Supreme Court Docket Report - October Term, 2004 - Number 4

On December 10, 2004, the Supreme Court granted certiorari in two cases of interest to the business community. Amicus briefs in support of the petitioners will be due on Monday, January 24, 2005, and amicus briefs in support of the respondents will be due on Monday, February 28, 2005.

1. Peer-To-Peer File Sharing Software ? Contributory or Vicarious Copyright Infringement. Peer-to-peer ("P2P") file sharing software allows users to link themselves together in a network in which each individual computer makes information available to every other computer on the network, thereby eliminating the need for shared files to be stored on a centralized computer server. The ability to locate files available for sharing over these networks is facilitated by one of three indexing methods: a centralized system controlled by a host (the method by which Napster operated before being held legally liable for copyright violations); a completely decentralized system in which each computer on the network maintains a list of files available for sharing on that computer (the method by which Streamcast Networks, Inc. operates); and a "supernode" system, in which a select number of computers on the network serve as indexing servers (the method by which Grokster, Ltd. operates). The Supreme Court granted certiorari in Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., No 04-480, to decide whether distributors of P2P software which uses either the decentralized or the "supernode" indexing method may be held to be contributorily or vicariously liable for copyright infringements by users of their product.

It is largely undisputed that "the vast majority of the files" shared by the users of defendants' software "are exchanged illegally in violation of copyright law." 380 F.3d 1154, 1160 (9th Cir. 2004). It is also undisputed, however, that the defendants' software is "capable of substantial noninfringing uses." Id. at 1161. Under the Ninth Circuit's construction of the Supreme Court's decision in Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984), a defendant whose product is capable of being used in commercially significant, noninfringing ways can be held liable for contributory copyright infringement only if the plaintiff shows that the defendant had reasonable knowledge of specific acts of infringement. 380 F.3d at 1160-61. The Ninth Circuit held that, because the decentralized indexing systems employed by defendants' software left the...