Ways Accompanies Our Review of Official Court Granted Certiorari

Home , Endeavor (company), Grokster

2764 125 SUPREME COURT REPORTER 545 U.S. 912 first and second displays to the third. Giv- Court of Appeals for the Ninth Circuit, 380 en the presumption of regularity that al- F.3d 1154, affirmed, and the Supreme ways accompanies our review of official Court granted certiorari. action, see n. 9, supra, the Court has iden- Holding: The Supreme Court, Justice tified no evidence of a purpose to advance Souter, held that one who distributes a religion in a way that is inconsistent with device with the object of promoting its use our cases. The Court may well be correct to infringe copyright, as shown by clear in identifying the third displays as the fruit expression or other affirmative steps taken of a desire to display the Ten Command- to foster infringement, is liable for the ments, ante, at 2740, but neither our cases resulting acts of infringement by third par- nor our history support its assertion that ties. such a desire renders the fruit poisonous. Vacated and remanded. * * * Justice Ginsburg filed concurring opinion For the foregoing reasons, I would re- in which Chief Justice Rehnquist and Jus- verse the judgment of the Court of Ap- tice Kennedy joined. peals. Justice Breyer filed concurring opinion in which Justice Stevens and Justice O’Con- , nor joined.

1. Copyrights and Intellectual Property O77

One infringes a copyright contribu- 545 U.S. 913, 162 L.Ed.2d 781 torily by intentionally inducing or encour- METRO–GOLDWYN–MAYER aging direct infringement and infringes STUDIOS INC., et al., vicariously by profiting from direct in- Petitioners, fringement while declining to exercise a v. right to stop or limit it. GROKSTER, LTD., et al. 2. Patents O259(1) No. 04–480. Under patent law’s traditional ‘‘staple Argued March 29, 2005. article of commerce doctrine,’’ distribution of a component of a patented device will Decided June 27, 2005. not violate the patent if it is suitable for Background: Copyright holders including use in other ways. 35 U.S.C.A. § 271(c). songwriters, music publishers, and motion See publication Words and Phras- picture studios brought copyright infringe- es for other judicial constructions ment action against distributors of peer-to- and definitions. peer file sharing computer networking software. The United States District Court 3. Patents O227 for the Central District of California, Ste- One who makes and sells articles phen V. Wilson, J., 259 F.Supp.2d 1029, which are only adapted to be used in a granted partial summary judgment in fa- patented combination will be presumed to vor of the distributors on issues of contrib- intend the natural consequences of his utory and vicarious infringement, and acts; he will be presumed, for purpose of plaintiffs appealed. The United States resulting infringement action, to intend 545 U.S. 913 METRO–GOLDWYN–MAYER STUDIOS INC. v. GROKSTER 2765 Cite as 125 S.Ct. 2764 (2005) that they shall be used in the combination product may be put to infringing uses, and of the patent. 35 U.S.C.A. § 271(c). shows statements or actions directed to promoting infringement, the staple-article 4. Patents O227 rule set forth in Sony Corp. of America v. Where an article is good for nothing Universal City Studios, Inc., limiting the else but patent infringement, there is no imputing of culpable intent as a matter of legitimate public interest in its unlicensed law from the characteristics or uses of a availability, and there is no injustice in distributed product, will not preclude lia- presuming or imputing to one who makes bility for inducing copyright infringement. and sells the article an intent to infringe. 35 U.S.C.A. § 271(c). 8. Patents O259(1) Patent Act’s exemption from liability 5. Patents O259(1) for those who distribute a staple article of Patent law’s ‘‘staple article of com- commerce does not extend to those who merce doctrine’’ absolves the equivocal induce patent infringement. 35 U.S.C.A. conduct of selling an item with substantial § 271(b, c). lawful as well as unlawful uses, and limits liability for infringement to instances of 9. Copyrights and Intellectual Property more acute fault than the mere under- O77 standing that some of one’s products will Patents O227 be misused, leaving breathing room for Evidence of active steps taken to en- innovation and a vigorous commerce. 35 courage direct patent or copyright in- U.S.C.A. § 271(c). fringement, such as advertising an infringing use or instructing how to engage in an 6. Copyrights and Intellectual Property infringing use, show an affirmative intent O77 that the product be used to infringe, and a Although secondary liability for copy- showing that infringement was encouraged right infringement may not be imposed by overcomes the law’s reluctance to find lia- presuming or imputing intent to cause in- bility when a defendant merely sells a fringement solely from the design or dis- commercial product suitable for some law- tribution of a product capable of substan- ful use. tial lawful use, which the distributor knows is in fact used for infringement, this bar 10. Copyrights and Intellectual Property does not mean that a producer can never O77 be held contributorily liable for third par- One who distributes a device with the ties’ infringing use of a product capable of object of promoting its use to infringe substantial lawful use, notwithstanding an copyright, as shown by clear expression or actual purpose to cause infringing use, un- other affirmative steps taken to foster in- less the distributors had specific knowl- fringement, is liable for the resulting acts edge of infringement at a time when they of infringement by third parties. contributed to the infringement and failed 11. Copyrights and Intellectual Property to act upon that information. O77 7. Copyrights and Intellectual Property Mere knowledge of infringing poten- O77 tial or of actual infringing uses would not Where evidence goes beyond charac- be enough to subject to copyright infringe- teristics of product that may be used to ment liability a distributor of a product infringe copyrights or knowledge that such capable of infringing uses, nor would ordi- 2766 125 SUPREME COURT REPORTER 545 U.S. 913 nary acts incident to product distribution, encouraged the product to be used to in- such as offering customers technical sup- fringe; in such a case, the culpable act is port or product updates, support liability not merely the encouragement of infringe- in themselves; instead, liability for inducement but also the distribution of the tool ment of infringement is premised on pur- intended for infringing use. poseful, culpable expression and conduct, and thus does nothing to compromise legit- S 913Syllabus * imate commerce or discourage innovation having a lawful promise. Respondent companies distribute free software that allows computer users to 12. Copyrights and Intellectual Property share electronic files through peer-to-peer O77 networks, so called because the computers Proving that a message was sent out communicate directly with each other, not to potential copyright infringers is the pre- through central servers. Although such eminent but not exclusive way of showing networks can be used to share any type of that active steps were taken by message digital file, recipients of respondents’ soft- sender that distributed device capable of ware have mostly used them to share infringing uses, with the purpose of bring- copyrighted music and video files without ing about infringing acts, for purpose of authorization. Seeking damages and an contributory copyright infringement claim injunction, a group of movie studios and against sender, and of showing that in- other copyright holders (hereinafter fringing acts took place by using the de- MGM) sued respondents for their users’ vice distributed. copyright infringements, alleging that re- 13. Copyrights and Intellectual Property spondents knowingly and intentionally dis- O77 tributed their software to enable users to In the absence of other evidence of infringe copyrighted works in violation of intent to cause copyright infringement by the Copyright Act. distribution of a product with infringing Discovery revealed that billions of uses, a court would be unable to find con- files are shared across peer-to-peer tributory infringement liability as to one networks each month. Respondents who makes and sells the product merely are aware that users employ their soft- based on a failure to take affirmative steps ware primarily to download copyrighted to prevent infringement, if the device oth- files, although the decentralized net- erwise was capable of substantial nonin- works do not reveal which files are fringing uses. copied, and when. Respondents have 14. Copyrights and Intellectual Property sometimes learned about the infringe- O77 ment directly when users have e-mailed Inducement liability for copyright in- questions regarding copyrighted works, fringement goes beyond encouraging a and respondents have replied with particular consumer to infringe a copy- guidance. Respondents are not merely right, and the distribution of a product can passive recipients of information about itself give rise to liability where evidence infringement. The record is replete shows that the distributor intended and with evidence that when they began to

* The syllabus constitutes no part of the opinion the reader. See United States v. Detroit Tim- of the Court but has been prepared by the ber & Lumber Co., 200 U.S. 321, 337, 26 S.Ct. Reporter of Decisions for the convenience of 282, 50 L.Ed. 499. 545 U.S. 914 METRO–GOLDWYN–MAYER STUDIOS INC. v. GROKSTER 2767 Cite as 125 S.Ct. 2764 (2005) distribute their free software, each of with no involvement by respondents be- them clearly voiced the objective that yond providing the software in the first recipients use the software to download place. Finally, the court held that respon- copyrighted works and took active dents could not be held liable under a steps to encourage infringement. After vicarious infringement theory because they the notorious file-sharing service, Nap- did not monitor or control the software’s ster, was sued by copyright holders for use, had no agreed-upon right or current facilitating copyright infringement, both ability to supervise its use, and had no respondents promoted and marketed independent duty to police infringement. themselves as Napster alternatives. Held: One who distributes a device They receive no revenue from users, with the object of promoting its use to but, instead, generate income by selling infringe copyright, as shown by clear ex- advertising space, then streaming the pression or other affirmative steps taken advertising to their users. As the to foster infringement, going beyond mere number of users increases, advertising distribution with knowledge of third-party opportunities are worth more. There action, is liable for the resulting acts of is no evidence that either respondent infringement by third parties using the made an effort to filter copyrighted device, regardless of the device’s lawful material from users’ downloads or oth- uses. Pp. 2775–2783. erwise to impede the sharing of copyrighted files. (a) The tension between the compet- While acknowledging that respon- ing values of supporting creativity through dents’ users had directly infringed MGM’s copyright protection and promoting tech- copyrights, the District Court nonetheless nological innovation by limiting infringe- granted respondents summary judgment ment liability is the subject of this case. as to liability arising from distribution of Despite offsetting considerations, the argument for imposing indirect liability here is their softSware.914 The Ninth Circuit affirmed. It read Sony Corp. of America v. powerful, given the number of infringing Universal City Studios, Inc., 464 U.S. 417, downloads that occur daily using respon- 104 S.Ct. 774, 78 L.Ed.2d 574, as holding dents’ software. When a widely shared that the distribution of a commercial prod- product is used to commit infringement, it uct capable of substantial noninfringing may be impossible to enforce rights in the uses could not give rise to contributory protected work effectively against all di- liability for infringement unless the dis- rect infringers, so that the only practical tributor had actual knowledge of specific alternative is to go against the device’s instances of infringement and failed to act distributor for secondary liability on a the- on that knowledge. Because the appeals ory of contributory or vicarious infringe- court found respondents’ software to be ment. One infringes contributorily by in- capable of substantial noninfringing uses tentionally inducing or encouraging direct and because respondents had no actual infringement, and infringes vicariously by knowledge of infringement owing to the profiting from direct infringement while software’s decentralized architecture, the declining to exercise the right to stop or court held that they were not liable. It limit it. Although ‘‘[t]he Copyright Act also held that they did not materially con- does not expressly render anyone liable for tribute to their users’ infringement be- [another’s] infringement,’’ Sony, 464 U.S., cause the users themselves searched for, at 434, 104 S.Ct. 774, these secondary lia- retrieved, and stored the infringing files, bility doctrines emerged from common law 2768 125 SUPREME COURT REPORTER 545 U.S. 914

