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IN THE NEWS Grokster and Morpheus are not vicariously Because of these noninfringing uses, Judge Thomas or contributorily liable for copyright held that the copyright owners would have to show that infringements committed by P2P users, the P2P companies had knowledge of specific infringing files. Copyright owners failed to show this, for two Court of Appeals affirms reasons. First, although the copyright owners introduced The entertainment industry has lost a significant evidence showing that “the vast majority of the software battle in its war against online digital piracy. The Ninth use is for copyright infringement,” this evidence was not Circuit Court of Appeals has held that companies that good enough. It wasn’t, Judge Thomas ruled, because – distribute Grokster and Morpheus – peer-to-peer according to the Supreme Court’s 1984 decision in the networking software – are not liable for copyright Sony-Betamax case (5:9:10) – “a product need only be infringements committed by those who use the capable of substantial noninfringing uses.” On this issue, companies’ software to distribute recorded music and Judge Thomas expressly disagreed with a conflicting movies, without being licensed to do so. decision of the Seventh Circuit Court of Appeals in the The ruling came in a case filed against the P2P Aimster case (ELR 25:5:9). In that case, the Seventh companies by movie and record companies, and in a Circuit ruled that the probability of noninfringing uses companion case filed by songwriters and music was relevant to deciding whether the distributor of P2P publishers. Writing for a unanimous three-judge panel of software had knowledge of infringing uses. Judge the Court of Appeals, Judge Sidney Thomas affirmed a Thomas rejected “Aimster [because it] is premised District Court order that had granted summary judgment specifically on a fundamental disagreement with [the to Grokster Ltd. and to StreamCast Networks, Inc. (the Ninth Circuit’s] reading of Sony-Betamax.” company that now owns and distributes the Morpheus Second, although the copyright owners sent notices software) (ELR 24:11:4). to the P2P companies about specific infringing files, this To prove their contributory infringement claims, the wasn’t good enough either. It wasn’t, because by the copyright owners had to show that: time the P2P companies received those notices, there • Grokster and Morpheus users infringed the owners’ was nothing the companies could do to stop the copyrights; infringing activities of their users. Grokster and • the P2P companies had knowledge of those StreamCast couldn’t do anything after receiving infringements; and infringement notices, because their software allowed • the P2P companies materially contributed to those users to communicate directly with one another infringements. concerning which files were available, without Grokster There was no dispute over the fact that most people or StreamCast’s further involvement – unlike Napster, use Grokster and Morpheus to infringe copyrights. The which maintained an index of available files on its own question was whether the P2P companies “had servers which was essential to the use of the Napster knowledge of” and “materially contributed” to those network (ELR 23:11:4). infringements. Judge Thomas also ruled that the P2P companies Grokster and StreamCast did, of course, know that had not “materially contributed” to the infringements their software is being used to commit infringements. committed by users of their software. They had not, They didn’t know, though, which particular movie and Judge Thomas reasoned, because (again, unlike Napster) music files were being distributed by their users were they do not provide an index of available files. The judge infringing – at least not before the P2P companies rejected the copyright owners’ argument that the P2P distributed their own software. This turned out to be companies “materially contributed” by failing to alter significant, because the District Court found, and Judge their software so it couldn’t be used to infringe. Thomas agreed, that Grokster and Morpheus software “‘Failure’ to alter software located on another’s has commercially significant noninfringing uses, and is computer is simply not akin to the failure to delete a in fact being used in noninfringing ways to distribute filename from one’s own computer, to the failure to public domain works and works whose copyrights are cancel the registration name and password of a particular owned by those who make them available over the user from one’s user list, or to the failure to make Grokster and Morpheus networks. ENTERTAINMENT LAW REPORTER 4 VOLUME 26, NUMBER 3, AUGUST 2004 modifications to software on one’s own computer,” he person’s computer are irrelevant to determining