August 2005

By Howard J. Shire, Michael Kelly and Daniel P. Margolis

In MGM Studios, Inc. v. Grokster, Ltd., No. 04-480 (June 27, 2005), the Supreme Court decided that the defendants could be held liable for copyright infringement perpetrated by the users of their respective software. Rather than clarifying the "significant noninfringing use" standard from Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984), to determine whether the defendants could be held liable for distributing a product with knowledge that it could be used to infringe, the Court utilized an alternative approach of finding liability. Turning to common law precedent and patent law, the unanimous Court held that liability may be based on purposeful, culpable expression under an inducement theory of secondary infringement. While some of the potential implications of this decision can be predicted, the full effect will not likely be clear for some time.

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