1. Why was the Court so concerned about the Open-Nap program offered by StreamCast and Grokster?

2. Why do you think the Court refused to apply the Sonyexception in this case?

After the Napster decision, a number of other P2P file-sharing communities emerged with a slightly different business model. One famous firm, Grokster, used a business model whereby it would be impossiblefor Grokster to know if the files being shared were an infringing use. Thus, Grokster argued, no Napster-like imputed liability could attach and no contributor infringement existed. According to Grokster (and many other such firms that were emerging), its business was precisely the same business that Sony was in when selling the Betamax and thus Grokster was entitled to the same type of fair use exception—“capable of substantial non-infringing uses”—as was articulated by the Supreme Court in the Sonycase. When MGM Stu-dios sued Grokster (and others, including Stream-Cast, the distributor of Morpheus software), both the federal trial court and the federal court of appeals agreedwith Grokster and allowed Grokster to use the Sonyexception in its rulings against MGM.
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The U.S. Supreme Court unanimously held that Grokster couldbe liable for inducing copyright infringement and reversed the court of appeals ruling. The Court specifically ruled that anyone who distributes a device with the intent to promote its use to infringe copyright is liable for the resulting acts of infringement (contributory) by third parties. Although there was some disagreement among the justices about the Sonydefense, ultimately the Court held that the lower courts had misapplied the Sonyexception because there was ample evidence that Grokster had acted with intent to cause copyright infringement via the use of its software.

Evidence of Intent “Three features of this evidence of intent are particularly notable. First, each company showed itself to be aiming to satisfy a known source of demand for copyright infringement, the market comprising former Napster users. StreamCast’s internal documents made constant reference to Napster, it initially distributed its Morpheus software through an OpenNap program compatible with Napster, it advertised its OpenNap program to Napster users, and its Morpheus software functions as Napster did except that it could be used to distribute more kinds of files, including copyrighted movies and software programs. Grokster’s name is apparently derived from Napster, it too initially offered an OpenNap program, its software’s function is likewise comparable to Napster’s, and it attempted to divert queries for Napster onto its own Web site. Grokster and StreamCast’s efforts to supply services to former Napster users, deprived of a mechanism to copy and distribute what were overwhelmingly infringing files, indicate a principal, if not exclusive, intent on the part of each to bring about infringement.”