The New York Times says:
Two lower courts previously sided with Grokster without holding a trial. They each based their decisions on the 1984 Supreme Court ruling that Sony Corp. could not be sued over consumers who used its VCRs to make illegal copies of movies.
The lower courts reasoned that, like VCRs, the file-sharing software can be used for "substantial" legal purposes, such as giving away free songs, free software or government documents. They also said the file-sharing services were not legally responsible because they don't have central servers pointing users to copyright material.
But in Monday's ruling, Souter said lower courts could find the file-sharing services responsible by examining factors such as how companies marketed the product or whether they took easily available steps to reduce infringing uses.
"There is substantial evidence in MGM's favor on all elements of inducement," Souter wrote.
The U.S. Supreme Court ruled unanimously Monday that companies that sell file-sharing software can be held liable for copyright infringement.
"One who distributes a device with the object of promoting its use to infringe copyright ... is liable for the resulting acts of infringement by third parties using the device, regardless of the device's lawful uses," Justice David Souter wrote in the ruling.
But Monday's ruling by the nation's highest court does not end the battle. The Supreme Court order sends the case back for trial to the same lower court that had originally ruled in favor of Grokster Ltd. and StreamCast Networks Inc., the file-sharing services named in the case.
The WSJ (subscription required) says that RIAA and the Studios have won. Snippet:
The case hinged on the court's assessment of what percentage of Grokster use was for "substantial noninfringing uses" versus what percentage was used for activities that violated copyright conditions. That language stems from a 1984 case, involving Sony Corp.'s Betamax video recorder. In that case, the high court ruled that Sony wasn't liable for "contributory infringement" since the video recorder had "substantial noninfringing uses" that didn't run afoul of copyright conditions. Essentially, the court said it was clear the device wasn't designed expressly for breaking the law but left open to interpretation what percentage of use is considered "substantial."