Secondary liability in the post Napster era: Ethical observations on MGM v. Grokster
| Pages | 121-130 |
| Date | 31 August 2005 |
| DOI | https://doi.org/10.1108/14779960580000266 |
| Published date | 31 August 2005 |
| Author | Richard A. Spinello |
| Subject Matter | Information & knowledge management |
Secondary liability in the post Napster era:
Ethical observations on MGM v. Grokster
INTRODUCTION
The Register of Copyrights in the United States has
said that copyright infringement on peer-to-peer
(P2P) networks is taking place on a ‘mind-boggling’
scale (Statement of the Honorable Marybeth Peters,
2003). While there is a general consensus that P2P
users who download and upload music or movie
files are culpable of direct copyright infringement,
the issue of secondary liability is murkier, though
quite important. According to Justice Holmes, sec-
ondary liability is ‘recognized in every part of the
law’ (Kalem Co. v. Harper Bros., 1911). At the same
time, pressing secondary (or even tertiary) liability
cases too hard could stifle innovation.
In this famous case, MGM and other content
providers filed suit against two file-swapping
services, Grokster and StreamCast, seeking injunc-
tive relief. A Federal District Court ruled in favor
of the defendants and that ruling was upheld by the
Ninth Circuit Court of Appeals. The Ninth Circuit
acknowledged that ‘the vast majority of the files [on
these networks] are exchanged illegally in violation
of copyright law,’ but nonetheless concluded that
Grokster and Streamcast were not liable for that
infringement (Metro-Goldwyn-Mayer Studios v.
Grokster, 2004). The Court relied heavily on the
precedent set in Universal City Studios v. Sony
(1979), which immunized Betamax and VCR man-
ufacturers from copyright violations committed
with their products.
But did the Ninth Circuit interpret the Sony case
correctly or has the Sony standard been misapplied?
Is this standard still relevant or has it been
Info, Comm & Ethics in Society (2005) 3: 121-130
© 2005 Troubador Publishing Ltd.
Richard A. Spinello
Department of Operations and Strategic Management, Carroll School of Management,
Boston College, Chestnut Hill, MA 02467 USA
Email: richard.spinello@bc.edu
The principal theme of this paper is secondary liability – to what extent should we hold those who cooperate in wrong-
doing and illicit behavior accountable? We probe this question by considering a lawsuit filed by the entertainment
industry against the file-swapping services of Grokster and StreamCast. Our focus is on the legal and moral implica-
tions of this case. We argue that the courts, which have so far ruled in favor of the defendants, have misapplied the so-
called Sony precedent for two reasons. The business model of these companies depends on copyright infringement
with advertising (and revenue) volume directly proportionate to the level of that infringement. Also, Sony's safe harbor
should not apply if there is active inducement of infringement. The key ethical question is the extent to which techno-
logical innovators must design and write their code to deal with infringement ex ante. We argue that purveyors of peer-
to-peer technology are formal cooperators in wrongdoing if they deliberately configure their system to enable the illic-
it copying of copyrighted music and movie files. We also consider the conditions for unjustifiable material cooperation,
and propose these conditions as a normative standard especially relevant for software vendors.
Keywords: copyright, contributory infringement, formal and material cooperation, peer-to-peer, secondary liability,
vicarious infringement
VOL 3 NO 3 JULY 2005 121
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