Metro-Goldwyn-Mayer Studios, Inc. v. Grokster

• Decision Date: 25 April 2003
• Docket Number: No. CV 01-09923 SVW PJWX.,No. CV 01-08541 SVW PJWX.,CV 01-08541 SVW PJWX.,CV 01-09923 SVW PJWX.
• Citation: 259 F.Supp.2d 1029
• Parties: METRO-GOLDWYN-MAYER STUDIOS, INC., et al. Plaintiffs, v. GROKSTER, LTD., et al., Defendants. Jerry Lieber, et al., Plaintiffs, v. Consumer Empowerment BV a/k/a Fasttrack, et al., Defendants. And Related Counterclaims
• Court: U.S. District Court — Central District of California

Page 1029

259 F.Supp.2d 1029

METRO-GOLDWYN-MAYER STUDIOS, INC., et al. Plaintiffs, v. GROKSTER, LTD., et al., Defendants.

Jerry Lieber, et al., Plaintiffs, v. Consumer Empowerment BV a/k/a Fasttrack, et al., Defendants. And Related Counterclaims

No. CV 01-08541 SVW PJWX.

No. CV 01-09923 SVW PJWX.

United States District Court, C.D. California.

April 25, 2003.

Richard H Cooper, Thomas G Hentoff, Beth A Levene, David E Kendall, Robert J Shaughnessy, Nicholas J Boyle, Ana C Reyes, Kevin Hardy, Joseph Marshall Terry, Williams & Connolly, Washington, DC, Matthew J Oppenheim, Dean Garfield, Recording Industry Assoc of America, Washington, DC, Gregory Paul Goeckner, Motion Picture Association of American, Encino, CA, Jan B Norman, Mark D Litvack, Jan B Norman Law Offices, Encino, CA, Jan B Norman, Jan B Norman Law Offices, Los Angeles, CA, Robert M Schwartz, O'Melveny & Myers, Los Angeles, CA, Jessica Davidson Miller, O'Melveny & Myers, Washington, DC, Laura H Parsky, U.S. Department of Justice, Criminal Div, Washington, DC, Mark A Snyder, O'Melveny & Myers, Russell J Frackman, George M Borkowski, Mitchell Silberberg & Knupp, Los Angeles, Steven B Fabrizio, Mitchell Silberberg & Knupp, Washington, DC, for plaintiffs.

Michael H Page, Mark A Lemley, Stacey L Wexler, Keker & Van Nest, San Francisco, CA, Jennifer Stisa Granick, Stanford Law School, Crown Quadrangle, Stanford, CA, for Grokster Ltd., defendant.

Andrew P Bridges, Richard Nessary, Terri Yuh-Lin Chen, Jennifer A Golinveaux, Wilson Sonsini Goodrich & Rosati, Palo Alto, CA, Debra E Pole, Sidley Austin Brown & Wood, Los Angeles, CA, Joseph R Taylor, Jeffrey K Compton, Liner Yankelevitz Sunshine & Regenstreif, Los Angeles, CA, Charles S Baker, Munsch Hardt Kopf & Harr, Austin, TX, for Musiccity.com, Inc., Musiccity Networks Inc., defendants.

Kenneth B Wilson, Judith Bond Jennison, Kurt B Opsahl, Stefani E Shanberg, Perkins Coie, San Francisco, CA, for Consumer Empowerment BV, defendant.

ORDER GRANTING DEFENDANTS GROKSTER, LTD.'S AND STREAMCAST NETWORKS, INC.'S MOTIONS FOR SUMMARY JUDGMENT AND DENYING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT WITH RSPECT TO DEFENDANTS GROKSTER, LTD. AND STREAMCAST NETWORKS, INC.

WILSON, District Judge.

I. INTRODUCTION

Plaintiffs bring these actions for copyright infringement under 17 U.S.C. §§ 501, et seq. The Court has jurisdiction pursuant to 28 U.S.C. § 1331. Plaintiffs ¹ and Defendants StreamCast Networks, Inc. and Grokster, Ltd. ("Defendants") filed cross-motions for summary judgment with regard to contributory and vicarious infringement. Plaintiffs contend that Defendants' conduct renders them liable for copyright infringement committed by users of Defendants' software. Defendants argue, however, that they merely provide software to users over whom they have no control, and thus that no liability may accrue to them under copyright law.

Both parties believe that there are no disputed issues of fact material to Defendants' liability, and thus that there are no factual disputes requiring a trial. Instead, both sides maintain that the only question before the Court (as to liability) is a legal one: whether Defendants' materially undisputed conduct gives rise to copyright liability.

For the reasons stated herein, the Court GRANTS Defendants' Motions for Summary Judgment and DENIES Plaintiffs' Motion for Summary Judgment with respect to Defendants Grokster and Stream-Cast.

