Jenner & Block

Supreme Court Asked To End File-Sharing Services’ Harm to Movie, Recording Industries in Grokster Case

On behalf of every major movie studio and record company in the United States, Jenner & Block has filed a petition in the U.S. Supreme Court seeking review of a Ninth Circuit decision that allowed two Napster-like file-sharing services to evade responsibility for massive copyright infringement occurring on their networks. According to the Firm’s petition on behalf of the industries, the two peer-to-peer services, Grokster and StreamCast Networks, create, maintain and profit from services on which millions of infringements occur daily.

The Petition for a Writ of Certiorari argues that “resolution of the questions presented here will largely determine the value – indeed, the very significance – of copyright in the digital era."  The petition asserts that such services encourage consumers to illegally obtain songs and movies for free rather than paying for them and that this infringement constitutes at least 90% of the activity on the services.

The U.S. Court of Appeals for the Ninth Circuit, purporting to rely on an earlier Supreme Court decision involving the Betamax machine, had ruled that the file-sharing services were not liable for the pervasive infringement on their networks because, among other things, the services were capable of being used to exchange non-infringing materials as well.

The Petition for a Writ of Certiorari argues, however, that the Ninth Circuit's ruling rests on a fundamental misunderstanding of the Supreme Court's decision in Sony-Betamax – that the presence of minimal non-infringing uses does not create total immunity from liability.

“The Court in Sony-Betamax … did not bar liability where, as here, the predominant, fully intended use of a product or service is infringing.  It also did not rule out liability where, as here, the creator of the service has an ongoing relationship with the infringers, and its profits depend directly on the volume of ongoing infringing activity on its service.  Nor did Sony-Betamax suggest that an enterprise is immune where, as here, it can exercise control to prevent infringement but chooses not to do so because its business model depends on voluminous infringing use.”

The Firm's petition urges the Supreme Court to review the Ninth Circuit decision because it presents "one of the most important copyright cases ever to reach [the] Court" and because the Ninth Circuit's decision creates a direct and acknowledged conflict with the Seventh Circuit's decision in Aimster, a case that affirmed liability for a similar peer-to-peer file-sharing service.

The Jenner & Block legal team representing the entertainment companies in the case include Partners Donald B. Verrilli, Jr., Ian H. Gershengorn, William M. Hohengarten, Steven B. Fabrizio, Matthew J. Oppenheim and Thomas J. Perrelli and Associates Kathleen R. Hartnett and Brian Hauck.

The case is Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd.