- The Court did not hold the defendants liable. Instead, Justice Souter's opinion ends (slip op. at 24, emphasis added):
There is substantial evidence in MGM's favor on all elements of inducement, and summary judgment in favor of Grokster and StreamCast was error. On remand, reconsideration of MGM's motion for summary judgment will be in order.
The judgment of the Court of Appeals is vacated, and the case is remanded for further proceedings consistent with this opinion.
In other words, this really was a case on civil procedure as much as on copyright law. Depending on the particular evidence, the defendants could be liable.
- Intent matters. Early in the opinion, Justice Souter ominously noted (slip op. at 5–6, emphasis added):
Grokster and StreamCast are not, however, merely passive recipients of information about infringing use. The record is replete with evidence that from the moment Grokster and StreamCast began to distribute their free software, each one clearly voiced the objective that recipients use it to download copyrighted works, and each took active steps to encourage infringement.
It wasn't just the knowledge; it was the very business model (slip op. at 8)
In addition to this evidence of express promotion, marketing, and intent to promote further, the business models employed by Grokster and StreamCast confirm that their principal object was use of their software to download copyrighted works.
Perhaps Justice Souter was inspired by W. Mark Felt, because the opinion in Grokster essentially counsels us to "follow the money." Remember, the IP Clause (Art. I, § 8, cl. 8) concerns both "progress"—what we now usually call "innovation," and has increasingly focussed on innovation in technology as opposed to innovation in substance—and "exclusive rights for a limited time"—a limited monopoly, which is purely an economic device. In other words, Justice Souter's decision implies that infringement is usually a matter more concerned with the economics (the motivation to infringe) than with the technique of infringement. This is not surprising in a legal system that increasingly disdains noneconomic remedies. Given this look at the "back end" of infringement, one shouldn't be surprised that the "front end" of the lawsuit for infringement follows the money, too.
- Nonetheless, the Court evaded the biggest question: What is the limit of the Sony doctrine? Rather than actually answering the question, the Court held that the Ninth Circuit overstated Sony's protection; that the evidence supported inducement claims in a way outside the scope of the Ninth Circuit's opinion (cf. slip op. at 14, noting that Sony presented no corresponding inducement evidence or claim); and that the Sony rule concerns only one theory of "secondary liability", not all theories of "secondary liability."
Sony's rule limits imputing culpable intent as a matter of law from the characteristics or uses of a distributed product. But nothing in Sony requires courts to ignore evidence of intent if there is such evidence, and the case was never meant to foreclose rules of fault-based liability derived from the common law. (slip op. at 17)
Unfortunately, Justice Souter's opinion never engages with the rhetorical problem of "what do we call something other than direct infringement?" I wish that he had; it's a shame he did not. His opinion usually uses the term "secondary infringement," although that's not parallel to "direct infringement." On the other hand, this is such a highly charged area that the argument that the Court need not decide that controversy today has some merit.