II. FACTUAL/PROCEDURAL BACKROUND

A. General Background

These cases arise from the free exchange of copyrighted music, movies and other digital media over the Internet. When the actions were originally filed, Defendants Grokster, Ltd. ("Grokster"), StreamCast Networks, Inc. (formerly known as MusicCity Networks, Inc.) ("StreamCast"), and Kazaa BV (formerly known as Consumer Empowerment BV) ("Kazaa BV"), distributed software that enabled users to exchange digital media via a peer-to-peer transfer network. In the Metro-Goldwyn-Mayer v. Grokster case, CV-01-8541, Plaintiffs are organizations in the motion picture and music recording industries, and bring this action against Defendants for copyright infringement, pursuant to 17 U.S.C. §§ 501, et seq. In the Lieber v. Consumer Empowerment case, CV-01-9923, Plaintiffs are professional songwriters and music publishers bringing a class action against the same Defendants for copyright infringement, although their Complaint lists separate causes of action for contributory infringement and vicarious infringement. The cases have been consolidated for discovery and pretrial purposes.

Each Defendant distributes free software, which users can download free of charge. Although Grokster, StreamCast and Kazaa BV independently branded, marketed and distributed their respective software, all three platforms initially were powered by the same FastTrack networking technology. The FastTrack technology was developed by Defendants Niklas Zennstrom and Janus Friis, who also launched Kazaa BV.² FastTrack was then licensed to Kazaa BV, Grokster and StreamCast for use in each company's filesharing software. As a result, users of these software platforms essentially were connected to the same peer-to-peer network and were able to exchange files seamlessly.

However, StreamCast no longer uses the FastTrack technology. Rather, StreamCast now employs the "open" (i.e., not proprietary) Gnutella technology, and distributes its own software—Morpheus— instead of a branded version of the Kazaa Media Desktop. Grokster, meanwhile, continues to distribute a branded version of the Kazaa Media Desktop, which operates on the same FastTrack technology as the Sharman/Kazaa software.

B. Operation of the StreamCast (Morpheus) and Grokster Software

Although novel in important respects, both the Grokster and Morpheus platforms operate in a manner conceptually analogous to the Napster system described at length by the district court in A & M Records, Inc. v. Napster, Inc., 114 F.Supp.2d 896 (N.D.Cal.2000).

In both cases, the software can be transferred to the user's computer, or "downloaded," from servers operated by Defendants. Once installed, a user may elect to "share" certain files located on the user's computer, including, for instance, music files, video files, software applications, ebooks and text files. When launched on the user's computer, the software automatically connects to a peer-to-peer network (FastTrack in Grokster's case; Gnutella in the case of Morpheus), and makes any shared files available for transfer to any other user currently connected to the same peer-to-peer network.

Both the Morpheus and Grokster software provide a range of means through which a user may search through the respective pool of shared files. For instance, a user can select to search only among audio files, and then enter a keyword, title, or artist search. Once a search commences, the software displays a list (or partial list) of users who are currently sharing files that match the search criteria, including data such as the estimated time required to transfer each file.

The user may then click on a specific listing to initiate a direct transfer from the source computer to the requesting user's computer. When the transfer is complete, the requesting user and source user have identical copies of the file, and the requesting user may also start sharing the file with others. Multiple transfers to other users ("uploads"), or from other users ("downloads"), may occur simultaneously to and from a single user's computer.

Both platforms include other incidental features, such as facilities for organizing, viewing and playing media files, and for communicating with other users.

C. Limitations of this Order

Because Plaintiffs principally seek prospective injunctive relief, the Court at this time considers only whether the current versions of Grokster's and StreamCast's products and services subject either party to liability. This Order does not reach the question whether either Defendant is liable for damages arising from past versions of their software, or from other past activities.

Additionally, it is important to reiterate that the instant motions concern only the software operated by Defendants Stream-Cast (the Morpheus software) and Grokster (the Grokster software). Defendant Sharman Networks, proprietor of the Kazaa.com website and Kazaa Media Desktop, is not a party to these Motions. Accordingly, the Court offers no opinion in this Order as to Sharman's potential liability.

III. SUMMARY JUDGMENT STANDARD

Rule 56(c) requires summary judgment for the moving party when the evidence, viewed in the light most favorable to the nonmoving party, shows that there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c); Tarin v. County of Los Angeles, 123 F.3d 1259, 1263 (9th Cir. 1997). The moving party bears the initial burden of establishing the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986).

That burden may be met by "`showing'—that is, pointing out to the district court—that there is an absence of evidence to support the nonmoving party's case." Id. at 325, 106 S.Ct. at 2554. Once the moving party has met its initial burden, Rule 56(e) requires the nonmoving party to go beyond the pleadings and identify specific facts that show a genuine issue for trial. See id. at 324, 106 S.Ct. at 2553; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986).

When deciding cross-motions for summary judgment, a district court retains the responsibility to examine the record to ensure that no disputed issues of fact exist, despite the parties' assurances to that effect. Fair Housing Council of Riverside County, Inc. v. Riverside Two, 249 F.3d 1132, 1136-37 (9th Cir.2001); see Chevron USA, Inc. v. Cayetano, 224 F.3d 1030, 1038 n. 6 (9th Cir.2000).

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