MGM v. Grokster Raises Questions About Innovation and Litigation

Washington, DC - The Electronic Frontier Foundation (EFF) was heartened to hear the Justices of the United States Supreme Court engage in a lively debate Tuesday about whether technology manufacturers should be held liable for the infringing activities of consumers. At stake is nothing less than the future of innovation in the United States. If vendors are held responsible for what people do with their products, even tech giants like Intel say they'd have to fire engineers and hire lawyers.

MGM and nearly a dozen other entertainment companies argued that peer-to-peer software manufacturers Grokster and StreamCast had built their businesses by distributing "infringing machines." But counsel for the entertainment industry, Donald B. Verrilli Jr. of the law firm Jenner &amp Block, scarcely finished his opening statements before the Justices interrupted with pointed questions about how his arguments would impact technological innovation. Justice Antonin Scalia asked how the industry would protect nascent technologies from "out-of-the-box lawsuits," and Justice Stephen Breyer pushed him to explain why MGM's argument wouldn't also apply to the iPod, Xerox machines, and even Gutenberg's printing press.

Richard G. Taranto of the law firm Farr &amp Taranto, who represented respondents Grokster, Ltd., and StreamCast Networks, Inc., replied that it was crucial for the Court to reaffirm its 21-year-old Betamax ruling, which held that companies should not be barred from selling products that may be used for copyright infringement if there is a potential for significant legal uses. Taranto also pointed out some of the many noninfringing uses for peer-to-peer software, including genomics research, archiving works in the public domain, and distributing new media whose creators use open copyright or Creative Commons licenses.

"The Justices asked all the right questions," said EFF Senior Staff Attorney Fred von Lohmann, lead attorney for StreamCast. "They were clearly worried about how this ruling would affect the future of technological invention. As Justice David Souter said, we shouldn't hang a sword of Damocles over the heads of America's innovators."

The Court will likely issue a decision in late June or early July.

More about MGM v. Grokster.

Contact:

Fred von Lohmann
Senior Intellectual Property Attorney
Electronic Frontier Foundation
fred@eff.org