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"Our position is that we're entitled to injunctive relief against the continued operation of this gigantic machine that
was built on infringement."
——Plaintiffs' attorney Donald Verrilli
MGM V. GROKSTER, ROUND ONE
Supreme Court Justices Pull No Punches As Rival Attorneys Get Right Into It
The N.Y. Times billed MGM v. Grokster, which got underway Tuesday, as a battle between “old-fashioned entertainment and newfangled technology,” while the L.A. Times described the case as “a tricky question of copyright law that has divided Hollywood from Silicon Valley.” As they heard oral arguments, the Supreme Court justices displayed no bias either way, but they seemed to buy into the defense’s contention that technological progress shouldn’t be legally impeded by the manner in which copyright infringement is defined. On the other hand, several justices found a solid criterion for judgment in the “active inducement” argument; i.e., that the P2P services should be liable for copyright infringement for having actively induced consumers to use their software to download copyrighted material.    

Donald B. Verrilli Jr., the attorney representing the entertainment industry, claimed the P2Ps are "inflicting catastrophic, multibillion-dollar harm" on the entertainment industry. "The record industry has lost 25% of its revenues" since the advent of Napster, Verrilli told the court, describing P2P software as a "gigantic infringement machine" that steals copyrighted works.

Verrilli said the inducement rule doesn’t go far enough. The DOJ’s Paul Clement backed him up, arguing that a product warranted protection if it was used for infringement less than 50% of the time. the Supreme Court should allow lawsuits that would shut down those entities whose primary business involves copyright infringement, calling the P2Ps’ activities “a shell game.”

Justices David H. Souter and Antonin Scalia wondered whether the Xerox copier or the iPod would have seen the light of day given that they can and are used for illegal purposes, while Justice Stephen G. Breyer noted that there are "excellent uses" of P2P technology.

Richard G. Taranto, repping Grokster and StreamCast, told the court that its 1984 “Betamax” decision absolving Sony of copyright infringement based on the “substantial non-infringing uses” of the VCR, should apply for the sake of "innovation protection." As long as the noninfringing uses were not "far-fetched," Taranto argued, the ruling that applied to VCRs should also apply to what he spun as an "autonomous communication tool." 

Justice Ruth Bader Ginsburg took issue with Taranto’s argument, pointing out that the 1984 decision "goes on for 13 more pages" after the cited passage. "If the standard was that clear, the court would have stopped there," she said. "I don't think you can take one sentence from a rather long opinion and say, 'Ah-hah, we have a clear rule.'"

Clement told the justices that while the Ninth Circuit had used as its test "the mere theoretical capability of noninfringing uses" in its 2001 ruling against Napster, the Supreme Court should look at the defendants’ actual "business model," which he described as an "extreme case” built on "copyright infringement without liability, with the full knowledge that the draw is unlawful copying.” The P2Ps, Clement asserted, had "a business plan from Day 1 to capitalize on Napster."

Said Verrilli, "Our position is that we're entitled to injunctive relief against the continued operation of this gigantic machine that was built on infringement."

Based on the day-one exchanges, it’s hard to say how the Supreme Court will rule. But it’s also hard to imagine Grokster and StreamCast  getting off the hook altogether.

Wrote Slate’s Emily Bazelon in a commentary, “The genius of Napster, Grokster, Aimster, and other free file-sharing services is the ease with which they turn law-abiders into law-breakers. Some of the credit (or blame) goes to the open-source movement—represented outside the Supreme Court today by a group waving ‘Don't Stop Innovation’ signs. But file sharing also owes its success to those of us who have just stopped noticing copyright warnings. According to one congressional study, most people think that copying for money is wrong, but that copying for friends is OK. In other words, who really stops to think before photocopying a magazine article or burning a copy of a CD? Swapping files with thousands of other people over a server, it turns out, doesn't feel that different. It doesn't feel like stealing.”

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