Bifalgorithm post · Property · 13.05[E][4][c], p. 13-84 (1982). Proof of actual harm, or

512

512 (Property · 13.05[E][4][c], p. 13-84 (1982). Proof of actual harm, or) — "512 … . The parties and many of the amici in this case think the key to resolving…

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  • The case concerns how the Sony rule applies to Grokster and StreamCast.
  • The central issue is what makes a product capable of commercially significant noninfringing uses.
  • MGM argues that the lower court gave too much weight to innovative technology and too little to copyrights infringed by users.
  • About 90% of the works available on one network were shown to be copyrighted.
  • MGM treats the remaining 10% as insufficient to constitute a substantial noninfringing use.
  • MGM asks the Court to hold that a product used principally for infringement does not qualify under Sony.
  • Grokster and StreamCast respond that their software supports significant lawful uses.
  • Their software can reproduce public domain works, and some copyright holders encourage copying.
  • They argue that lawful uses will remain significant and grow even if infringement is currently predominant.
  • The Court agrees that the Court of Appeals misapplied the Sony rule.
  • Sony bars secondary liability when infringement intent is presumed solely from designing or distributing a product capable of substantial lawful use.
  • The Ninth Circuit interpreted Sony too broadly, treating substantial lawful capability as an absolute bar to contributory liability.
  • The Ninth Circuit applied that limitation even when independent evidence showed an actual purpose to cause infringing use.
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"512 … . The parties and many of the amici in this case think the key to resolving it is the Sony rule and, in particular, what it means for a product to be “capable of commercially significant noninfringing uses.” Sony Corp. v. Universal City Studios, supra, at 442. MGM advances the argument that granting summary judgment to Grokster and StreamCast as to their current activities gave too much weight to the value of innovative technology, and too little to the copyrights infringed by users of their software, given that 90% of works available on one of the networks was shown to be copyrighted. Assuming the remaining 10% to be its noninfringing use, MGM says this should not qualify as “substantial,” and the Court should quantify Sony to the extent of holding that a product used “principally” for infringement does not qualify. As mentioned before, Grokster and StreamCast reply by citing evidence that their software can be used to reproduce public domain works, and they point to copyright holders who actually encourage copying. Even if infringement is the principal practice with their software today, they argue, the noninfringing uses are significant and will grow. We agree with MGM that the Court of Appeals misapplied Sony, which it read as limiting secondary liability quite beyond the circumstances to which the case applied. Sony barred secondary liability based on presuming or imputing intent to cause infringement solely from the design or distribution of a product capable of substantial lawful use, which the distributor knows is in fact used for infringement. The Ninth Circuit has read Son y’s limitation to mean that whenever a product is capable of substantial lawful use, the producer can never be held contributorily liable for third parties’ infringing use of it; it read the rule as being this broad, even when an actual purpose to cause infringing use is shown by evidence independent of design and distribution of the product, unless the distributors had"

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