principles and are well established in the fringement and failed to act upon that law, e.g., id., at 486, 104 S.Ct. 774. Pp. information. Sony did not displace other 2775–2776. secondary liability theories. Pp. 2776– (b) Sony addressed a claim that sec- 2779. ondary liability for infringement can arise (c) Nothing in Sony requires courts to from the very distribution of a commercial ignore evidence of intent to promote in- product. There, S 915copyright holders sued fringement if such evidence exists. It was Sony, the manufacturer of videocassette never meant to foreclose rules of fault- recorders, claiming that it was contribu- based liability derived from the common torily liable for the infringement that oc- law. 464 U.S., at 439, 104 S.Ct. 774. curred when VCR owners taped copyright- Where evidence goes beyond a product’s ed programs. The evidence showed that characteristics or the knowledge that it the VCR’s principal use was ‘‘time-shift- may be put to infringing uses, and shows ing,’’ i.e., taping a program for later view- statements or actions directed to promoting at a more convenient time, which the ing infringement, Sony’s staple-article rule Court found to be a fair, noninfringing use. will not preclude liability. At common law 464 U.S., at 423–424, 104 S.Ct. 774. More- a copyright or patent defendant who ‘‘not over, there was no evidence that Sony had only expected but invoked [infringing use] desired to bring about taping in violation by advertisement’’ was liable for infringe- of copyright or taken active steps to in- ment. Kalem Co. v. Harper Brothers, 222 crease its profits from unlawful taping. U.S. 55, 62–63, 32 S.Ct. 20, 56 L.Ed. 92. Id., at 438, 104 S.Ct. 774. On those facts, The rule on inducement of infringement as the only conceivable basis for liability was developed in the early cases is no different on a theory of contributory infringement today. Evidence of active steps taken to through distribution of a product. Id., at encourage direct infringement, such as ad- 439, 104 S.Ct. 774. Because the VCR was vertising an infringing use or instructing ‘‘capable of commercially significant nonin- how to engage in an infringing use, shows fringing uses,’’ the Court held that Sony an affirmative intent that the product be was not liable. Id., at 442, 104 S.Ct. 774. used to infringe, and overcomes the law’s This theory reflected patent law’s tradi- reluctance to find liability when a defen- tional staple article of commerce doctrine dant merely sells a commercial product that distribution of a component of a pat- suitable for some lawful use. A rule that ented device will not violate the patent if it is suitable for use in other ways. 35 premises liability on purposeful, culpable U.S.C. § 271(c). The doctrine absolves expression and conduct S 916does nothing to the equivocal conduct of selling an item compromise legitimate commerce or dis- with lawful and unlawful uses and limits courage innovation having a lawful prom- liability to instances of more acute fault. ise. Pp. 2779–2780. In this case, the Ninth Circuit misread (d) On the record presented, respon- Sony to mean that when a product is dents’ unlawful objective is unmistakable. capable of substantial lawful use, the pro- The classic instance of inducement is by ducer cannot be held contributorily liable advertisement or solicitation that broad- for third parties’ infringing use of it, even casts a message designed to stimulate oth- when an actual purpose to cause infringing ers to commit violations. MGM argues use is shown, unless the distributors had persuasively that such a message is shown specific knowledge of infringement at a here. Three features of the evidence of time when they contributed to the in- intent are particularly notable. First, 545 U.S. 916 METRO–GOLDWYN–MAYER STUDIOS INC. v. GROKSTER 2769 Cite as 125 S.Ct. 2764 (2005) each of the respondents showed itself to SOUTER, J., delivered the opinion for be aiming to satisfy a known source of de- a unanimous Court. GINSBURG, J., filed mand for copyright infringement, the a concurring opinion, in which market comprising former Napster users. REHNQUIST, C. J., and KENNEDY, J., Respondents’ efforts to supply services to joined, post, p. 2783. BREYER, J., filed a former Napster users indicate a principal, concurring opinion, in which STEVENS if not exclusive, intent to bring about in- and O’CONNOR, JJ., joined, post, p. 2787. fringement. Second, neither respondent attempted to develop filtering tools or other mechanisms to diminish the infring- Paul D. Clement, for United States as ing activity using their software. While amicus curiae, by special leave of the the Ninth Circuit treated that failure as Court, supporting the Petitioners. irrelevant because respondents lacked an independent duty to monitor their users’ Kenneth W. Starr, Steven A. Engel, Su- activity, this evidence underscores their san E. Engel, Kirkland & Ellis LLP, intentional facilitation of their users’ in- Washington, DC, Russell J. Frackman, fringement. Third, respondents make George M. Borkowski, Mitchell, Silberberg money by selling advertising space, then & Knupp LLP, Los Angeles, CA, Donald by directing ads to the screens of comput- B. Verrilli, Jr., Counsel of Record, Ian ers employing their software. The more Heath Gershengorn, William M. Hohen- their software is used, the more ads are garten, Steven B. Fabrizio, Thomas J. Per- sent out and the greater the advertising relli, Matthew J. Oppenheim, Jenner & revenue. Since the extent of the soft- Block LLP, Washington, DC, David E. ware’s use determines the gain to the dis- Kendall, Robert J. Shaughnessy, Thomas tributors, the commercial sense of their G. Hentoff, Williams & Connolly LLP, enterprise turns on high-volume use, Washington, DC, Gregory P. Goeckner, which the record shows is infringing. Dean C. Garfield, Motion Picture Associa- This evidence alone would not justify an tion of America, Inc., Encino, CA, Elaine inference of unlawful intent, but its import J. Goldenberg, Matthew Hersh, Kathleen is clear in the entire record’s context. R. Hartnett, Brian Hauck, Jenner & Block Pp. 2780–2782. LLP, Washington, DC, Steven M. Marks, Stanley Pierre-Louis, Recording Industry (e) In addition to intent to bring Association of America, Inc., Washington, about infringement and distribution of a DC, Counsel for Motion Picture Studio and device suitable for infringing use, the in- Recording Company Petitioners. ducement theory requires evidence of actual infringement by recipients of the de- Robert M. Schwartz, Drew E. Breuder, vice, the software in this case. There is O’Melveny & Myers LLP, Los Angeles, evidence of such infringement on a gigan- California, Counsel for Petitioners Warner tic scale. Because substantial evidence Bros. Entertainment Inc. and New Line supports MGM on all elements, summary Cinema Corporation. judgment for respondents was error. On Kelli L. Sager, Andrew J. Thomas, Jef- remand, reconsideration of MGM’s sum- frey H. Blum, Jeffrey L. Fisher, Davis mary judgment motion will be in order. Wright Tremaine LLP, Los Angeles, CA, Pp. 2782–2783. Carey R. Ramos, Counsel of Record, Peter 380 F.3d 1154, vacated and remanded. L. Felcher, Aidan Synnott, Theodore K. 2770 125 SUPREME COURT REPORTER 545 U.S. 916

Cheng, John H. Longwell, Paul, Weiss, I Rifkind, Wharton & Garrison LLP, New York, NY, Counsel for Songwriter and A Music Publisher Petitioners. Respondents, Grokster, Ltd., and Michael H. Page, Mark A. Lemley, Kek- StreamCast Networks, Inc., defendants in er & Van Nest, LLP, San Francisco, CA, the trial court, distribute free software Counsel for Grokster. products that allow computer users to Charles S. Baker, Porter & Hedges, share electronic files through peer-to-peer LLP, Houston, TX, Cindy A. Cohn, Coun- networks, so called because users’ comput- sel of Record, Fred Von Lohmann, Elec- ers communicate directly with each other, tronic Frontier Fndtn., San Francisco, CA, not through S 920central servers. The ad- Counsel for StreamCast. vantage of peer-to-peer networks over in- Matthew A. Neco, Wendy Millar Good- formation networks of other types shows kin, StreamCast Networks, Inc., Woodland up in their substantial and growing popu- Hills, CA, Counsel for StreamCast. larity. Because they need no central com- Richard G. Taranto, H. Bartow Farr, puter server to mediate the exchange of III, Farr & Taranto, Washington, DC, information or files among users, the high- Counsel for Respondents. bandwidth communications capacity for a server may be dispensed with, and the For U.S. Supreme Court briefs, see: need for costly server storage space is 2005 WL 166587 (Pet.Brief) eliminated. Since copies of a file (particu- 2005 WL 166588 (Pet.Brief) larly a popular one) are available on many 2005 WL 508120 (Resp.Brief) users’ computers, file requests and retriev- 2005 WL 640966 (Reply.Brief) als may be faster than on other types of 2005 WL 640697 (Reply.Brief) networks, and since file exchanges do not travel through a server, communications Justice SOUTER delivered the opinion can take place between any computers that of the Court. remain connected to the network without S 918The question is under what circum- risk that a glitch in the server will disable stances the distributor of a product capa- the network in its entirety. Given these ble of both lawful and unlawful use is liable benefits in security, cost, and efficiency, S 919for acts of copyright infringement by peer-to-peer networks are employed to third parties using the product. We hold store and distribute electronic files by uni- that one who distributes a device with the versities, government agencies, corpora- object of promoting its use to infringe tions, and libraries, among others.1 copyright, as shown by clear expression or other affirmative steps taken to foster in- Other users of peer-to-peer networks fringement, is liable for the resulting acts include individual recipients of Grokster’s of infringement by third parties. and StreamCast’s software, and although

1. Peer-to-peer networks have disadvantages to minimize storage or bandwidth consump- as well. Searches on peer-to-peer networks tion, the costs of which are borne by every may not reach and uncover all available files user of the network. Most relevant here, it is because search requests may not be transmit- more difficult to control the content of files ted to every computer on the network. There available for retrieval and the behavior of may be redundant copies of popular files. users. The creator of the software has no incentive 545 U.S. 922 METRO–GOLDWYN–MAYER STUDIOS INC. v. GROKSTER 2771 Cite as 125 S.Ct. 2764 (2005) the networks that they enjoy through us- parable power and capacity to collect tem- ing the software can be used to share any porary indexes of the files available on the type of digital file, they have prominently computers of users connected to it. The employed those networks in sharing copy- supernode (or indexing computer) searches righted music and video files without au- its own index and may communicate the thorization. A group of copyright holders search request to other supernodes. If (MGM for short, but including motion pic- the file is found, the supernode discloses ture studios, recording companies, song- its location to the computer requesting it, writers, and music publishers) sued Grok- and the requesting user can download the ster and StreamCast for their users’ file directly from the computer located. copyright infringements, alleging that The copied file is placed in a designated they S 921knowingly and intentionally dis- sharing folder on the requesting user’s tributed their software to enable users to computer, where it is available for other reproduce and distribute the copyrighted users to download in turn, along with any works in violation of the Copyright Act, other file in that folder. 17 U.S.C. § 101 et seq. (2000 ed. and 2 Supp. II). MGM sought damages and an S 922In the Gnutella network made avail- injunction. able by Morpheus, the process is mostly Discovery during the litigation revealed the same, except that in some versions of the way the software worked, the business the Gnutella protocol there are no super- aims of each defendant company, and the nodes. In these versions, peer computers predilections of the users. Grokster’s epo- using the protocol communicate directly nymous software employs what is known with each other. When a user enters a as FastTrack technology, a protocol devel- search request into the Morpheus soft- oped by others and licensed to Grokster. ware, it sends the request to computers StreamCast distributes a very similar connected with it, which in turn pass the product except that its software, called request along to other connected peers. Morpheus, relies on what is known as Gnu- The search results are communicated to tella technology.3 A user who downloads the requesting computer, and the user can and installs either software possesses the download desired files directly from peers’ protocol to send requests for files directly computers. As this description indicates, to the computers of others using software Grokster and StreamCast use no servers compatible with FastTrack or Gnutella. to intercept the content of the search re- On the FastTrack network opened by the quests or to mediate the file transfers Grokster software, the user’s request goes conducted by users of the software, there to a computer given an indexing capacity being no central point through which the by the software and designated a super- substance of the communications passes in node, or to some other computer with com- either direction.4

2. The studios and recording companies and 4. There is some evidence that both Grokster the songwriters and music publishers filed and StreamCast previously operated super- separate suits against the defendants that nodes, which compiled indexes of files avail- were consolidated by the District Court. able on all of the nodes connected to them. 3. Subsequent versions of Morpheus, released This evidence, pertaining to previous versions after the record was made in this case, appar- of the defendants’ software, is not before us ently rely not on Gnutella but on a technology and would not affect our conclusions in any called Neonet. These developments are not event. before us. 2772 125 SUPREME COURT REPORTER 545 U.S. 922

Although Grokster and StreamCast do FastTrack and Gnutella networks each not therefore know when particular files month, the probable scope of copyright are copied, a few searches using their soft- infringement is staggering. ware would show what is available on the Grokster and StreamCast concede the networks the software reaches. MGM infringement in most downloads, Brief for commissioned a statistician to conduct a Respondents 10, n. 6, and it is uncontested systematic search, and his study showed that they are aware that users employ that nearly 90% of the files available for download on the FastTrack system were their software primarily to download copy- copyrighted works.5 Grokster and righted files, even if the decentralized StreamCast dispute this figure, raising FastTrack and Gnutella networks fail to methodological problems and arguing that reveal which files are being copied, and free copying even of copyrighted works when. From time to time, moreover, the may be authorized by the rightholders. companies have learned about their users’ They also argue that potential noninfring- infringement directly, as from users who ing uses of their software are significant in have sent e-mail to each company with kind, even if infrequent in practice. Some questions about playing copyrighted mov- musical performers, for example, have ies they had downloaded, to whom the gained new audiences by distributing companies have responded with guidance.6

S 923their copyrighted works for free across App. 559–563, 808–816, 939–954. And peer-to-peer networks, and some distribu- MGM notified the companies of 8 million tors of unprotected content have used copyrighted files that could be obtained peer-to-peer networks to disseminate files, using their software. Shakespeare being an example. Indeed, Grokster and StreamCast are not, how- StreamCast has given Morpheus users the ever, merely passive recipients of informa- opportunity to download the briefs in this tion about infringing use. The record is very case, though their popularity has not replete with evidence that from the mo- been quantified. ment Grokster S 924and StreamCast began As for quantification, the parties’ anec- to distribute their free software, each one dotal and statistical evidence entered thus clearly voiced the objective that recipients far to show the content available on the use it to download copyrighted works, and FastTrack and Gnutella networks does not each took active steps to encourage in- say much about which files are actually fringement. downloaded by users, and no one can say how often the software is used to obtain After the notorious file-sharing service, copies of unprotected material. But Napster, was sued by copyright holders MGM’s evidence gives reason to think that for facilitation of copyright infringement, the vast majority of users’ downloads are A&M Records, Inc. v. Napster, Inc., 114 acts of infringement, and because well over F.Supp.2d 896 (N.D.Cal.2000), aff’d in 100 million copies of the software in ques- part, rev’d in part, 239 F.3d 1004 (C.A.9 tion are known to have been downloaded, 2001), StreamCast gave away a software and billions of files are shared across the program of a kind known as OpenNap,

