Grokster was the case everyone (but Dahlia) has been waiting for, because everyone and their dog has either downloaded music or knows someone who has. And despite all the technological buzz, the court's opinion is old school. Justice David Souter, joined by the entire court, in essence says this: If you run a crooked business, we will shut you down. The defendants were explicitly relying on illegal copying to run their peer-to-peer file-sharing business—one of the P2P companies went so far as to make Top 40 songs available for free. And that, said the court, just isn't kosher. "One who distributes a device with the object of promoting its use to infringe copyright," Souter wrote, "is liable for the resulting acts of infringement by third parties."
But what about the Sony BetaMax rule—which saved the VCR on the grounds that it can be used for legal as well as illegal purposes? The Sony rule is central: It is what makes it legal to sell the TiVo, the photocopier, and even the typewriter, though each in its own way might be used for evil deeds. All the Grokster-watchers wanted to know what the court would do with Sony.
The most interesting part about Grokster is that it purports to leave Sony untouched, while adding this new cautionary against operating a crooked business. In other words, the court is saying that it's all about the marketing. By this logic, if Xerox in the 1970s had said,"Don't buy that textbook—photocopy it!" the photocopier, just like that, would have become contraband.
If a rule that's based on marketing seems odd, that's because it is. Can we really know, by looking at a company's ads, whether they're up to no good? The aftermath of Grokster will be a long debate over what exactly it means to "promote" violations of copyright. One reading of Grokster is that it creates a new safe harbor. The opinion suggests that by taking affirmative steps to stop infringement, Grokster and StreamCast might have stayed out of trouble. "Neither company attempted to develop filtering tools or other mechanisms to diminish the infringing activity using their software," Souter pointed out. Yet the court also maintains that companies don't have to so diminish—after all, the VCR itself did nothing to prevent illegal uses. In short, by encrypting its offerings, making a deal with the recording industry, or taking some other copyright-friendly step, the court suggests a new P2P service could stay out of copyright trouble.
What the court is doing boils down to asking judges to be on the watch for monkey business. In the eyes of the justices, companies like KaZaA and Grokster were clearly up to no good, but iTunes—now there's a respectable operation. What the court is trying to do, however awkwardly, is prevent copyright from killing new technologies while at the same time preventing scofflaws from getting away with the technological equivalent of murder. The result is almost like a rule of etiquette—yes, you can sell something that will destroy the recording industry, as long as you don't flaunt it. That's a lesson that's already been learned by Steve Jobs' iTunes, the leading legitimate music download service. The court, in short, has cursed KaZaA, blessed iTunes, and told us that TiVo is OK, too. And while today's decision nominally declares victory for the recording industry, I doubt there will be much celebration going on in industry headquarters tonight.