New Developments in E- Commerce: Legal Issues Professor Nancy King Oregon State University Aarhus School of Business

Online Copyright Infringement Decision: MGM Studios v. Grokster (2005, U.S. Supreme Court).Decision: MGM Studios v. Grokster Who are the parties in the case?

Grokster What legal question did the U.S. Supreme Court address in the case? How did the Supreme Court answer this question? Did the lower courts that had previously considered this case answer the legal question the same way?

Grokster Understanding the factual context for the case. How do peer-to-peer file- sharing services work? What is the difference between downloading music and file- sharing of music?

Grokster Understanding the applicable law: What is direct copyright infringement? Was it the subject of the Grokster case? What is indirect or secondary copyright infringement?

Grokster Contributory Copyright Infringement: To Intentionally induce or encourage direct infringement.

Grokster Vicarious Copyright Infringment: To profit from direct infringement while declining to exercise a right to stop or limit it.

Grokster – holding of the case Inducement Theory of Copyright Infringement: ”… one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.”

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Grokster Understanding the rationale for the court’s decision: What two competing social or policy values were discussed in case that relate to peer-to-peer networking? Which of these two values did the U.S. Supreme Court think was more powerful and therefore justified the decision it made in this opinion? Why?

Grokster Understanding the legal rules applied in the case. Where did the U.S. Supreme Court get the legal rules (‘the law’) that it applied to resolve this dispute? possibilities: international treaties, constitutions, statutes, court opinions (including those containing common law) and administrative regulations.

Grokster Applying the law from the case to management problems: Assume you are advising a technology company about the meaning of the Grokster case. The company distributes a product that enables users to download and share copyrighted movies.

Grokster Management problem cont’d. At a minimum, what would you advise the technology company to do or not do based on the Grokster case?

Grokster, Management Problem, Cont’d. Does it matter whether the company’s product incorporates peer- to-peer networking software or could other technologies that are capable of being used for copyright infringement also be a problem? The Slingbox Personal Broadcaster

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Post-Grokster in the U.S. File-Sharers’ Hero Changes in the online music industry. Single-mother in Oregon countersues RIAA under RICO