whether said. vicarious liability exists.” To prove their vicarious infringement claims, the Finally, the copyright owners argued that “Grokster copyright owners had to show that: and StreamCast should not be able to escape vicarious • Grokster and Morpheus users infringed the owners’ liability by turning a ‘blind eye’ to the infringement of copyrights; their users, and that ‘[t]urning a blind eye to detectable • the P2P companies received a direct financial acts of infringement for the sake of profit gives rise to benefit; and liability.’” Judge Thomas was not persuaded. He said • the P2P companies had “the right and ability to that “although that rhetoric has occasionally been supervise the infringers.” employed in describing vicarious copyright Again, there was no dispute over the fact that most infringement, there is no separate ‘blind eye’ theory or people use Grokster and Morpheus to infringe element of vicarious liability that exists independently of copyrights. Nor was there any dispute over the fact that the traditional elements of liability.” the P2P companies received a direct financial benefit The copyright owners were represented by Russell J. (from the sale of advertising). The question was whether Frackman of Mitchell Silberberg & Knupp in Los the P2P companies had “the right and ability to supervise Angeles, Thomas G. Hentoff of Williams & Connolly in the infringers.” Washington, D.C., Robert M. Schwartz of O’Melveny & Judge Thomas concluded they didn’t, because they Myers in Los Angeles, and Kelli L. Sager of Davis couldn’t block access to the Grokster and Morpheus Wright Tremaine in Los Angeles. The P2P companies networks by any of their users. The copyright owners were represented by Mark Lemley of Keker & Van Nest argued that “the software itself could be altered to in San Francisco, and Cindy A. Cohn and Fred von prevent users from sharing copyrighted files” – and thus Lohmann of the Electronic Frontier Foundation in San the P2P companies do have the right and ability to Francisco. supervise the infringers. But once again Judge Thomas ruled that the P2P companies do not have a duty to alter Metro-Goldwyn-Mayer Studios v. Grokster Ltd., No. 03- software located on another person’s computer, and that 55894 (9th Cir. 2004), available at www.ca9.uscourts. “possibilities for upgrading software located on another gov/ca9/newopinions.nsf/E9CE41F2E90CC8D788256E F400822372/$file/0355894.pdf?openelement ENTERTAINMENT LAW REPORTER 5 VOLUME 26, NUMBER 3, AUGUST 2004 INTERNATIONAL DEVELOPMENTS Publication by German magazines of German courts ruled in favor of the magazines. They paparazzi photos of Princess Caroline of held that the magazines’ rights of freedom of expression, Monaco invaded her privacy; European and the public’s interest in knowing how figures par excellence live, even if they aren’t politicians, Court of Human Rights rules that German outweighed Caroline’s interest in privacy. courts did not protect Caroline’s “private That prompted Princess Caroline to appeal to the life” as required by European Human European Court of Human Rights – the EU court that Rights Convention hears claims under the European Convention for the Protection of Human Rights and Fundamental Freedoms. Princess Caroline of Monaco has won a landmark In that court, Caroline argued that the German courts’ ruling from the European Court of Human Rights – a rulings had violated her rights under the European ruling that is likely to broaden the right of privacy in Convention. Article 8 of that Convention provides that several European Union countries at the expense of “Everyone has the right to respect for his private and paparazzi and those who publish their celebrity photos. family life. .” Princess Caroline’s victory is the result of her The European Court said “there is no doubt that the decade-long legal campaign against the publishers of publication . of photos of [Princess Caroline] in her Bunte, Freizeit Revue and Neue Post. The three German daily life, either on her own or with other people, falls magazines ran a series of articles with titles like as “Pure within the scope of her private life.” But that was not the happiness,” “Caroline . a woman returning to life,” end of the matter, because the magazines asserted a right “Out and about with Princess Caroline in Paris” and to publish the photos under Article 10 of the European “The kiss. Or: they are not hiding anymore . .” The Convention which guarantees freedom of the press. The articles were accompanied by several photographs, taken European Court therefore had to balance these two by paparazzi. rights. The photos were not offensive; none showed her It concluded that “the decisive factor in balancing topless, for example, though one – taken from afar – did the

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