Reasoning of the Court

The court thought that the case was very similar to the Napster vs. A&M records and molded their business to capture users after Napster went to a pay site. As cited in the case documents this is a copy of an internal e-mail sent from a company executive: “We have put this network in place so that when Napster pulls the plug on their free service or if the Court orders them shut down prior to that we will be positioned to capture the flood of their 32 million users that will be actively looking for an alternative”

Grokster and Streamcast also developed promotional and advertising materials that stated they were 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?”

The opinion of the court was that Grokster even planned to flaunt that its software was illegal and launched what it called an OpenNap network. Even it name was close to Napster. In the end Grokster trying to piggyback on the successes and failure of Napster and encouraging Napster users to use their site while not filtering the transmitted information for copyrighted material was the downfall of Grokster.