June 27, 2005 | By Donna Wentworth

Supreme Court Reverses Grokster, Endangers Innovation

The Supreme Court unanimously ruled today that creators of P2P file-sharing software could be held liable for intending to induce infringements, reversing the lower court's ruling. The Court's murky standard puts at risk technology creators of all stripes.

"Today the Supreme Court has unleashed a new era of legal uncertainty on America's innovators," said Fred von Lohmann, EFF's senior intellectual property attorney. "The newly announced inducement theory of copyright liability will fuel a new generation of entertainment industry lawsuits against technology companies. Perhaps more important, the threat of legal costs may lead technology companies to modify their products to please Hollywood instead of consumers."

The lower court had ruled that Grokster and Streamcast Networks were shielded because their software was "capable of substantial non-infringing uses," the standard set in Sony. The Supreme Court found that Sony does not protect "one who distributes a device with the object of promoting [infringement]... as shown by clear expression or other affirmative steps taken to foster infringement."

On that basis, the Court sent the case back down to the District Court, where the P2P companies will have a chance to defend their actions under this test.

EFF's press release can be found here; audio from the respondents' press conference (MP3); the Court's unanimous opinion (and two concurrences) here (PDF).

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