5. By comparison, evidence introduced by the 6. The Grokster founder contends that in an- plaintiffs in A&M Records, Inc. v. Napster, swering these e-mails he often did not read Inc., 239 F.3d 1004 (C.A.9 2001), showed that them fully. App. 77, 769. 87% of files available on the Napster file- sharing network were copyrighted, id., at 1013. 545 U.S. 926 METRO–GOLDWYN–MAYER STUDIOS INC. v. GROKSTER 2773 Cite as 125 S.Ct. 2764 (2005)

designed as compatible with the Napster be positioned to capture the flood of their program and open to Napster users for 32 million users that will be actively look- downloading files from other Napster ing for an alternative.’ ’’ Id., at 588–589, and OpenNap users’ computers. Evi- 861. dence indicates that ‘‘[i]t was always Thus, StreamCast developed promotion- [StreamCast’s] intent to use [its Open- al materials to market its service as the Nap network] to be able to capture best Napster alternative. One proposed email addresses of [its] initial target advertisement read: ‘‘Napster Inc. has an- market so that [it] could promote [its] nounced that it will soon begin charging StreamCast Morpheus interface to them,’’ you a fee. That’s if the courts don’t order App. 861; indeed, the OpenNap program it shut down first. What will you do to get was engineered ‘‘ ‘to leverage Napster’s around it?’’ Id., at 897. Another pro- 50 million user base,’ ’’ id., at 746. posed ad touted StreamCast’s software as the ‘‘# 1 alternative to Napster’’ and asked StreamCast monitored both the number ‘‘[w]hen the lights went off at Napster TTT of users downloading its OpenNap pro- where did the users go?’’ Id., at 836 (ellip- gram and the number of music files they sis in original).7 StreamCast even planned downloaded. Id., at 859, 863, 866. It also to flaunt the illegal uses of its software; used the resulting OpenNap network to when it launched the OpenNap network, distribute copies of the Morpheus software the chief technology officer of the company and to encourage users to adopt it. Id., at averred that ‘‘[t]he goal is to get in trouble 861, 867, 1039. Internal company docu- with the law and get sued. It’s the best ments indicate that StreamCast hoped to way to get in the new[s].’’ Id., at 916. attract large numbers of former Napster users if that company was shut down by The evidence that Grokster sought to court order or otherwise, and that Stream- capture the market of former Napster Cast planned to be the next Napster. Id., users is sparser but revealing, for Grok- at 861. A kit developed by StreamCast to ster launched its own OpenNap system be delivered to advertisers, for example, called Swaptor and inserted digital codes contained press articles about Stream- into its Web site so that computer users Cast’s potential to capture former Napster using Web search engines to look for users, id., at 568–572, and it introduced ‘‘Napster’’ or ‘‘[f]ree file sharing’’ would be itself to some potential advertisers as a directed to the Grokster Web site, where company ‘‘which is similar to what Napster they could download the Grokster soft- was,’’ id., at 884. It broadcast banner ware. Id., at 992–993. And Grokster’s advertisements to users of other Napster- name is an apparent derivative of Napster. compatible software, urging them to adopt StreamCast’s executives monitored the its OpenNap. Id., at 586. An internal e- number of songs by certain commercial mail from a company executive stated: artists available on their networks, and an

‘‘ ‘We have put this network in S 925place so internal communication indicates they that when Napster pulls the plug on their aimed to have a larger number of copy- free service TTT or if the Court orders righted songs available on their

them shut down prior to that TTT we will netSworks926 than other file-sharing net-

7. The record makes clear that StreamCast leased to the public and do not show encour- developed these promotional materials but agement to infringe, they illuminate Stream- not whether it released them to the public. Cast’s purposes. Even if these advertisements were not re- 2774 125 SUPREME COURT REPORTER 545 U.S. 926

works. Id., at 868. The point, of course, fringing content when it received threaten- would be to attract users of a mind to ing notice from the copyright holders, it infringe, just as it would be with their never blocked anyone from continuing to promotional materials developed showing use its software to share copyrighted files. copyrighted songs as examples of the S 927Id., at 75–76. StreamCast not only re- kinds of files available through Morpheus. jected another company’s offer of help to Id., at 848. Morpheus in fact allowed monitor infringement, id., at 928–929, but users to search specifically for ‘‘Top 40’’ blocked the Internet Protocol addresses of songs, id., at 735, which were inevitably entities it believed were trying to engage copyrighted. Similarly, Grokster sent in such monitoring on its networks, id., at users a newsletter promoting its ability to 917–922. provide particular, popular copyrighted materials. Brief for Motion Picture Studio B and Recording Company Petitioners 7–8. After discovery, the parties on each side In addition to this evidence of express of the case cross-moved for summary judg- promotion, marketing, and intent to pro- ment. The District Court limited its con- mote further, the business models em- sideration to the asserted liability of Grok- ployed by Grokster and StreamCast con- ster and StreamCast for distributing the firm that their principal object was use of current versions of their software, leaving their software to download copyrighted aside whether either was liable ‘‘for dam- works. Grokster and StreamCast receive ages arising from past versions of their no revenue from users, who obtain the software, or from other past activities.’’ software itself for nothing. Instead, both 259 F.Supp.2d 1029, 1033 (C.D.Cal.2003). companies generate income by selling ad- The District Court held that those who vertising space, and they stream the ad- used the Grokster and Morpheus software vertising to Grokster and Morpheus users to download copyrighted media files direct- while they are employing the programs. ly infringed MGM’s copyrights, a conclu- As the number of users of each program sion not contested on appeal, but the court increases, advertising opportunities be- nonetheless granted summary judgment in come worth more. Cf. App. 539, 804. favor of Grokster and StreamCast as to While there is doubtless some demand for any liability arising from distribution of free Shakespeare, the evidence shows that the then-current versions of their software. substantive volume is a function of free Distributing that software gave rise to no access to copyrighted work. Users seek- liability in the court’s view, because its use ing Top 40 songs, for example, or the did not provide the distributors with actual latest release by Modest Mouse, are cer- knowledge of specific acts of infringement. tain to be far more numerous than those Case No. CV 01 08541 SVW (PJWx) (CD seeking a free Decameron, and Grokster Cal., June 18, 2003), App. 1213. and StreamCast translated that demand The Court of Appeals affirmed. 380 into dollars. F.3d 1154 (C.A.9 2004). In the court’s Finally, there is no evidence that either analysis, a defendant was liable as a con- company made an effort to filter copy- tributory infringer when it had knowledge righted material from users’ downloads or of direct infringement and materially con- otherwise impede the sharing of copyright- tributed to the infringement. But the ed files. Although Grokster appears to court read Sony Corp. of America v. Uni- have sent e-mails warning users about in- versal City Studios, Inc., 464 U.S. 417, 104 545 U.S. 929 METRO–GOLDWYN–MAYER STUDIOS INC. v. GROKSTER 2775 Cite as 125 S.Ct. 2764 (2005)

S.Ct. 774, 78 L.Ed.2d 574 (1984), as hold- technological innovation may be discour- ing that distribution of a commercial prod- aged; the administration of copyright law uct capable of substantial noninfringing is an exercise in managing the tradeoff. uses could not give rise to contributory See Sony Corp. v. Universal City Studios, liability for infringement unless the dis- supra, at 442, 104 S.Ct. 774; see generally tributor had actual knowledge of specific Ginsburg, Copyright and Control Over instances of infringement and failed to act New Technologies of Dissemination, 101 on that knowledge. The fact that the soft- Colum. L.Rev. 1613 (2001); Lichtman & ware was capable of substantial nonin- Landes, Indirect Liability for Copyright fringing uses in the Ninth Circuit’s view Infringement: An Economic Perspective, meant S 928that Grokster and StreamCast 16 Harv. J.L. & Tech. 395 (2003). were not liable, because they had no such actual knowledge, owing to the decentral- The tension between the two values is ized architecture of their software. The the subject of this case, with its claim that court also held that Grokster and Stream- digital distribution of copyrighted material Cast did not materially contribute to their threatens copyright holders as never be- users’ infringement because it was the fore, because every copy is identical to the users themselves who searched for, re- original, copying is easy, S 929and many peo- trieved, and stored the infringing files, ple (especially the young) use file-sharing with no involvement by the defendants software to download copyrighted works. beyond providing the software in the first This very breadth of the software’s use place. may well draw the public directly into the The Ninth Circuit also considered debate over copyright policy, Peters, whether Grokster and StreamCast could Brace Memorial Lecture: Copyright En- be liable under a theory of vicarious in- ters the Public Domain, 51 J. Copyright fringement. The court held against liabili- Soc. 701, 705–717 (2004) (address by Reg- ty because the defendants did not monitor ister of Copyrights), and the indications or control the use of the software, had no are that the ease of copying songs or agreed-upon right or current ability to su- movies using software like Grokster’s and pervise its use, and had no independent Napster’s is fostering disdain for copyright duty to police infringement. We granted protection, Wu, When Code Isn’t Law, 89 certiorari. 543 U.S. 1032, 125 S.Ct. 686, Va. L.Rev. 679, 724–726 (2003). As the 160 L.Ed.2d 518 (2004). case has been presented to us, these fears are said to be offset by the different con- II cern that imposing liability, not only on infringers but on distributors of software A based on its potential for unlawful use, MGM and many of the amici fault the could limit further development of benefi- Court of Appeals’s holding for upsetting a cial technologies. See, e.g., Lemley & sound balance between the respective val- Reese, Reducing Digital Copyright In- ues of supporting creative pursuits fringement Without Restricting Innova- through copyright protection and promot- tion, 56 Stan. L.Rev. 1345, 1386–1390 ing innovation in new communication tech- (2004); Brief for Innovation Scholars and nologies by limiting the incidence of liabili- Economists as Amici Curiae 15–20; Brief ty for copyright infringement. The more for Emerging Technology Companies as artistic protection is favored, the more Amici Curiae 19–25; Brief for Intel Cor- 2776 125 SUPREME COURT REPORTER 545 U.S. 929 poration as Amicus Curiae 20–22.8 & Co. v. H.L. Green Co., 316 F.2d 304, 307 9 The argument for imposing indirect lia- (C.A.2 1963). Although ‘‘[t]he Copyright bility in this case is, however, a powerful Act does not expressly render anyone lia- one, given the number of infringing down- ble for infringement committed by anoth- loads that occur every day using Stream- er,’’ Sony Corp. v. Universal City Studios, Cast’s and Grokster’s software. When a 464 U.S., at 434, 104 S.Ct. 774, these doc- widely shared service or product is used to trines of secondary liability emerged from commit infringement, it may be impossible common law principles and are well estab- to S 930enforce rights in the protected work lished in the law, id., at 486, 104 S.Ct. 774 effectively against all direct infringers, the (Blackmun, J., dissenting); Kalem Co. v. only practical alternative being to go Harper Brothers, 222 U.S. 55, 62–63, 32 against the distributor of the copying de- S.Ct. 20, 56 L.Ed. 92 (1911); Gershwin vice for secondary liability on a theory of Pub. Corp. v. Columbia Artists Manage- contributory or vicarious infringement. ment, S 931supra, at 1162; 3 M. Nimmer & See In re Aimster Copyright Litigation, D. Nimmer, Copyright § 12.04[A] (2005). 334 F.3d 643, 645–646 (C.A.7 2003). [1] One infringes contributorily by in- B tentionally inducing or encouraging direct Despite the currency of these principles infringement, see Gershwin Pub. Corp. v. of secondary liability, this Court has dealt Columbia Artists Management, Inc., 443 with secondary copyright infringement in F.2d 1159, 1162 (C.A.2 1971), and infringes only one recent case, and because MGM vicariously by profiting from direct in- has tailored its principal claim to our opin- fringement while declining to exercise a ion there, a look at our earlier holding is in right to stop or limit it, Shapiro, Bernstein order. In Sony Corp. v. Universal City

8. The mutual exclusivity of these values ry infringement and vicarious liability are not should not be overstated, however. On the clearly drawn’ TTTT[R]easoned analysis of [the one hand technological innovators, including Sony plaintiffs’ contributory infringement those writing file-sharing computer programs, claim] necessarily entails consideration of ar- may wish for effective copyright protections guments and case law which may also be for their work. See, e.g., Wu, When Code forwarded under the other labels, and indeed Isn’t Law, 89 Va. L.Rev. 679, 750 (2003). the parties TTT rely upon such arguments and (StreamCast itself was urged by an associate authority in support of their respective posi- to ‘‘get [its] technology written down and [its tions on the issue of contributory infringe- intellectual property] protected.’’ App. 866.) ment,’’ id., at 435, n. 17, 104 S.Ct. 774 (quot- On the other hand the widespread distribu- ing Universal City Studios, Inc. v. Sony Corp. tion of creative works through improved tech- of America, 480 F.Supp. 429, 457–458 nologies may enable the synthesis of new (C.D.Cal.1979)). In the present case MGM works or generate audiences for emerging has argued a vicarious liability theory, which artists. See Eldred v. Ashcroft, 537 U.S. 186, allows imposition of liability when the defen- 223–226, 123 S.Ct. 769, 154 L.Ed.2d 683 dant profits directly from the infringement (2003) (STEVENS, J., dissenting); Van Hou- and has a right and ability to supervise the weling, Distributive Values in Copyright, 83 direct infringer, even if the defendant initially Texas L.Rev. 1535, 1539–1540, 1562–1564 lacks knowledge of the infringement. See, (2005); Brief for Sovereign Artists et al. as e.g., Shapiro, Bernstein & Co. v. H.L. Green Amici Curiae 11. Co., 316 F.2d 304, 308 (C.A.2 1963); Dream- land Ball Room, Inc. v. Shapiro, Bernstein & 9. We stated in Sony Corp. of America v. Uni- Co., 36 F.2d 354, 355 (C.A.7 1929). Because versal City Studios, Inc., 464 U.S. 417, 104 we resolve the case based on an inducement S.Ct. 774, 78 L.Ed.2d 574 (1984), that ‘‘ ‘the theory, there is no need to analyze separately lines between direct infringement, contributo- MGM’s vicarious liability theory. 545 U.S. 932 METRO–GOLDWYN–MAYER STUDIOS INC. v. GROKSTER 2777 Cite as 125 S.Ct. 2764 (2005)

