Advanced Copyright Issues on the Internet - Fenwick & West LLP

also warned existing Australian users that use of the software was not permitted in Australia,pending an appeal. 1423 (5) The Supreme Court’s Grokster DecisionIn one of the most significant copyright decisions since the Sony case, the Supreme Courtvacated the Ninth Circuit’s ruling in the Grokster case and remanded it for further proceedings.In its decision, taking inspiration again from the patent law, as it had in the Sony case, theSupreme Court introduced inducement liability for the first time into U.S. copyright law. TheCourt largely sidestepped, however, the opportunity to clarify a number of open questions aboutthe scope of contributory liability and the Sony defense, with respect to many of which the NinthCircuit and the Seventh Circuit had issued conflicting rulings in the Grokster and Aimster cases,respectively.Open <strong>Issues</strong> Going Into the Appeal. In order to best understand the scope of the SupremeCourt’s decision – both what it decided and the issues it left open – it is useful to begin by notingthe issues of secondary liability with respect to which the Ninth Circuit (in its Napster andGrokster decisions) and the Seventh Circuit (in its Aimster decision) had issued contrary rulingsbefore the appeal to the Supreme Court. From the analyses of these cases in earlier sections 1424 itis apparent that the two Circuits differed in their interpretation of Sony on at least the followingdimensions:What types of secondary liability the Sony defense applies to: contributory liability only(Ninth Circuit) versus both contributory and vicarious liability (Seventh Circuit).How the Sony defense should be interpreted: as merely a gloss on the type of knowledgerequired for contributory liability (Ninth Circuit) versus a cost/benefit analysis of theinfringing and noninfringing uses of a system to determine whether contributory liabilityshould be imposed (Seventh Circuit).What triggers the Sony defense: mere capability of substantial noninfringing uses of thetechnology at issue (Ninth Circuit) versus “principal,” actual uses (Seventh Circuit).Whether Sony imposes a duty to redesign technology to avoid or reduce infringing uses:no (Ninth Circuit) versus yes if not disproportionately costly to do so (Seventh Circuit).These contrary rulings from the Circuits, together with the petitioners’ and respondents’briefs and a host of amicus briefs, presented a number of questions that the Supreme Court couldhave resolved through this case:Does Sony afford an independent, stand-alone immunity to secondary copyright liabilitybased upon the sale and distribution of technology that is capable of substantial1423 Ian Ferguson, “Sharman Cuts Off Kazaa Downloads in Australia” (Dec. 5, 2005), available as of Dec. 6, 2005at www.news.com.com/2100-1027_3-5983455.html.1424 See Sections III.C.2(c)(1) & (4) (Napster and Grokster, respectively) and III.C.2(c)(4) (Aimster).- 315 -