Like many in the industry, I awaited the Supreme Court�s ruling in the MGM v. Grokster case with great interest, but also some degree of ambivalence about the right outcome. Anyone who has worked for a software company knows the importance of protection of copyright, and the stifling effect that piracy can have on the incentives for innovation. By the same token, this case sets (and potentially breaks) some significant precedents. Now, more than ever, the providers of devices and services bear responsibilities for the actions of their users and customers. The spectre of mutli-year and multi-million dollar legal suits arising against companies for the actions of a few of their customers could itself stifle innovation, especially in such still-evolving areas as P2P computing and digital media.
For those of you not familiar with the case, entertainment giants such as MGM, Disney, and Time Warner asked the Supreme Court to reverse lower court rulings that held that peer�to-peer file sharing companies such as Grokster and StreamCast Networks aren't responsible when their users illegally download music and other copyrighted content. The lower court ruling was based substantially on the 1984 Betamax Case, which provided a safe-harbor for companies who distribute devices (such as a VCR), that might be used by some individuals to infringe copyrights, if the device had substantial non-infringing uses as well.
The importance of the case was evidenced by the volume of friend of the court briefs filed. Briefs in favor of the studies were filed by from Americans for Tax Reform, Major League Baseball, and the Justice Department, to the Christian Coalition, the Eagles, and Cheryl Crow. Briefs in favor of Grokster were filed by the ACLU, Chuck D, Kazaa, the Consumer Electronics Association, and the Computer and Communications Industry Association.
The Supreme Court has ruled unanimously: Internet file-sharing services may be sued if they encourage customers to swap songs and movies illegally. In the text of his opinion, Justice Souter established that lower courts could find file-sharing services responsible by examining factors such as whether the companies marketed the product to deliberately highlight its use for infringing purposes or whether they took easily available steps to reduce infringing uses. In essence, the safe harbor of �substantial non-infringing uses� appears to still be there, but companies can find themselves ailing out of that harbor if through �purposeful, culpable expression and conduct� they encourage the use of their products or services for illegal purposes.
What does this mean for Plaxo? On surface, probably not much. The content that people share using Plaxo is their own contact information. However, like any service with over 5 million users, there are no doubt at least a few people who are busily thinking of ways to leverage the service for less than legitimate ends. Our responsibilities from a legal standpoint seem to be consistent with our company values: create a service that provides a wide variety of legitimate uses, market and educate to our users about the proper uses (e.g. Plaxo Etiquette), and take reasonable steps to prevent abuse.
As for the implications to the industry as a whole...I�m sure that we�ll be hearing a lot more from the various sides on the impact this will have. Depending on who you believe, this ruling will either cause the premature death of untold numbers of innovative, products and services or �power[s] the digital future�lay[ing] the groundwork for the dawn of a new day � an opportunity that will bring the entertainment and technology communities even closer together.� The truth probably lies somewhere in-between. Nine justices can�t all be wrong, can they?