## Facts

- Metro-Goldwyn-Mayer Studios and other copyright owners sued Grokster and StreamCast, which distributed free peer-to-peer (P2P) file-sharing software.
- The software enabled users’ computers to communicate directly and share digital files without routing transfers through a central server.
- Evidence showed widespread unauthorized sharing of copyrighted music and video files via these networks; plaintiffs presented evidence that most shared files were copyrighted.
- Respondents monetized their software through advertising, with revenue increasing as the user base and traffic increased.
- After litigation against Napster, respondents marketed their services as alternatives for former Napster users and used Napster-related references to attract users.
- Respondents were aware of infringing uses (including user communications referencing copyrighted content) and at times provided guidance.
- Respondents made no meaningful effort to filter copyrighted works or otherwise reduce infringing activity.

## Issues

1. Under what circumstances may a distributor of a product capable of lawful and unlawful uses be held secondarily liable for users’ copyright infringement?
2. Whether evidence of a distributor’s promotional conduct and intent can support liability even when the product is capable of substantial noninfringing uses under *Sony*.

## Decision

- The Supreme Court unanimously vacated the Ninth Circuit’s judgment and remanded.
- The Court held that a distributor that markets or distributes a device with the object of promoting its use to infringe copyright, shown by clear expression or other affirmative steps to foster infringement, may be liable for resulting third-party infringement.
- The Court concluded that plaintiffs presented sufficient evidence of intentional inducement to defeat summary judgment for respondents.
- The Court rejected a reading of *Sony* that would categorically bar liability for distributors of products capable of substantial noninfringing uses where there is proof of purposeful encouragement of infringement.

## Legal Principles

- Secondary liability may attach where a defendant intentionally induces infringement, even if the product is capable of substantial noninfringing uses.
- Inducement requires an object to promote infringement, proven by clear expression or affirmative conduct aimed at fostering infringing use.
- *Sony* limits inferring intent solely from a product’s design or general capacity for infringing use, but does not immunize defendants who actively encourage infringement.
- Mere knowledge of infringing potential or actual infringement, without purposeful encouragement, is insufficient for inducement; ordinary distribution-related conduct (e.g., routine support) is not enough absent evidence of an unlawful objective.

## Conclusion

The Court established an inducement-based theory of secondary copyright liability, holding that distributors who intentionally promote infringing uses through affirmative steps can be liable for users’ infringement despite the product’s lawful capabilities, and it remanded for further proceedings under that standard.


Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913 (2005)