Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd.

In 2001, Metro-Goldwyn-Mayer Studios and other plaintiffs comprising record companies, music publishers, and other movie studios (collectively, MGM) (plaintiffs) brought a copyright-infringement action against a group including Grokster, Ltd. and, ultimately, StreamCast Networks, Inc. (StreamCast) (defendant). MGM asserted that the defendants’ file-sharing software contributed to massive copyright infringement. The parties cross-moved for summary judgment. The district court granted the defendants’ motion and denied MGM’s motion. The Ninth Circuit affirmed, but in 2005, the Supreme Court reversed and remanded the case for reconsideration of MGM’s summary-judgment motions. Grokster settled with MGM shortly after the Supreme Court decision. On the case’s remand to the district court, MGM filed a renewed summary-judgment motion as to StreamCast’s liability. MGM presented a study that over 87 percent of the files offered for distribution on StreamCast’s network were either infringing or highly likely to be infringing and that 97 percent of download requests from StreamCast’s users were directed to the infringing files. The evidence also showed that StreamCast’s file-sharing service used software called OpenNap—compatible with another file-sharing service, Napster—because StreamCast wanted to target Napster users in the wake of Napster’s legal troubles. StreamCast ran an online ad asking the question: “When the lights went off at Napster . . . where did the users go?” Darrell Smith, StreamCast’s chief technology officer, testified that StreamCast had targeted Napster users to increase the amount of file-sharing and thus increase the number of users. StreamCast conducted this advertising campaign even after a federal court entered a preliminary injunction against Napster for secondary liability for copyright infringement. Two StreamCast executives had discussed the possibility that Napster might be ordered to employ filtering technology to prevent infringement. Additionally, the court received evidence that StreamCast was aware of filtering technology that could have prevented users from accessing copyrighted works, but Smith testified that he had never been asked to investigate the feasibility of using filtering technology.