July 6, 2005 | By Fred von Lohmann

First Post-Grokster Cold Front?

As mentioned last week, the post-Grokster world may create new concerns for companies creating technologies that enable new digital uses like "place-shifting." Because these companies forthrightly promote activities that should qualify as fair uses, but have generally never been ruled on by a court, they are put in a potentially difficult position -- if they lose on fair use, are they automatically liable for inducement?

This is not just a hypothetical question. Apparently, the motion picture industry is turning its attention to "Me2Me" technologies like those offered by TiVo, Sling Media, and Orb Networks that allow you to access your own media via the Internet. The following quotes appeared in The Hollywood Reporter today:

  • "We're hopeful Slingbox will incorporate technology that will respect copyright," said Dean Garfield, vp and director of legal affairs at MPAA. "You don't have the authority to retransmit license work without negotiation or authorization."
  • "Slingbox is one manifestation of what we assume will be a cascade of similar products that are meant to manipulate our signals in ways that we think will be harmful to the network-affiliate business, if not the law," CBS executive vp Martin Franks said.
  • "Even if you take it at face value that it is a one-to-one transmittal device, I don't think it will be very long before some hacker in Cupertino posts on the Web the way to modify it, the way they modify a TiVo, that turns it into something that can be tapped by 50 people," Franks said.

Prior to the MGM v. Grokster ruling, these companies needed only to prove that any substantial use of their product is noninfringing. Today, they may be called upon to prove that every use that they ever promoted or advertised is noninfringing. Now there may be other defenses: courts should recognize that a good-faith belief that a use is noninfringing bars an inducement claim. But overall, this is one way MGM v. Grokster makes the climate chillier for innovators.

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