Studios, supra, this Court addressed a [2, 3] This analysis reflected patent claim that secondary liability for infringe- law’s traditional staple article of commerce ment can arise from the very distribution doctrine, now codified, that distribution of of a commercial product. There, the prod- a component of a patented device will not uct, novel at the time, was what we know violate the patent if it is suitable for use in today as the videocassette recorder or other ways. 35 U.S.C. § 271(c); Aro Mfg. VCR. Copyright holders sued Sony as the Co. v. Convertible Top Replacement Co., manufacturer, claiming it was contribu- 377 U.S. 476, 485, 84 S.Ct. 1526, 12 torily liable for infringement that occurred L.Ed.2d 457 (1964) (noting codification of when VCR owners taped copyrighted pro- cases); id., at 486, n. 6, 84 S.Ct. 1526 grams because it supplied the means used (same). The doctrine was devised to iden- to infringe, and it had constructive knowl- tify instances in which it may be presumed edge that infringement would occur. At from distribution of an article in commerce the trial on the merits, the evidence that the distributor intended the article to showed that the principal use of the VCR be used to infringe another’s patent, and was for ‘‘ ‘time-shifting,’ ’’ or taping a pro- so may justly be held liable for that infringement. ‘‘One who makes and sells gram for later viewing at a more conve- articles which are only adapted to be used nient time, which the Court found to be a in a patented combination will be pre- fair, not an infringing, use. Id., at 423– sumed to intend the natural consequences 424, 104 S.Ct. 774. There was no evidence of his acts; he will be presumed to intend that Sony had expressed an object of that they shall be used in the combination bringing about taping in violation of copy- of the patent.’’ New York Scaffolding Co. right or had taken active steps to increase v. Whitney, 224 F. 452, 459 (C.A.8 1915); its profits from unlawful taping. Id., at see also James Heekin Co. v. Baker, 138 438, 104 S.Ct. 774. Although Sony’s ad- F. 63, 66 (C.A.8 1905); Canda v. Michigan vertisements urged consumers to buy the Malleable Iron Co., 124 F. 486, 489 (C.A.6 VCR to ‘‘ ‘record favorite shows’ ’’ or 1903); Thomson–Houston Electric Co. v. ‘‘ ‘build a library’ ’’ of recorded programs, Ohio Brass Co., 80 F. 712, 720–721 (C.A.6 id., at 459, 104 S.Ct. 774 (Blackmun, J., 1897); Red Jacket Mfg. Co. v. Davis, 82 F. dissenting), neither of these uses was nec- 432, 439 (C.A.7 1897); Holly v. Vergennes essarily infringing, id., at 424, 454–455, 104 Machine Co., 4 F. 74, 82 (C.C.D.Vt.1880); S.Ct. 774. Renwick v. Pond, 20 F.Cas. 536, 541 (No. On those facts, with no evidence of stat- 11,702) (C.C.S.D.N.Y.1872). ed or indicated intent to promote infring- [4, 5] In sum, where an article is ‘‘good ing uses, the only conceivable basis for for nothing else’’ but infringement, Canda imposing liability was on a theory of con- v. Michigan Malleable Iron Co., supra, at tributory infringement arising from its sale 489, there is no legitimate public interest of VCRs to consumers with knowledge in its unlicensed availability, and there is that some would use them to infringe. Id., no injustice in presuming or imputing an at 439, 104 S.Ct. 774. But because the intent to infringe, see Henry v. A.B. Dick VCR was ‘‘capable of commercially signifi- Co., 224 U.S. 1, 48, 32 S.Ct. 364, 56 L.Ed. cant noninfringing uses,’’ we held the man- 645 (1912), overruled on other grounds,

ufacturer S 932could not be faulted solely on Motion Picture Patents Co. v. Universal the basis of its distribution. Id., at 442, Film Mfg. Co., 243 U.S. 502, 37 S.Ct. 416, 104 S.Ct. 774. 61 L.Ed. 871 (1917). Conversely, the doc- 2778 125 SUPREME COURT REPORTER 545 U.S. 932

trine absolves the equivocal conduct of We agree with MGM that the Court of selling an item with substantial lawful as Appeals misapplied Sony, which it read as well as unlawful uses, and limits liability to limiting secondary liability quite beyond

instances of more acute S 933fault than the the circumstances to which the case ap- mere understanding that some of one’s plied. Sony barred secondary liability products will be misused. It leaves based on presuming or imputing intent to breathing room for innovation and a vigor- cause infringement solely from the design ous commerce. See Sony Corp. v. Univer- or distribution of a product capable of sal City Studios, 464 U.S., at 442, 104 substantial lawful use, which the distribu- S.Ct. 774; Dawson Chemical Co. v. Rohm tor knows is in fact used for infringement. & Haas Co., 448 U.S. 176, 221, 100 S.Ct. The S 934Ninth Circuit has read Sony’s limi- 2601, 65 L.Ed.2d 696 (1980); Henry v. tation to mean that whenever a product is capable of substantial lawful use, the pro- A.B. Dick Co., supra, at 48, 32 S.Ct. 364. ducer can never be held contributorily liable for third parties’ infringing use of it; it [6] The parties and many of the amici read the rule as being this broad, even in this case think the key to resolving it is when an actual purpose to cause infringing the Sony rule and, in particular, what it use is shown by evidence independent of means for a product to be ‘‘capable of design and distribution of the product, un- commercially significant noninfringing less the distributors had ‘‘specific knowl- uses.’’ Sony Corp. v. Universal City Stu- edge of infringement at a time at which dios, supra, at 442, 104 S.Ct. 774. MGM they contributed to the infringement, and advances the argument that granting sum- failed to act upon that information.’’ 380 mary judgment to Grokster and Stream- F.3d, at 1162 (internal quotation marks Cast as to their current activities gave too and brackets omitted). Because the Cir- much weight to the value of innovative cuit found the StreamCast and Grokster technology, and too little to the copyrights software capable of substantial lawful use, infringed by users of their software, given it concluded on the basis of its reading of that 90% of works available on one of the Sony that neither company could be held networks was shown to be copyrighted. liable, since there was no showing that Assuming the remaining 10% to be its their software, being without any central noninfringing use, MGM says this should server, afforded them knowledge of specif- not qualify as ‘‘substantial,’’ and the Court ic unlawful uses. should quantify Sony to the extent of hold- This view of Sony, however, was error, ing that a product used ‘‘principally’’ for converting the case from one about liabili- infringement does not qualify. See Brief ty resting on imputed intent to one about for Motion Picture Studio and Recording liability on any theory. Because Sony did Company Petitioners 31. As mentioned not displace other theories of secondary before, Grokster and StreamCast reply by liability, and because we find below that it citing evidence that their software can be was error to grant summary judgment to used to reproduce public domain works, the companies on MGM’s inducement and they point to copyright holders who claim, we do not revisit Sony further, as actually encourage copying. Even if in- MGM requests, to add a more quantified fringement is the principal practice with description of the point of balance between their software today, they argue, the non- protection and commerce when liability infringing uses are significant and will rests solely on distribution with knowledge grow. that unlawful use will occur. It is enough 545 U.S. 936 METRO–GOLDWYN–MAYER STUDIOS INC. v. GROKSTER 2779 Cite as 125 S.Ct. 2764 (2005) to note that the Ninth Circuit’s judgment 48–49, 32 S.Ct. 364 (contributory liability rested on an erroneous understanding of for patent infringement may be found Sony and to leave further consideration of where a good’s ‘‘most conspicuous use is the Sony rule for a day when that may be one which will co–operate in an infringe- required. ment when sale to such user is invoked by advertisement’’ of the infringing use); C Thomson–Houston Electric Co. v. Kelsey [7, 8] Sony’s rule limits imputing cul- Electric R. Specialty Co., 75 F. 1005, 1007– pable intent as a matter of law from the 1008 (C.A.2 1896) (relying on advertise- characteristics or uses of a distributed ments and displays to find defendant’s product. But nothing in Sony requires ‘‘willingness TTT to aid other persons in courts to ignore evidence of intent if there any attempts which they may be disposed is such evidence, and the case was never to make towards [patent] infringement’’); meant to foreclose rules of fault-based lia- Rumford Chemical Works v. Hecker, 20 10 F.Cas. 1342, 1346 (No. 12,133) (C.C.D.N.J. bility derived from S 935the common law. Sony Corp. v. Universal City Studios, su- 1876) (demonstrations of infringing activity pra, at 439, 104 S.Ct. 774 (‘‘If vicarious along with ‘‘avowals of the [infringing] pur- liability is to be imposed on Sony in this pose and use for which it was made’’ sup- case, it must rest on the fact that it has ported liability for patent infringement). sold equipment with constructive knowl- [9] S 936The rule on inducement of in- edge’’ of the potential for infringement). fringement as developed in the early cases Thus, where evidence goes beyond a prod- is no different today.11 Evidence of ‘‘ac- uct’s characteristics or the knowledge that tive steps TTT taken to encourage direct it may be put to infringing uses, and shows infringement,’’ Oak Industries, Inc. v. Ze- statements or actions directed to promot- nith Electronics Corp., 697 F.Supp. 988, ing infringement, Sony’s staple-article rule 992 (N.D.Ill.1988), such as advertising an will not preclude liability. infringing use or instructing how to en- The classic case of direct evidence of gage in an infringing use, show an affirma- unlawful purpose occurs when one induces tive intent that the product be used to commission of infringement by another, or infringe, and a showing that infringement ‘‘entic[es] or persuad[es] another’’ to in- was encouraged overcomes the law’s reluc- fringe, Black’s Law Dictionary 790 (8th tance to find liability when a defendant ed.2004), as by advertising. Thus at com- merely sells a commercial product suitable mon law a copyright or patent defendant for some lawful use, see, e.g., Water Tech- who ‘‘not only expected but invoked [in- nologies Corp. v. Calco, Ltd., 850 F.2d 660, fringing use] by advertisement’’ was liable 668 (C.A.Fed.1988) (liability for induce- for infringement ‘‘on principles recognized ment where one ‘‘actively and knowingly in every part of the law.’’ Kalem Co. v. aid[s] and abet[s] another’s direct infringe- Harper Brothers, 222 U.S., at 62–63, 32 ment’’ (emphasis deleted)); Fromberg, Inc. S.Ct. 20 (copyright infringement). See v. Thornhill, 315 F.2d 407, 412–413 (C.A.5 also Henry v. A.B. Dick Co., 224 U.S., at 1963) (demonstrations by sales staff of in-

10. Nor does the Patent Act’s exemption from 11. Inducement has been codified in patent liability for those who distribute a staple arti- law. Ibid. cle of commerce, 35 U.S.C. § 271(c), extend to those who induce patent infringement, § 271(b). 2780 125 SUPREME COURT REPORTER 545 U.S. 936

fringing uses supported liability for in- dates, support liability in themselves. The ducement); Haworth Inc. v. Herman Mil- inducement rule, instead, premises liability ler Inc., 37 U.S.P.Q.2d 1080, 1090, 1994 on purposeful, culpable expression and WL 875931 (W.D.Mich.1994) (evidence that conduct, and thus does nothing to compro- defendant ‘‘demonstrate[d] and recom- mise legitimate commerce or discourage mend[ed] infringing configurations’’ of its innovation having a lawful promise. product could support inducement liability); Sims v. Mack Trucks, Inc., 459 III F.Supp. 1198, 1215 (E.D.Pa.1978) (finding A inducement where the use ‘‘depicted by The only apparent question about treat- the defendant in its promotional film and ing MGM’s evidence as sufficient to with- brochures infringes the TTT patent’’), over- stand summary judgment under the theo- ruled on other grounds, 608 F.2d 87 (C.A.3 ry of inducement goes to the need on 1979). Cf. W. Keeton, D. Dobbs, R. Kee- MGM’s part to adduce evidence that ton, & D. Owen, Prosser and Keeton on StreamCast and Grokster communicated Law of Torts 37 (5th ed. 1984) (‘‘There is an inducing message to their software a definite tendency to impose greater re- users. The classic instance of inducement sponsibility upon a defendant whose con- is by advertisement or solicitation that duct was intended to do harm, or was broadcasts a message designed to stimu- morally wrong’’). late others to commit violations. MGM [10, 11] For the same reasons that claims that such a message is shown here. Sony took the staple-article doctrine of It is undisputed that StreamCast beamed patent law as a model for its copyright onto the computer screens of users of safe-harbor rule, the inducement rule, too, Napster-compatible programs ads urging is a sensible one for copyright. We adopt the adoption of its OpenNap program, it here, holding that one who distributes a which was designed, as its name implied, device with the object of promoting its use to invite the custom of patrons of Napster,

to infringe copyright, as S 937shown by clear then under attack in the courts for facili- expression or other affirmative steps taken tating massive infringement. Those who to foster infringement, is liable for the accepted StreamCast’s OpenNap program resulting acts of infringement by third par- were offered software to perform the same ties. We are, of course, mindful of the services, which a factfinder could conclude need to keep from trenching on regular S 938would readily have been understood in commerce or discouraging the develop- the Napster market as the ability to down- ment of technologies with lawful and un- load copyrighted music files. Grokster lawful potential. Accordingly, just as distributed an electronic newsletter con- Sony did not find intentional inducement taining links to articles promoting its soft- despite the knowledge of the VCR manu- ware’s ability to access popular copyright- facturer that its device could be used to ed music. And anyone whose Napster or infringe, 464 U.S., at 439, n. 19, 104 S.Ct. free file-sharing searches turned up a link 774, mere knowledge of infringing poten- to Grokster would have understood Grok- tial or of actual infringing uses would not ster to be offering the same file-sharing be enough here to subject a distributor to ability as Napster, and to the same people liability. Nor would ordinary acts incident who probably used Napster for infringing to product distribution, such as offering downloads; that would also have been the customers technical support or product up- understanding of anyone offered Grok- 545 U.S. 940 METRO–GOLDWYN–MAYER STUDIOS INC. v. GROKSTER 2781 Cite as 125 S.Ct. 2764 (2005)

ster’s suggestively named Swaptor soft- Cast’s internal documents made constant ware, its version of OpenNap. And both reference to Napster, it initially distribut- companies communicated a clear message ed its Morpheus software through an by responding affirmatively to requests for OpenNap program compatible with Nap- help in locating and playing copyrighted ster, it advertised its OpenNap program to materials. Napster users, and its Morpheus software [12] In StreamCast’s case, of course, functions as Napster did except that it the evidence just described was supple- could be used to distribute more kinds of mented by other unequivocal indications of files, including copyrighted movies and unlawful purpose in the internal communi- software programs. Grokster’s name is cations and advertising designs aimed at apparently derived from Napster, it too Napster users (‘‘When the lights went off initially offered an OpenNap program, its at Napster TTT where did the users go?’’ software’s function is likewise comparable App. 836 (ellipsis in original)). Whether to Napster’s, and it attempted to divert the messages were communicated is not to queries for Napster onto its own Web site. the point on this record. The function of Grokster and StreamCast’s efforts to sup- the message in the theory of inducement is ply services to former Napster users, de- to prove by a defendant’s own statements prived of a mechanism to copy and distrib- that his unlawful purpose disqualifies him ute what were overwhelmingly infringing from claiming protection (and incidentally files, indicate a principal, if not exclusive, to point to actual violators likely to be intent on the part of each to bring about found among those who hear or read the infringement. message). See supra, at 2779–2780. [13] Second, this evidence of unlawful Proving that a message was sent out, then, objective is given added significance by is the preeminent but not exclusive way of MGM’s showing that neither company at- showing that active steps were taken with tempted to develop filtering tools or other the purpose of bringing about infringing mechanisms to diminish the infringing ac- acts, and of showing that infringing acts tivity using their software. While the took place by using the device distributed. Ninth Circuit treated the defendants’ fail- Here, the summary judgment record is ure to develop such tools as irrelevant replete with other evidence that Grokster because they lacked an independent duty and StreamCast, unlike the manufacturer to monitor their users’ activity, we think and distributor in Sony, acted with a pur- this evidence underscores Grokster’s and pose to cause copyright violations by use of StreamCast’s intentional facilitation of software suitable for illegal use. See su- their users’ infringement.12 pra, at 2772–2774. [14] Third, there is a further comple-

