Question

Business Law- Copyright Law. (Answer IRAC format ) Facts: Grokster, Ltd., and StreamCast Networks, Inc. distributed free software that allowed computer users to share electronic files through peer-to-peer networks. The Grokster and StreamCast software could be used for legal purposes, such as sharing non-copyrighted files. Nonetheless, nearly 90 percent of the files available for download through Grokster or StreamCast were copyrighted. Billions of files were shared each month. The two companies encouraged illegal use of their software. A group of copyright holders sued Grokster and StreamCast alleging that they were violating the copyright law. Both parties moved for summary judgment. The trial court held for Grokster and StreamCast; the appeals court affirmed. The Supreme Court granted certiorari. Holding: Judgment for Grokster and StreamCast reversed. Anyone who distributes a device for infringing copyrights is liable if: • the distributor intends to promote the infringement of copyright law, and • there is actual infringement by recipients of the device. This file sharing software is fostering disdain for copyright laws. It is impossible to enforce rights in copyrighted works by going against all the direct infringers (those who use the software). The only practical option is to go after the distributor of the software. Issue: Were Grokster and StreamCast violating copyright law? (Answer in IRAC format )

Answer 1

There was an unlawful infringement of copyrights by the Third party to Grokster and StreamCast. However, legally, if any Company or Player in the market willfully promote the copyright infringement to the Third Parties in a clear expressions or by undertaking affirmative steps to foster the same in the market, then in such cases, such a Company or Player would be liable for the activities of the Third Party. However, in this case, the promotion was never affirmative regarding the Copyright infringement in whichever form. So legally speaking, they were not violating copyright law. However, it cannot be denied that they indeed profited from the Third Party’s acts of Copyright infringements in their business although not directly involved nor promoting it.