Issue of the case

The case of MGM vs Grokster is a suit filed by 28 different entertainment companies against file sharing companies such as Kaka and Morpheus. The entertainment companies say that peer to peer file sharing is illegal copyright infringement and is basically allowing users to steal material.

The Supreme court decided to take on this case and had a landmark ruling declaring that users of this software to illegally obtain copyrighted material is in violation of the law. They did fall short of forcing technology companies to redesign software programs to limit the downloads of copyrighted material. Grokster claimed that using many different people to download a single file was not illegal because they are not getting all the information as a whole from a single source. The uplolders are not providing an entire piece of material to the downloader so there is no infringement. The person in violation is the downloader not the companies that provide the software to assemble the pieces together.

During oral argument, Justice Souter expressed skepticism about this legal strategy:
"I don’t understand how you can separate the past from the present in this fashion. One, I suppose, could say, ‘Well, I’m going to make inducing remarks Monday through Thursday, and I’m going to stop Thursday night.’ The sales of the product on Friday are still going to be the result of inducing remarks Monday through Wednesday. And you’re asking [us], in effect,…to ignore Monday through Thursday."

MGM argued that Musicians, studios, artists, and writers were affected and losing money due to the platform of these websites. The expenses for recording and producing music, movies, and software are high and if people are allowed to simply download them the business will become bankrupt and no longer to be able to afford the costs to create.

In a rare unanimous (9-0) decision, the U.S. Supreme Court overturned a District Court and ruled in favor of MGM, sending MGM's case against the file-sharing service, Grokster, back to the lower court for trial.

In order to download the free client, users must now first agree to the statement "I will not use LimeWire for copyright infringement."

StreamCast developed promotional materials to market its service as the best Napster alternative. One proposed advertisement read: "Napster Inc. has announced that it will soon begin charging you a fee. That's if the courts don't order it shut down first. What will you do to get around it?"

Sources http://w2.eff.org/IP/P2P/MGM_v_Grokster/ http://www.copyright.gov/docs/mgm/index.html