S 939Three features of this evidence of in- ment to the direct evidence of unlawful tent are particularly notable. First, each objective. It is useful to recall that company showed itself to be aiming to StreamCast S 940and Grokster make money satisfy a known source of demand for by selling advertising space, by directing copyright infringement, the market com- ads to the screens of computers employing prising former Napster users. Stream- their software. As the record shows, the

12. Of course, in the absence of other evidence prevent infringement, if the device otherwise of intent, a court would be unable to find was capable of substantial noninfringing uses. contributory infringement liability merely Such a holding would tread too close to the based on a failure to take affirmative steps to Sony safe harbor. 2782 125 SUPREME COURT REPORTER 545 U.S. 940 more the software is used, the more ads * * * are sent out and the greater the advertis- In sum, this case is significantly differ- ing revenue becomes. Since the extent of ent from Sony and reliance on that case to the software’s use determines the gain to rule in favor of StreamCast and Grokster the distributors, the commercial sense of was error. Sony dealt with a claim of their enterprise turns on high-volume use, liability based solely on distributing a which the record shows is infringing.13 product with alternative lawful and unlaw- This evidence alone would not justify an ful uses, with knowledge that some users inference of unlawful intent, but viewed in would follow the unlawful course. The the context of the entire record its import case struck a balance between the inter- is clear. ests of protection and innovation by holding that the product’s capability of sub- The unlawful objective is unmistakable. stantial lawful employment should bar the imputation of fault and consequent secondary liability for the unlawful acts of others. B MGM’s evidence in this case most obvi- In addition to intent to bring about in- ously addresses a different basis of liability fringement and distribution of a device for distributing a product open to alterna- suitable for infringing use, the inducement tive uses. Here, evidence of the distribu- theory of course requires evidence of actu- tors’ words and deeds going beyond distri- al infringement by recipients of the device, bution as such shows a purpose to cause the software in this case. As the account and profit from third-party acts of copy- of the facts indicates, there is evidence of right infringement. If liability for induc- infringement on a gigantic scale, and there ing infringement is ultimately found, it will is no serious issue of the adequacy of not be on the basis of presuming or imput- MGM’s showing on this point in order to ing fault, but from inferring a patently survive the companies’ summary judgment illegal objective from statements and ac- requests. AlSthough941 an exact calculation tions showing what that objective was. of infringing use, as a basis for a claim of There is substantial evidence in MGM’s damages, is subject to dispute, there is no favor on all elements of inducement, and question that the summary judgment evi- summary judgment in favor of Grokster dence is at least adequate to entitle MGM and StreamCast was error. On remand, to go forward with claims for damages and reconsideration of MGM’s motion for sum- equitable relief. mary judgment will be in order.

13. Grokster and StreamCast contend that any that, and the distribution of a product can theory of liability based on their conduct is itself give rise to liability where evidence not properly before this Court because the shows that the distributor intended and en- rulings in the trial and appellate courts dealt couraged the product to be used to infringe. only with the present versions of their soft- In such a case, the culpable act is not merely ware, not ‘‘past acts TTT that allegedly encour- the encouragement of infringement but also aged infringement or assisted TTT known acts the distribution of the tool intended for in- of infringement.’’ Brief for Respondents 14; fringing use. See Kalem Co. v. Harper Broth- see also id., at 34. This contention misappre- ers, 222 U.S. 55, 62–63, 32 S.Ct. 20, 56 L.Ed. hends the basis for their potential liability. It 92 (1911); Cable/Home Communication Corp. is not only that encouraging a particular con- v. Network Productions, Inc., 902 F.2d 829, sumer to infringe a copyright can give rise to 846 (C.A.11 1990); A&M Records, Inc. v. Ab- secondary liability for the infringement that dallah, 948 F.Supp. 1449, 1456 (C.D.Cal. results. Inducement liability goes beyond 1996). 545 U.S. 943 METRO–GOLDWYN–MAYER STUDIOS INC. v. GROKSTER 2783 Cite as 125 S.Ct. 2764 (2005)

The judgment of the Court of Appeals is U.S.C. § 271(b) (active inducement liabili- vacated, and the case is remanded for fur- ty) with § 271(c) (contributory liability for ther proceedings consistent with this opin- distribution of a product not ‘‘suitable for ion. substantial noninfringing use’’). It is so ordered. In Sony, 464 U.S. 417, 104 S.Ct. 774, the Court considered Sony’s liability for selling Justice GINSBURG, with whom THE the Betamax videocassette recorder. It CHIEF JUSTICE and Justice did so enlightened by a full trial record. KENNEDY join, concurring Drawing an analogy to the staple article of commerce doctrine from patent law, the S 942I concur in the Court’s decision, S943 which vacates in full the judgment of the Sony Court observed that the ‘‘sale of an Court of Appeals for the Ninth Circuit, article TTT adapted to [a patent] infringing ante, at 2782–2783, and write separately to use’’ does not suffice ‘‘to make the seller a clarify why I conclude that the Court of contributory infringer’’ if the article ‘‘is Appeals misperceived, and hence misap- also adapted to other and lawful uses.’’ plied, our holding in Sony Corp. of Amer- Id., at 441, 104 S.Ct. 774 (quoting Henry v. ica v. Universal City Studios, Inc., 464 A.B. Dick Co., 224 U.S. 1, 48, 32 S.Ct. 364, U.S. 417, 104 S.Ct. 774, 78 L.Ed.2d 574 56 L.Ed. 645 (1912), overruled on other (1984). There is here at least a ‘‘genuine grounds, Motion Picture Patents Co. v. issue as to [a] material fact,’’ Fed. Rule Universal Film Mfg. Co., 243 U.S. 502, Civ. Proc. 56(c), on the liability of Grokster 517, 37 S.Ct. 416, 61 L.Ed. 871 (1917)). or StreamCast, not only for actively induc- ‘‘The staple article of commerce doc- ing copyright infringement, but also, or trine’’ applied to copyright, the Court stat- alternatively, based on the distribution of ed, ‘‘must strike a balance between a their software products, for contributory copyright holder’s legitimate demand for copyright infringement. On neither score effective—not merely symbolic—protec- was summary judgment for Grokster and tion of the statutory monopoly, and the StreamCast warranted. rights of others freely to engage in sub- At bottom, however labeled, the ques- stantially unrelated areas of commerce.’’ tion in this case is whether Grokster and Sony, 464 U.S., at 442, 104 S.Ct. 774. StreamCast are liable for the direct in- ‘‘Accordingly,’’ the Court held, ‘‘the sale of fringing acts of others. Liability under copying equipment, like the sale of other our jurisprudence may be predicated on articles of commerce, does not constitute actively encouraging (or inducing) infringe- contributory infringement if the product is ment through specific acts (as the Court’s widely used for legitimate, unobjectionable opinion develops) or on distributing a purposes. Indeed, it need merely be ca- product distributees use to infringe copy- pable of substantial noninfringing uses.’’ rights, if the product is not capable of Ibid. Thus, to resolve the Sony case, the ‘‘substantial’’ or ‘‘commercially significant’’ Court explained, it had to determine noninfringing uses. Sony, 464 U.S., at ‘‘whether the Betamax is capable of com- 442, 104 S.Ct. 774; see also 3 M. Nimmer mercially significant noninfringing uses.’’ & D. Nimmer, Nimmer on Copyright Ibid. § 12.04[A][2] (2005). While the two cate- To answer that question, the Court con- gories overlap, they capture different cul- sidered whether ‘‘a significant number of pable behavior. Long coexisting, both are [potential uses of the Betamax were] non- now codified in patent law. Compare 35 infringing.’’ Ibid. The Court homed in on 2784 125 SUPREME COURT REPORTER 545 U.S. 943

one potential use—private, noncommercial opinion in A & M Records, Inc. v. Napster, time-shifting of television programs in the Inc., 239 F.3d 1004 (C.A.9 2001), the Court home (i.e., recording a broadcast TV pro- of Appeals held that ‘‘if substantial nonin- gram for later personal viewing). Time- fringing use was shown, the copyright shifting was noninfringing, the Court con- owner would be required to show that the cluded, because in some cases trial testi- defendant had reasonable knowledge of mony showed it was authorized by the specific infringing files.’’ 380 F.3d 1154, copyright holder, id., at 443–447, 104 S.Ct. 1161 (C.A.9 2004). ‘‘A careful examination 774, and in others it qualified as legitimate of the record,’’ the S 945court concluded, ‘‘in- fair use, id., at 447–455, 104 S.Ct. 774. dicates that there is no genuine issue of Most purchasers used the Betamax princi- material fact as to noninfringing use.’’ pally to engage in time-shifting, id., at 421, Ibid. The appeals court pointed to the 423, 104 S.Ct. 774, a use that ‘‘plainly band Wilco, which made one of its albums satisfie[d]’’ the Court’s standard, id., at available for free downloading, to other 442, 104 S.Ct. 774. Thus, there was no recording artists who may have authorized need in Sony to ‘‘give precise content to free distribution of their music through the Internet, and to public domain literary the question of how much [actual or poten- works and films available through Grok- tial] use is commerScially significant.’’ 944 ster’s and StreamCast’s software. Ibid. Ibid. 1 Further development was left for Although it acknowledged petitioners’ later days and cases. (hereinafter MGM) assertion that ‘‘the vast The Ninth Circuit went astray, I will majority of the software use is for copy- endeavor to explain, when that court right infringement,’’ the court concluded granted summary judgment to Grokster that Grokster’s and StreamCast’s and StreamCast on the charge of contribu- proffered evidence met Sony’s tory liability based on distribution of their requirement that ‘‘a product need only software products. Relying on its earlier be capable of substantial noninfring-

1. Justice BREYER finds in Sony Corp. of fringing uses, some estimate of the respective America v. Universal City Studios, Inc., 464 magnitudes of these uses is necessary for a U.S. 417, 104 S.Ct. 774, 78 L.Ed.2d 574 finding of contributory infringement. TTT But (1984), a ‘‘clear’’ rule permitting contributory the balancing of costs and benefits is neces- liability for copyright infringement based on sary only in a case in which substantial non- distribution of a product only when the prod- infringing uses, present or prospective, are uct ‘‘will be used almost exclusively to in- demonstrated.’’). See also Matthew Bender & fringe copyrights.’’ Post, at 2791. But cf. Co. v. West Pub. Co., 158 F.3d 693, 707 (C.A.2 Sony, 464 U.S., at 442, 104 S.Ct. 774 (recog- 1998) (‘‘The Supreme Court applied [the nizing ‘‘copyright holder’s legitimate demand Sony ] test to prevent copyright holders from for effective—not merely symbolic—protec- leveraging the copyrights in their original tion’’). Sony, as I read it, contains no clear, work to control distribution of TTT products near-exclusivity test. Nor have Courts of Ap- that might be used incidentally for infringe- peals unanimously recognized Justice BREY- ment, but that had substantial noninfringing ER’s clear rule. Compare A & M Records, usesTTTT The same rationale applies here [to Inc. v. Napster, Inc., 239 F.3d 1004, 1021 products] that have substantial, predominant (C.A.9 2001) (‘‘[E]vidence of actual knowl- and noninfringing uses as tools for research edge of specific acts of infringement is re- and citation.’’). All Members of the Court quired to hold a computer system operator agree, moreover, that ‘‘the Court of Appeals liable for contributory copyright infringe- misapplied Sony,’’ at least to the extent it read ment.’’), with In re Aimster Copyright Litiga- that decision to limit ‘‘secondary liability’’ to tion, 334 F.3d 643, 649–650 (C.A.7 2003) a hardly ever category, ‘‘quite beyond the (‘‘[W]hen a supplier is offering a product or circumstances to which the case applied.’’ service that has noninfringing as well as in- Ante, at 2778. 545 U.S. 947 METRO–GOLDWYN–MAYER STUDIOS INC. v. GROKSTER 2785 Cite as 125 S.Ct. 2764 (2005)

