Grokster case: predictions Posted on October 16th, 2004 by Max Hailperin

I haven’t posted a commentary in so long, I’m going to do a bonus one in which I give myself two opportunities to be wrong in one commentary. Last week the recording industry, movie industry, and an assortment of songwriters and publishers asked the Supreme Court of the US to review the Grokster case. I’ll make the same easy prediction as the rest of the pundits, that the Court will decline to take this case. However, I’ll also go out on a limb and predict what might happen if the Court by some fluke does take the case.

The case concerns distributed peer-to-peer (P2P) filesharing networks, and whether their operators can be held accountable for the users’ activity.

The question is whether operators of distributed P2P networks, such as Grokster and Morpheus, can avoid responsibility for their users’ copyright infringements, even though

1. they have an ongoing relationship of pushing ads to those users, and thus have a profit motive,
2. their lack of ability to monitor and control activity is a feature they designed into their software, and
3. they knew that the bulk of their systems’ use was for copyright infringement.

The Ninth Circuit Court of Appeals held that the P2P companies are not liable for their users’ copyright infringements, primarily because the networks can also be used for non-infringing purposes, and because the companies do not know of any specific infringement at a time when they can do anything to stop it.

I have no doubt that all nine Supreme Court justices view Grokster and Morpheus as bad actors, and would like to see them put out of business. However, it would take extremely delicate surgery to cut out just the cancerous tissue without damaging any of the surrounding healthy tissue of legitimate businesses. As evidence of how hard this is, one of the most powerful members of the Senate, Orrin Hatch, failed in an all-out effort to craft acceptable new law to target companies like Grokster and Morpheus. The Supreme Court is highly unlikely to want to try crafting language the Senate (assisted by the Registrar of Copyrights and a bunch of lobbiests) couldn’t manage. Thus, I predict they will turn down this case and leave it to a later session of Congress to clean up the mess.

What, however, if the Court does take the case? What if they reverse the Ninth Circuit’s decision? If that happens, I predict the opinion will be as narrowly tailored as possible to the specifics of the case. In particular, they would likely point to the ongoing, profit-oriented, connection between Grokster and Morpheus’s ad servers and the infringing users. Thus, in the unlikely event that the Court shuts down these commercial P2P services, we likely would see a flowering of open-source, advertising-free services taking up the slack, much as Grokster and Morpheus themselves flowered after Napster was cut down.

In the short-term, this change would simply give P2P users the blessing of fewer ads. The real signficance, however, would be to move us one step further down the road to the inevitable day when the entertainment industry recognizes the genie can’t be put back into the bottle. By encouraging the growth of an even more diffuse, even more shallow-pocketed adversary, the industry would not be winning the war. What battles would they have left? They could try to get Congress to place responsibility on internet service providers, as Pennsylvania did with child pornography. But given how poorly that law stood up to judicial scrutiny, that avenue doesn’t look very promising. Instead, I foresee the entertainment industry finally convincing itself that it needs to accept a radical alternative, such as William Fisher’s suggestion of a compulsory licensing scheme.