The Ninth Circuit's decision in Grokster came down today. It's a rather extreme exercise in hair-splitting, which basically comes down to this: There is no contributory or vicarious liability for copyright infringement as the law now stands for merely providing the tools that enable others to violate copyrights. Anything more than merely providing the tools, though, leans toward the Napster/Ellison analysis. Judge Thomas—who wrote the majority opinion in Ellison and cites it with approval, slip op. at 11734—limits his opinion to the facts:
Under the circumstances presented by this case, we conclude that the defendants are not liable for contributory and vicarious copyright infringement and affirm the district court’s partial grant of summary judgment.
Slip op. at 11730 (emphasis added).
Judge Thomas dealt with both contributory and vicarious copyright infringement. While distinguishing the Seventh Circuit's recent decision in Aimster, he noted that creating a tool that has significant noninfringing uses is not a "material contribution," and thus is not contributory infringement, under the law as it stands.
While material contribution can be established through provision of site and facilities for infringement, followed by a failure to stop specific instances of infringement once knowledge of those infringements is acquired, the Software Distributors have not provided the site and facilities for infringement in the first place. If the Software Distributors were true access providers, failure to disable that access after acquiring specific knowledge of a user’s infringement might be material contribution. Or, if the Software Distributors stored files or indices, failure to delete the offending files or offending index listings might be material contribution. However, the Software Distributors here are not access providers, and they do not provide file storage and index maintenance. Rather, it is the users of the software who, by connecting to each other over the internet, create the network and provide the access. “Failure” to alter software located on another’s computer is simply not akin to the failure to delete a filename from one’s own computer, to the failure to cancel the registration name and password of a particular user from one’s user list, or to the failure to make modifications to software on one’s own computer.
Slip op. at 11740–41 (citations omitted). In other words, it's not the manufacturer of the semiautomatic handgun optimized for "cop-killer" bullets who makes a material contribution to infringement; it's the gun shop that, knowing this, provides the weapons to known (or perhaps just suspected) members of Crack Dealer's Union Local 409. Whether the distributor who gets the gun from the manufacturer to the shop also makes a material contribution is a much harder, and thankfully evaded, question.
The theory of vicarious infringement also failed, because the Software Distributors did not have sufficient control over their users' activity.
It does not appear from any of the evidence in the record that either of the defendants has the ability to block access to individual users. Grokster nominally reserves the right to terminate access, while StreamCast does not maintain a licensing agreement with persons who download Morpheus. However, given the lack of a registration and log-in process, even Grokster has no ability to actually terminate access to filesharing functions, absent a mandatory software upgrade to all users that the particular user refuses, or IP addressblocking attempts. It is also clear that none of the communication between defendants and users provides a point of access for filtering or searching for infringing files, since infringing material and index information do not pass through defendants’ computers.
Slip op. at 11743–44 (footnote omitted). In the end, it all comes down to the inadequacy of the legal system in regulating new technologies.
[W]e live in a quicksilver technological environment with courts ill-suited to fix the flow of internet innovation. The introduction of new technology is always disruptive to old markets, and particularly to those copyright owners whose works are sold through well-established distribution mechanisms. Yet, history has shown that time and market forces often provide equilibrium in balancing interests, whether the new technology be a player piano, a copier, a tape recorder, a video recorder, a personal computer, a karaoke machine, or an MP3 player. Thus, it is prudent for courts to exercise caution before restructuring liability theories for the purpose of addressing specific market abuses, despite their apparent present magnitude.
Slip op. at 11746–47 (citation omitted, emphasis added).
So, then, where does this leave us? It does not, contrary to headlines that I have already seen, mean that "file-sharing software is legal." It means that the plaintiff record companies didn't (not necessarily couldn't—just didn't) establish intent in the same way as was done in Napster. It also creates an extremely fine line between providing a tool used to infringe, which is subject to apparently more-searching analysis, and providing a forum used to infringe, as the record indicates Napster and AOL did, or at least did enough to require a jury to make a definitive determination. Of course, a tool may well be meaningless without the forum. That, however, is for another time; as Judge Thomas emphasized, the tool alone is not unlawful unless the tool itself constitutes an infringement. Think of this as Internet "gun control": a handgun is not per se unlawful to possess, unless it is actually used in a crime or is a weapon specifically prohibited (such as a fully automatic weapon).
What this really points out is that Congress has done a piss-poor job of drafting the Copyright Act so that it is not held hostage by changing technology. (Some of my current scholarly work revolves around this axis.) But then, that's been a problem since the 1850s; so, absent a zero-based rewrite and rethink of the Act, it's a problem that we're stuck with. Judge Thomas's emphasis on "market forces" at the end of his opinion points out the real solution to piracy: Making piracy economically unattractive by providing high-quality, easily accessible intangibles at a price that makes the perceived cost and inconvenience associated with downloading, storing, proofing, etc. "too much" for the potential audience. In other words, don't repeat the mistakes of Prohibition and the "War on Drugs": go after the demand side, not the supply.