ing uses.’’ 380 F.3d, at 1162.2 ternative channel for promotion and distri- This case differs markedly from Sony. bution.’’); Decl. of Gregory Newby ¶ 12, Cf. Peters, Brace Memorial Lecture: id., at 136 (‘‘Numerous authorized and Copyright Enters the Public Domain, 51 J. public domain Project Gutenberg eBooks Copyright Soc. 701, 724 (2004) (‘‘The Grok- are made available on Morpheus, Kazaa, ster panel’s reading of Sony is the broad- Gnutella, Grokster, and similar software est that any court has given it TTTT’’). products.’’); Decl. of Aram Sinnreich ¶ 6, Here, there has been no finding of any fair id., at 151 (‘‘file sharing seems to have a use and little beyond anecdotal evidence of net positive impact on music sales’’); Decl. noninfringing uses. In finding the Grok- of John Busher ¶ 8, id., at 166 (‘‘I estimate ster and StreamCast software products ca- that Acoustica generates sales of between pable of substantial noninfringing uses, the $1,000 and $10,000 per month as a result of District Court and the Court of Appeals the distribution of its trialware software through the Gnutella and FastTrack Net- appear to have relied largely on declara- works.’’); Decl. of Patricia D. Hoekman tions submitted by the defendants. These ¶¶ 3–4, id., at 169–170 (search on Mor- declarations include assertions (some of pheus for ‘‘President Bush speeches’’ them hearsay) that a number of copyright found several video recordings, searches owners authorize distribution of their for ‘‘Declaration of Independence’’ and works on the Internet and that some pub- ‘‘Bible’’ found various documents and de- lic domain material is available through clarant was able to download a copy of the peer-to-peer networks including those ac- Declaration); Decl. of Sean L. Mayers cessed through Grokster’s and Stream- ¶ 11, id., at 67 (‘‘Existing open, decentral- Cast’s software. 380 F.3d, at 1161, 259 ized peer-to-peer file-sharing networks TTT F.Supp.2d 1029, 1035–1036 (C.D.Cal.2003); offer content owners distinct business ad- App. 125–171. vantages over alternate online distribution S 946The District Court declared it ‘‘undis- technologies.’’). Compare Decl. of Brew- puted that there are substantial nonin- ster Kahle ¶ 20, id., at 142 (‘‘Those who fringing uses for Defendants’ software,’’ download the Prelinger films TTT are enti- thus obviating the need for further pro- tled to redistribute those files, and the ceedings. 259 F.Supp.2d, at 1035. This Archive welcomes their redistribution by conclusion appears to rest almost entirely the Morpheus–Grokster–KaZaa communi- on the collection of declarations submitted ty of users.’’), with Deposition of Brewster by Grokster and StreamCast. Ibid. Re- Kahle (Sept. 18, S 9472002), id., at 396–403 view of these declarations reveals mostly (testifying that he has no knowledge of any anecdotal evidence, sometimes obtained person downloading a Prelinger film using secondhand, of authorized copyrighted Morpheus, Grokster, or KaZaA). Com- works or public domain works available pare also Decl. of Richard Prelinger ¶ 17, online and shared through peer-to-peer id., at 147 (‘‘[W]e welcome further redis- networks, and general statements about tribution of the Prelinger films TTT by the benefits of peer-to-peer technology. individuals using peer-to-peer software See, e.g., Decl. of Janis Ian ¶ 13, App. 128 products like Morpheus, KaZaA and Grok- (‘‘P2P technologies offer musicians an al- ster.’’), with Deposition of Richard Preling-

2. Grokster and StreamCast, in the Court of specific acts of infringement and failed to act Appeals’ view, would be entitled to summary on that knowledge—a standard the court held judgment unless MGM could show that that MGM could not meet. 380 F.3d, at 1162– the software companies had knowledge of 1163. 2786 125 SUPREME COURT REPORTER 545 U.S. 947 er (Oct. 1, 2002), id., at 410–411 (‘‘Q. What Grokster’s and StreamCast’s software is your understanding of Grokster? A. I products (which this case is about) and have no understanding of Grokster TTT. Q. uses of peer-to-peer technology generally Do you know whether any user of the (which this case is not about). Grokster software has made available to In sum, when the record in this case share any Prelinger film? A. No.’’). See was developed, there was evidence that also Deposition of Aram Sinnreich (Sept. Grokster’s and StreamCast’s products 25, 2002), id., at 390 (testimony about the were, and had been for some time, over- band Wilco based on ‘‘[t]he press and in- whelmingly used to infringe, ante, at dustry news groups and scuttlebutt.’’). 2771–2773; App. 434–439, 476–481, and These declarations do not support sum- that this infringement was the overwhelm- mary judgment in the face of evidence, ing source of revenue from the products, proffered by MGM, of overwhelming use of Grokster’s and StreamCast’s software ante, at 2773–2774; 259 F.Supp.2d, at for infringement.3 1043–1044. Fairly appraised, the evidence was insufficient to demonstrate, beyond S Even if the absolute number of nonin- 948 genuine debate, a reasonable prospect that fringing files copied using the Grokster substantial or commercially significant and StreamCast software is large, it does noninfringing uses were likely to develop not follow that the products are therefore over time. On this record, the District put to substantial noninfringing uses and Court should not have ruled dispositively are thus immune from liability. The num- on the contributory infringement charge ber of noninfringing copies may be reflec- by granting summary judgment to Grok- tive of, and dwarfed by, the huge total ster and StreamCast.4 volume of files shared. Further, the Dis- trict Court and the Court of Appeals did If, on remand, the case is not resolved not sharply distinguish between uses of on summary judgment in favor of MGM

3. Justice BREYER finds support for summary consent to home recording of their copyright- judgment in this motley collection of declara- ed broadcasts, that a similar percentage of tions and in a survey conducted by an expert program copying was authorized, id., at 424, retained by MGM. Post, at 2788–2790. That 104 S.Ct. 774. Here, the plaintiffs allegedly survey identified 75% of the files available control copyrights for 70% or 75% of the through Grokster as copyrighted works material exchanged through the Grokster and owned or controlled by the plaintiffs, and StreamCast software, 380 F.3d, at 1158; App. 15% of the files as works likely copyrighted. 439, and the District Court does not appear to App. 439. As to the remaining 10% of the have relied on comparable testimony about files, ‘‘there was not enough information to authorized copying from copyright holders. form reasonable conclusions either as to what those files even consisted of, and/or whether they were infringing or non-infringing.’’ Id., 4. The District Court’s conclusion that at 479. Even assuming, as Justice BREYER ‘‘[p]laintiffs do not dispute that [d]efendants’ does, that the Sony Court would have ab- software is being used, and could be used, for solved Sony of contributory liability solely on substantial noninfringing purposes,’’ 259 the basis of the use of the Betamax for author- F.Supp.2d 1029, 1036 (C.D.Cal.2003); accord ized time-shifting, post, at 2788, summary 380 F.3d, at 1161, is, to say the least, dubious. judgment is not inevitably appropriate here. In the courts below and in this Court, MGM Sony stressed that the plaintiffs there owned has continuously disputed any such conclu- ‘‘well below 10%’’ of copyrighted television sion. Brief for Motion Picture Studio and programming, 464 U.S., at 443, 104 S.Ct. Recording Company Petitioners 30–38; Brief 774, and found, based on trial testimony from for MGM Plaintiffs–Appellants in No. 03– representatives of the four major sports 55894 etc. (CA9), p. 41; App. 356–357, 361– leagues and other individuals authorized to 365. 545 U.S. 950 METRO–GOLDWYN–MAYER STUDIOS INC. v. GROKSTER 2787 Cite as 125 S.Ct. 2764 (2005)

based on Grokster and StreamCast active- A buyer could use that machine for non- ly inducing infringement, the Court of Ap- infringing purposes, such as recording for

peals, I S 949would emphasize, should recon- later viewing (sometimes called ‘‘ ‘time- sider, on a fuller record, its interpretation shifting,’ ’’ Sony, 464 U.S., at 421, 104 S.Ct. of Sony’s product distribution holding. 774) uncopyrighted television programs or copyrighted programs with a copyright Justice BREYER, with whom Justice holder’s permission. The buyer could use

STEVENS and Justice O’CONNOR join, S 950the machine for infringing purposes as concurring. well, such as building libraries of taped I agree with the Court that the distribu- copyrighted programs. Or, the buyer tor of a dual-use technology may be liable might use the machine to record copy- for the infringing activities of third parties righted programs under circumstances in where he or she actively seeks to advance which the legal status of the act of record- the infringement. Ante, at 2770. I further ing was uncertain (i.e., where the copying agree that, in light of our holding today, may, or may not, have constituted a ‘‘fair we need not now ‘‘revisit’’ Sony Corp. of use,’’ id., at 425–426, 104 S.Ct. 774). Sony America v. Universal City Studios, Inc., knew many customers would use its VCRs 464 U.S. 417, 104 S.Ct. 774, 78 L.Ed.2d 574 to engage in unauthorized copying and (1984). Ante, at 2778–2779. Other Mem- ‘‘ ‘library-building.’ ’’ Id., at 458–459, 104 bers of the Court, however, take up the S.Ct. 774 (Blackmun, J., dissenting). But Sony question: whether Grokster’s prod- that fact, said the Court, was insufficient uct is ‘‘capable of ‘substantial’ or ‘commer- to make Sony itself an infringer. And the cially significant’ noninfringing uses.’’ Court ultimately held that Sony was not Ante, at 2783 (GINSBURG, J., concurring) liable for its customers’ acts of infringe- (quoting Sony, supra, at 442, 104 S.Ct. ment. 774). And they answer that question by In reaching this conclusion, the Court stating that the Court of Appeals was recognized the need for the law, in fixing wrong when it granted summary judgment secondary copyright liability, to ‘‘strike a on the issue in Grokster’s favor. Ante, at balance between a copyright holder’s legit- 2784. I write to explain why I disagree imate demand for effective—not merely with them on this matter. symbolic—protection of the statutory monopoly, and the rights of others freely to I engage in substantially unrelated areas of The Court’s opinion in Sony and the commerce.’’ Id., at 442, 104 S.Ct. 774. It record evidence (as described and analyzed pointed to patent law’s ‘‘staple article of in the many briefs before us) together commerce’’ doctrine, ibid., under which a convince me that the Court of Appeals’ distributor of a product is not liable for conclusion has adequate legal support. patent infringement by its customers unless that product is ‘‘unsuited for any com- A mercial noninfringing use.’’ Dawson I begin with Sony’s standard. In Sony, Chemical Co. v. Rohm & Haas Co., 448 the Court considered the potential copy- U.S. 176, 198, 100 S.Ct. 2601, 65 L.Ed.2d right liability of a company that did not 696 (1980). The Court wrote that the sale itself illegally copy protected material, but of copying equipment, ‘‘like the sale of rather sold a machine—a videocassette re- other articles of commerce, does not con- corder (VCR)—that could be used to do so. stitute contributory infringement if the 2788 125 SUPREME COURT REPORTER 545 U.S. 950 product is widely used for legitimate, league officials and a religious broadcast- unobjectionable purposes. Indeed, it need ing representative. Id., at 444, and n. 24, merely be capable of substantial nonin- 104 S.Ct. 774. It also discussed (1) a Los fringing uses.’’ Sony, 464 U.S., at 442, Angeles educational station affiliated with 104 S.Ct. 774 (emphasis added). The the Public Broadcasting Service that made Court ultimately characterized the legal many of its programs available for home ‘‘question’’ in the particular case as taping, and (2) Mr. Rogers’ Neighborhood, ‘‘whether [Sony’s VCR] is capable of com- a widely watched children’s program. Id., mercially significant noninfringing uses ’’ at 445, 104 S.Ct. 774. On the basis of this (while declining to give ‘‘precise content’’ testimony and other similar evidence, the to these terms). Ibid. (emphasis added). Court determined that producers of this kind had authorized duplication of their It then applied this standard. The copyrighted programs ‘‘in significant Court had before it a survey (commis- enough numbers to create a substantial sioned by the District Court and then pre- market for a noninfringing use of the’’ pared by the respondents) showing that VCR. Id., at 447, n. 28, 104 S.Ct. 774 roughly 9% of all S 951VCR recordings were (emphasis added). of the type—namely, religious, educational, The Court, in using the key word ‘‘sub- and sports programming—owned by pro- stantial,’’ indicated that these circum- ducers and distributors testifying on stances alone constituted a sufficient basis Sony’s behalf who did not object to time- for rejecting the imposition of secondary shifting. See Brief for Respondents, O.T. liability. See id., at 456, 104 S.Ct. 774 1983, No. 81–1687, pp. 52–53; see also (‘‘Sony demonstrated a significant likeli- Sony, supra, at 424, 104 S.Ct. 774 (7.3% of hood that substantial numbers of copy- all Sony VCR use is to record sports pro- right holders’’ would not object S to time- grams; representatives of the sports 952 shifting (emphasis added)). Nonetheless, leagues do not object). A much higher the Court buttressed its conclusion by percentage of VCR users had at one point finding separately that, in any event, un- taped an authorized program, in addition authorized time-shifting often constituted to taping unauthorized programs. And not infringement, but ‘‘fair use.’’ Id., at the plaintiffs—not a large class of content 447–456, 104 S.Ct. 774. providers as in this case—owned only a small percentage of the total available un B authorized programming. See ante, at 2786, n. 3 (GINSBURG, J., concurring). When measured against Sony’s underly- But of all the taping actually done by ing evidence and analysis, the evidence Sony’s customers, only around 9% was of now before us shows that Grokster passes the sort the Court referred to as author- Sony’s test—that is, whether the compa- ized. ny’s product is capable of substantial or commercially significant noninfringing The Court found that the magnitude of uses. Id., at 442, 104 S.Ct. 774. For one authorized programming was ‘‘significant,’’ thing, petitioners’ (hereinafter MGM) own and it also noted the ‘‘significant potential expert declared that 75% of current files for future authorized copying.’’ 464 U.S., available on Grokster are infringing and at 444, 104 S.Ct. 774. The Court sup- 15% are ‘‘likely infringing.’’ See App. 436– ported this conclusion by referencing the 439, ¶¶ 6–17 (Decl. of Dr. Ingram Olkin); trial testimony of professional sports cf. ante, at 2771–2772 (opinion of the 545 U.S. 954 METRO–GOLDWYN–MAYER STUDIOS INC. v. GROKSTER 2789 Cite as 125 S.Ct. 2764 (2005)

