Inducers and Authorisers: A Comparison of the US Supreme Court's Grokster Decision and the Australian Federal Court's Kazaa Ruling

Abstract

On June 27, 2005, the US Supreme Court announced its much-awaited decision in MGM Studios, Inc. v. Grokster Ltd. A few months after this, the Federal Court of Australia handed down its decision at first instance in relation to parallel litigation in that country concerning the KaZaa file sharing system. Both decisions repay careful consideration of the way in which the respective courts have addressed the relationship between the protection of authors' rights and the advent of new technologies, particularly in relation to peer-to-peer networks.

In the Grokster case, songwriters, record producers and motion picture producers alleged that two popular 'file-sharing' networks, Grokster and Streamcast (dba Morpheus) should be held liable for facilitating the commission of massive amounts of copyright infringement by the end-users who employed the defendants' peer-to-peer (P2P) software to copy and redistribute films and sound recordings to each others' hard drives. The Court reversed the Ninth Circuit's grant of summary judgment for defendants, holding that the technology entrepreneurs could be held liable for 'actively inducing' the end-users' acts of infringement. A similar decision was reached in Australia with respect to the KaZaa software, albeit in this proceeding the court had the advantage of much greater factual material as to the operation of the KaZaa system than did the US Supreme Court in Grokster. Nonetheless, both cases illustrate the difficulties that arise as consumer-wielded digital media increasingly supplant the traditional intermediaries who made copyrighted works available to the public (and who traditionally were the targets of copyright enforcement) and as courts struggle to balance meaningful protection for works of authorship against the progress of technological innovation. For some, the weakening of copyright control is the necessary price to pay for technological advancement. For others, authors' ability to maintain exclusive rights remains a cornerstone of any copyright system as it adapts to accommodate new modes of exploitation.

Grokster is the latest, and most important, in a series of US decisions to address that balance by articulating the liability of an enterprise which does not itself commit copyright infringement, but instead makes it possible for others to infringe. To appreciate the Supreme Court's analysis, it helps to set the case in both domestic and international doctrinal context. Because unauthorized P2P distribution of copyrighted works extends well beyond the US, copyright owners have pursued legal actions in other countries, including the Netherlands and Australia. While the Australian case still awaits full appellate consideration, it provides a useful example of how another common law jurisdiction (Australia) analyses the liability of those who provide goods or services to facilitate infringement. In this regard, it is also useful to consider what obligations, if any, exist at the international level with respect to the liability of infringement-facilitators. We will conclude with some (perhaps foolhardy) forecasts for the post-Grokster/KaZaa future of copyright enforcement.

Keywords: KaZaa, Grokster, file sharing, file share, authors' right, peer-to-peer, copyright, morpheus, streamcast, P2P, infringement, technology

JEL Classification: K00, K1, K10, K11, K42