 9 percent authorized uses in Sony and that the rule protects innovation by requiring only capability of substantial lawful uses rather than predominant lawful use.63 Breyer highlights the potential for future legitimate uses such as public domain works, shareware, and user-created content, arguing that Sony's forward-looking capability standard protects technology development absent the active inducement shown here.64