Court). That leaves some number of files roughly approximate to those at issue in near 10% that apparently are noninfring- Sony. At least, MGM has offered no evi- ing, a figure very similar to the 9% or so of dence sufficient to survive summary judg- authorized time-shifting uses of the VCR ment that could plausibly demonstrate a that the Court faced in Sony. significant quantitative difference. See As in Sony, witnesses here explained the ante, at 2771–2772 (opinion of the Court); nature of the noninfringing files on Grok- see also Brief for Motion Picture Studio ster’s network without detailed quantifica- and Recording Company Petitioners i (re- tion. Those files include: ferring to ‘‘at least 90% of the total use of the services’’); but see ante, at 2786, n. 3 —Authorized copies of music by artists (GINSBURG, J., concurring). To be sure, such as Wilco, Janis Ian, Pearl Jam, Dave in quantitative terms these uses account Matthews, John Mayer, and others. See for only a small percentage of the total App. 152–153, ¶¶ 9–13 (Decl. of Aram number of uses of Grokster’s product. Sinnreich) (Wilco’s ‘‘lesson has already But the same was true in Sony, which been adopted by artists still signed to their characterized the relatively limited author- major labels’’); id., at 170, ¶¶ 5–7 (Decl. of ized copying market as ‘‘substantial.’’ Patricia D. Hoekman) (locating ‘‘numerous (The Court made clear as well in Sony that audio recordings’’ that were authorized for the amount of material then presently swapping); id., at 74, ¶ 10 (Decl. of Daniel available for lawful copying—if not actual- B. Rung) (describing Grokster’s partner- ly copied—was significant, see 464 U.S., at ship with a company that hosts music from 444, 104 S.Ct. 774, and the same is certain- thousands of independent artists) ly true in this case.) —Free electronic books and other works Importantly, Sony also used the word from various online publishers, including ‘‘capable,’’ asking whether the product is Project Gutenberg. See id., at 136, ¶ 12 ‘‘capable of ’’ substantial noninfringing (Decl. of Gregory Newby) (‘‘Numerous au- uses. Its language and analysis suggest thorized and public domain Project Guten- that a figure like 10%, if fixed for all time, berg eBooks are made available’’ on Grok- might well prove insufficient, but that such ster. Project Gutenberg ‘‘welcomes this a figure serves as an adequate foundation widespread S sharing TTT using these 953 where there is a reasonable prospect of software products[,] since they assist us in expanded legitimate uses over time. See meeting our objectives’’); id., at 159–160, ibid. (noting a ‘‘significant potential for ¶ 32 (Decl. of Sinnreich) future authorized copying’’). And its lan- —Public domain and authorized software, guage also indiScates954 the appropriateness such as WinZip 8.1. Id., at 170, ¶ 8 (Decl. of looking to potential future uses of the of Hoekman); id., at 165, ¶¶ 4–7 (Decl. of product to determine its ‘‘capability.’’ John Busher) Here the record reveals a significant —Licensed music videos and television and future market for noninfringing uses of movie segments distributed via digital vid- Grokster-type peer-to-peer software. eo packaging with the permission of the Such software permits the exchange of copyright holder. Id., at 70, ¶ 24 (Decl. of any sort of digital file—whether that file Sean L. Mayers). does, or does not, contain copyrighted ma- The nature of these and other lawfully terial. As more and more uncopyrighted swapped files is such that it is reasonable information is stored in swappable form, it to infer quantities of current lawful use seems a likely inference that lawful peer- 2790 125 SUPREME COURT REPORTER 545 U.S. 954

to-peer sharing will become increasingly information technology. Cf. ante, at 2770– prevalent. See, e.g., App. 142, ¶ 20 (Decl. 2771 (opinion of the Court) (discussing the of Brewster Kahle) (‘‘[T]he [Internet Ar- significant benefits of peer-to-peer technol- chive] welcomes [the] redistribution [of au- ogy). thorized films] by the Morpheus–Grok- There may be other now-unforeseen ster–KaZaa community of users’’); id., at noninfringing uses that develop for peer- 166, ¶ 8 (Decl. of Busher) (sales figures of to-peer software, just as the home-video $1,000 to $10,000 per month through peer- to-peer networks ‘‘will increase in the fu- rental industry (unmentioned in Sony) de- ture as Acoustica’s trialware is more wide- veloped for the VCR. But the foreseeable ly distributed through these networks’’); development of such uses, when taken to- id., at 156–163, ¶¶ 21–40 (Decl. of Sinnr- gether with an estimated 10% noninfring- eich). ing material, is sufficient to meet Sony’s standard. And while Sony considered the And that is just what is happening. record following a trial, there are no facts Such legitimate noninfringing uses are asserted by MGM in its summary judg- coming to include the swapping of: re- ment filings that lead me to believe the search information (the initial purpose of outcome after a trial here could be any many peer-to-peer networks); public do- different. The lower courts reached the main films (e.g., those owned by the Prel- same conclusion. inger Archive); historical recordings and digital educational materials (e.g., those Of course, Grokster itself may not want stored on the Internet Archive); digital to develop these other noninfringing uses. photos (OurPictures, for example, is start- But Sony’s standard seeks to protect not ing a P2P photo-swapping service); the Groksters of this world (which in any ‘‘shareware’’ and ‘‘freeware’’ (e.g., Linux event may well be liable under today’s and certain Windows software); secure li- holding), but the development of technolo- censed music and movie files (Intent Me- gy more generally. And Grokster’s de- diaWorks, for example, protects licensed sires in this respect are beside the point. content sent across P2P networks); news broadcasts past and present (the BBC II Creative Archive lets users ‘‘rip, mix and share the BBC’’); user-created audio and The real question here, I believe, is not video files (including ‘‘podcasts’’ that may whether the record evidence satisfies be distributed through P2P software); and Sony. As I have interpreted the standard all manner of free ‘‘open content’’ works set forth in that case, it does. And of the collected by Creative Commons (one can Courts of Appeals that have considered search for Creative Commons material on the matter, only one has proposed inter- StreamCast). See Brief for Distributed preting Sony more strictly than I would Computing Industry Association as Ami- do—in a case where the product might cus Curiae 15–26; Merges, A New Dy- have failed under any standard. In re namism in the Public Domain, 71 S 955U. Aimster Copyright Litigation, 334 F.3d Chi. L.Rev. 183 (2004). I can find nothing 643, 653 (C.A.7 2003) (defendant ‘‘failed to in the record that suggests that this course show that its service is ever used for any of events will not continue to flow natural- purpose other than to infringe’’ copyrights ly as a consequence of the character of the (emphasis added)); see Matthew Bender &

software taken together with the foresee- Co. v. West Pub. Co., 158 S 956F.3d 693, 706– able development of the Internet and of 707 (C.A.2 1998) (court did not require that 545 U.S. 957 METRO–GOLDWYN–MAYER STUDIOS INC. v. GROKSTER 2791 Cite as 125 S.Ct. 2764 (2005)

noninfringing uses be ‘‘predominant,’’ it terests. In particular: (1) Has Sony (as I merely found that they were predominant, interpret it) worked to protect new tech- and therefore provided no analysis of nology? (2) If so, would modification or Sony’s boundaries); but see ante, at 2784, strict interpretation significantly weaken n. 1 (GINSBURG, J., concurring); see also that protection? (3) If S 957so, would new or A&M Records, Inc. v. Napster, Inc., 239 necessary copyright-related benefits out- F.3d 1004, 1020 (C.A.9 2001) (discussing weigh any such weakening? Sony ); Cable/Home Communication Corp. v. Network Productions, Inc., 902 A F.2d 829, 842–847 (C.A.11 1990) (same); The first question is the easiest to an- Vault Corp. v. Quaid Software, Ltd., 847 swer. Sony’s rule, as I interpret it, has F.2d 255, 262 (C.A.5 1988) (same); cf. Dy- provided entrepreneurs with needed assur- nacore Holdings Corp. v. U.S. Philips ance that they will be shielded from copy- Corp., 363 F.3d 1263, 1275 (C.A.Fed.2004) right liability as they bring valuable new (same); see also Doe v. GTE Corp., 347 technologies to market. F.3d 655, 661 (C.A.7 2003) (‘‘A person may Sony’s rule is clear. That clarity allows be liable as a contributory infringer if the those who develop new products that are product or service it sells has no (or only capable of substantial noninfringing uses slight) legal use’’). to know, ex ante, that distribution of their Instead, the real question is whether we product will not yield massive monetary should modify the Sony standard, as MGM liability. At the same time, it helps deter requests, or interpret Sony more strictly, them from distributing products that have as I believe Justice GINSBURG’s ap- no other real function than—or that are proach would do in practice. Compare specifically intended for—copyright in- ante, at 2784–2786 (concurring opinion) (infringement, deterrence that the Court’s sufficient evidence in this case of both holding today reinforces (by adding a present lawful uses and of a reasonable weapon to the copyright holder’s legal ar- prospect that substantial noninfringing senal). uses would develop over time), with Sony, Sony’s rule is strongly technology pro- 464 U.S., at 442–447, 104 S.Ct. 774 (basing tecting. The rule deliberately makes it conclusion as to the likely existence of a difficult for courts to find secondary liabili- substantial market for authorized copying ty where new technology is at issue. It upon general declarations, some survey establishes that the law will not impose data, and common sense). copyright liability upon the distributors of As I have said, Sony itself sought to dual-use technologies (who do not them- ‘‘strike a balance between a copyright selves engage in unauthorized copying) un- holder’s legitimate demand for effective— less the product in question will be used not merely symbolic—protection of the almost exclusively to infringe copyrights statutory monopoly, and the rights of oth- (or unless they actively induce infringe- ers freely to engage in substantially unre- ments as we today describe). Sony there- lated areas of commerce.’’ Id., at 442, 104 by recognizes that the copyright laws are S.Ct. 774. Thus, to determine whether not intended to discourage or to control modification, or a strict interpretation, of the emergence of new technologies, includ- Sony is needed, I would ask whether ing (perhaps especially) those that help MGM has shown that Sony incorrectly disseminate information and ideas more balanced copyright and new-technology in- broadly or more efficiently. Thus Sony’s 2792 125 SUPREME COURT REPORTER 545 U.S. 957

rule shelters VCRs, typewriters, tape re- and Recording Company Petitioners 11; corders, photocopiers, computers, cassette Brief for Audible Magic Corp. et al. as players, compact disc burners, digital video Amici Curiae 3–10. Grokster says it is recorders, MP3 players, Internet search not at all easy to do, and not an efficient engines, and peer-to-peer software. But solution in any event, and several appar- Sony’s rule does not shelter descramblers, ently disinterested computer science pro- even if one could theoretically use a de- fessors agree. See Brief for Respondents scrambler in a noninfringing way. 464 31; Brief for Computer Science Professor Harold Abelson et al. as Amici Curiae 6– S 958U.S., at 441–442, 104 S.Ct. 774. Ca- ble/Home Communication Corp., supra, at 10, 14–18. Which account should a judge 837–850 (developer liable for advertising credit? Sony says that the judge will not television signal descrambler), with Vault necessarily have to decide.

Corp., supra, at 262 (primary use infring- S 959Given the nature of the Sony rule, it ing but a substantial noninfringing use). is not surprising that in the last 20 years, Sony’s rule is forward looking. It does there have been relatively few contributo- not confine its scope to a static snapshot of ry infringement suits—based on a product a product’s current uses (thereby threaten- distribution theory—brought against tech- ing technologies that have undeveloped fu- nology providers (a small handful of feder- al appellate court cases and perhaps fewer ture markets). Rather, as the VCR exam- than two dozen District Court cases in the ple makes clear, a product’s market can last 20 years). I have found nothing in the evolve dramatically over time. And briefs or the record that shows that Sony Sony—by referring to a capacity for sub- has failed to achieve its innovation-protect- stantial noninfringing uses—recognizes ing objective. that fact. Sony’s word ‘‘capable’’ refers to a plausible, not simply a theoretical, likeli- B hood that such uses will come to pass, and The second, more difficult, question is that fact anchors Sony in practical reality. whether a modified Sony rule (or a strict Cf. Aimster, 334 F.3d, at 651. interpretation) would significantly weaken Sony’s rule is mindful of the limitations the law’s ability to protect new technology. facing judges where matters of technology Justice GINSBURG’s approach would re- are concerned. Judges have no specialized quire defendants to produce considerably technical ability to answer questions about more concrete evidence—more than was present or future technological feasibility presented here—to earn Sony’s shelter. or commercial viability where technology That heavier evidentiary demand, and es- professionals, engineers, and venture capi- pecially the more dramatic (case-by-case talists themselves may radically disagree balancing) modifications that MGM and and where answers may differ depending the Government seek, would, I believe, upon whether one focuses upon the time of undercut the protection that Sony now product development or the time of distri- offers. bution. Consider, for example, the ques- To require defendants to provide, for tion whether devices can be added to example, detailed evidence—say, business Grokster’s software that will filter out in- plans, profitability estimates, projected fringing files. MGM tells us this is easy technological modifications, and so forth— enough to do, as do several amici that would doubtless make life easier for copy- produce and sell the filtering technology. right holder plaintiffs. But it would simul- See, e.g., Brief for Motion Picture Studio taneously increase the legal uncertainty 545 U.S. 961 METRO–GOLDWYN–MAYER STUDIOS INC. v. GROKSTER 2793 Cite as 125 S.Ct. 2764 (2005) that surrounds the creation or develop- engage in unlawful copying—a fact that ment of a new technology capable of being makes the attachment of copyright liability put to infringing uses. Inventors and en- to the creation, production, or distribution trepreneurs (in the garage, the dorm of the technology an exceptional thing. room, the corporate lab, or the boardroom) See 464 U.S., at 431, 104 S.Ct. 774 (courts would have to fear (and in many cases ‘‘must be circumspect’’ in construing the endure) costly and extensive trials when copyright laws to preclude distribution of they create, produce, or distribute the sort new technologies). Moreover, Sony has of information technology that can be used been the law for some time. And that fact for copyright infringement. They would imposes a serious burden upon copyright often be left guessing as to how a court, holders like MGM to show a need for upon later review of the product and its change in the current rules of the game, uses, would decide when necessarily rough including a more strict interpretation of estimates amounted to sufficient evidence. the test. See, e.g., Brief for Motion Pic- They would have no way to predict how ture Studio and Recording Company Peti- courts would weigh the respecStive960 values tioners 31 (Sony should not protect prod- of infringing and noninfringing uses; de- ucts when the ‘‘primary or principal’’ use is termine the efficiency and advisability of infringing). technological changes; or assess a prod- In any event, the evidence now available uct’s potential future markets. The price does not, in my view, make out a sufficient- of a wrong guess—even if it involves a ly strong case for change. To say S this good-faith effort to assess technical and 961 is not to doubt the basic need to protect commercial viability—could be large statu- copyrighted material from infringement. tory damages (not less than $750 and up to The Constitution itself stresses the vital $30,000 per infringed work ). 17 U.S.C. role that copyright plays in advancing the § 504(c)(1). The additional risk and un- ‘‘useful Arts.’’ Art. I, § 8, cl. 8. No one certainty would mean a consequent addi- disputes that ‘‘reward to the author or tional chill of technological development. artist serves to induce release to the public of the products of his creative genius.’’ C United States v. Paramount Pictures, The third question—whether a positive Inc., 334 U.S. 131, 158, 68 S.Ct. 915, 92 copyright impact would outweigh any tech- L.Ed. 1260 (1948). And deliberate unlaw- nology-related loss—I find the most diffi- ful copying is no less an unlawful taking of cult of the three. I do not doubt that a property than garden-variety theft. See, more intrusive Sony test would generally e.g., 18 U.S.C. § 2319 (2000 ed. and Supp. provide greater revenue security for copy- II) (criminal copyright infringement); right holders. But it is harder to conclude § 1961(1)(B) (2000 ed., Supp. II) (copy- that the gains on the copyright swings right infringement can be a predicate act would exceed the losses on the technology under the Racketeer Influenced and Cor- roundabouts. rupt Organizations Act); § 1956(c)(7)(D) For one thing, the law disfavors equat- (2000 ed., Supp. II) (money laundering in- ing the two different kinds of gain and cludes the receipt of proceeds from copy- loss; rather, it leans in favor of protecting right infringement). But these highly gen- technology. As Sony itself makes clear, eral principles cannot by themselves tell us the producer of a technology which per- how to balance the interests at issue in mits unlawful copying does not himself Sony or whether Sony’s standard needs 2794 125 SUPREME COURT REPORTER 545 U.S. 961 modification. And at certain key points, mains uncertain, though there is good rea- information is lacking. son to believe that the decline, if any, is Will an unmodified Sony lead to a signif- not substantial. See, e.g., M. Madden, icant diminution in the amount or quality Pew Internet & American Life Project, of creative work produced? Since copy- Artists, Musicians, and the Internet 21 right’s basic objective is creation and its (Dec. 5, 2004), http://www.pewinternet.org/ revenue objectives but a means to that pdfs/PIP Artists.Musicians Report.pdf end, this is the underlying copyright ques- (nearly 70% of musicians believe that file tion. See Twentieth Century Music Corp. sharing is a minor threat or no threat at v. Aiken, 422 U.S. 151, 156, 95 S.Ct. 2040, all to creative industries); Benkler, Shar- 45 L.Ed.2d 84 (1975) (‘‘Creative work is to ing Nicely: On Shareable Goods and the be encouraged and rewarded, but private Emergence of Sharing as a Modality of motivation must ultimately serve the cause Economic Production, 114 Yale L. J. 273, of promoting broad public availability of 351–352 (2004) (‘‘Much of the actual flow of literature, music, and the other arts’’). revenue to artists—from performances and And its answer is far from clear. other sources—is stable even assuming a Unauthorized copying likely diminishes complete displacement of the CD market industry revenue, though it is not clear by by peer-to-peer distribution TTTT[I]t would how much. Compare S. Liebowitz, Will be silly to think that music, a cultural form MP3 Downloads Annihilate the Record In- without which no human society has exist- dustry? The Evidence So Far 2 ed, will cease to be in our world [because (June 2003), http://www.utdallas.edu/ of illegal file swapping]’’). liebowit/intprop/records.pdf (all Internet More importantly, copyright holders at materials as visited June 24, 2005, and least potentially have other tools available available in Clerk of Court’s case file) to reduce piracy and to abate whatever S (file sharing has caused a decline in 962 threat it poses to creative production. As music sales), and Press Release, Informa today’s opinion makes clear, a copyright Telecoms & Media, Steady Download holder may proceed against S a technolo- Growth Defies P2P (Dec. 6, 2004), 963 gy provider where a provable specific in- http://www.informatm.com (citing Informa tent to infringe (of the kind the Court Media Group Reports, Music on the Inter- describes) is present. Ante, at 2782. Ser- net (5th ed.2004)) (estimating total lost sales to the music industry in the range of vices like Grokster may well be liable un- $2 billion annually), with F. Oberholzer & der an inducement theory. K. Strumpf, The Effect of File Sharing on In addition, a copyright holder has al- Record Sales: An Empirical Analysis 24 ways had the legal authority to bring a (Mar. 2004), www.unc.edu/cigar/papers/ traditional infringement suit against one FileSharing March2004.pdf (academic who wrongfully copies. Indeed, since Sep- study concluding that ‘‘file sharing has no tember 2003, the Recording Industry As- statistically significant effect on purchases sociation of America (RIAA) has filed of the average album’’), and McGuire, ‘‘thousands of suits against people for Study: File–Sharing No Threat to Music sharing copyrighted material.’’ Walker, Sales (Mar. 29, 2004), http://www. New Movement Hits Universities: Get Le- washingtonpost.com/ac2/wp–dyn/A34300– gal Music, Washington Post, Mar. 17, 2005, 2004Mar29?language=printer (discussing p. E1. These suits have provided copyright mixed evidence). holders with damages; have served as a The extent to which related production teaching tool, making clear that much file has actually and resultingly declined re- sharing, if done without permission, is un- 545 U.S. 965 METRO–GOLDWYN–MAYER STUDIOS INC. v. GROKSTER 2795 Cite as 125 S.Ct. 2764 (2005)

lawful; and apparently have had a real and 385, 391, 451 (2004). Other technology significant deterrent effect. See, e.g., L. can, through encryption, potentially re- Rainie, M. Madden, D. Hess, & G. Mudd, strict users’ ability to make a digital copy. Pew Internet Project and comScore Media See J. Borland, Tripping the Rippers, Metrix Data Memo: The state of music C/net News.com (Sept. 28, 2001), downloading and file-sharing online 2, 4, 6, http://news.com.com/Trippingvthevrip 10 (Apr. 2004), http://www.pewinternet. pers/2009-1023 3-273619.html; but see org/pdfs/PIP Filesharing April 04.pdf Brief for Bridgemar Services, Ltd. d/b/a (number of people downloading files fell iMesh.com as Amicus Curiae 5–8 (arguing from a peak of roughly 35 million to rough- that peer-to-peer service providers can ly 23 million in the year following the first more easily block unlawful swapping). suits; 38% of current downloaders report At the same time, advances in technolo- downloading fewer files because of the gy have discouraged unlawful copying by suits); M. Madden & L. Rainie, Pew Inter- making lawful copying (e.g., downloading net Project Data Memo: Music and video music with the copyright holder’s permis- downloading moves beyond P2P, p. 7 (Mar. sion) cheaper and easier to achieve. Sev- 2005), http://www.pewinternet.org/pdfs/ eral services now sell music for less than PIP Filesharing March05.pdf (number of $1 per song. (Walmart.com, for example, downloaders has ‘‘inched up’’ but ‘‘contin- charges $0.88 each.) Consequently, many ues to rest well below the peak level’’); consumers initially attracted to the con- Note, Costs and Benefits of the Recording venience and flexibility of services like Industry’s Litigation Against Individuals, 20 Berkeley Tech. L. J. 571 (2005); but see Grokster are now migrating to lawful paid Evangelista, File Sharing; Downloading services (services with copying permission) Music and Movie Files is as Popular as where they can enjoy at little cost even Ever, San Francisco Chronicle, Mar. 28, greater convenience and flexibility without 2005, p. E1 (referring to the continuing engaging in unlawful swapping. See Wu, ‘‘tide of rampant copyright infringement,’’ When Code Isn’t Law, 89 Va. L.Rev. 679, while noting that the RIAA says it believes 731–735 (2003) (noting the prevalence of the ‘‘campaign of lawsuits and public edu- technological problems on unpaid swap- cation has at least contained the prob- ping sites); K. Dean, P2P Tilts Toward lem’’). Legitimacy, Wired News (Nov. 24, 2004), http://www.wired.com/news/digiwood/0, S Further, copyright holders may de- 964 1412,65836,00.html; Madden & Rainie, velop new technological devices that will March 2005 Data Memo, supra, at 6–8 help curb unlawful infringement. Some new technology, called ‘‘digital ‘watermark- (percentage of current downloaders who ing’ ’’ and ‘‘digital fingerprint[ing],’’ can en- have used paid services rose from 24% to code within the file information about the 43% in a year; number using free services author and the copyright scope and date, fell from 58% to 41%). which ‘‘fingerprints’’ can help to expose S 965Thus, lawful music downloading ser- infringers. RIAA Reveals Method to vices—those that charge the customer for Madness, Wired News (Aug. 28, 2003), downloading music and pay royalties to the http://www.wired.com/news/digiwood/0, copyright holder—have continued to grow 1412,60222,00.html; Besek, Anti–Circum- and to produce substantial revenue. See vention Laws and Copyright: A Report Brief for Internet Law Faculty as Amicus from the Kernochan Center for Law, Me- Curiae 5–20; Bruno, Digital Entertain- dia and the Arts, 27 Colum. J. L. & Arts ment: Piracy Fight Shows Encouraging 2796 125 SUPREME COURT REPORTER 545 U.S. 965

Signs (Mar. 5, 2005), available at LEXIS, Ninth Circuit’s determination of the rele- News Library, Billboard File (in 2004, con- vant aspects of the Sony question. sumers worldwide purchased more than 10 * * * times the number of digital tracks pur- For these reasons, I disagree with Jus- chased in 2003; global digital music mar- tice GINSBURG, but I agree with the ket of $330 million in 2004 expected to double in 2005); Press Release, Informa Court and join its opinion. Telecoms & Media, Steady Download Growth Defies P2P (global digital reve- nues will likely exceed $3 billion in 2010); , Ashton, [International Federation of the Phonographic Industry] Predicts Down-

loads Will Hit the Mainstream, Music Week, Jan. 29, 2005, p. 6 (legal music sites 545 U.S. 748, 162 L.Ed.2d 658 and portable MP3 players ‘‘are helping to TOWN OF CASTLE ROCK, transform the digital music market’’ into COLORADO, Petitioner, ‘‘an everyday consumer experience’’). And v. more advanced types of non-music-orient- ed peer-to-peer networks have also started Jessica GONZALES, individually and as to develop, drawing in part on the lessons next best friend of her deceased minor of Grokster. children, Rebecca Gonzales, Katheryn Finally, as Sony recognized, the legisla- Gonzales, and Leslie Gonzales. tive option remains available. Courts are No. 04–278. less well suited than Congress to the task Argued March 21, 2005. of ‘‘accommodat[ing] fully the varied per- Decided June 27, 2005. mutations of competing interests that are Background: Wife brought civil rights ac- inevitably implicated by such new technol- tion against municipality and police offi- ogy.’’ Sony, 464 U.S., at 431, 104 S.Ct. cers based on officers’ refusal to enforce 774; see, e.g., Audio Home Recording Act of 1992, 106 Stat. 4237 (adding 17 U.S.C., domestic abuse restraining order against ch. 10); Protecting Innovation and Art husband. The United States District Court While Preventing Piracy: Hearing before for the District of Colorado, Wiley Daniel, the Senate Committee on the Judiciary, J., dismissed the action for failure to state 108th Cong., 2d Sess. (2004). a claim. The Tenth Circuit Court of Ap- peals, 307 F.3d 1258, reversed. Upon re- I do not know whether these develop- hearing en banc, the Tenth Circuit Court ments and similar alternatives will prove of Appeals, Seymour, Circuit Judge, 366 sufficient, but I am reasonably certain F.3d 1093, reversed the District Court’s that, given their existence, a strong dem- decision and remanded. onstrated need for modifying Sony (or for interpreting Sony’s standard more strictly) Holdings: Following grant of certiorari, has not yet been shown. That fact, along the United States Supreme Court, Justice with the added risks that modification (or Scalia held that: strict interpretation) would impose upon (1) Supreme Court would not defer to the technological innovation, leads me to the Tenth Circuit Court of Appeals’ deter- conclusion that we should maintain Sony, mination that Colorado law gave wife a reading its standard as I S 966have read it. right to have police enforce restraining As so read, it requires affirmance of the order;