Curtain falls on Grokster

The move followed a legal fight with the entertainment industry

Peer-to-peer (P2P) software vendor Grokster Ltd. has closed down as part of a settlement in a 3-year-old lawsuit brought against it by the U.S. entertainment industry.

Grokster has stopped operations and agreed to a permanent injunction against directly or indirectly contributing to copyright infringement, the Recording Industry Association of America (RIAA) and the Motion Picture Association of America (MPAA) announced today.

The settlement follows a decision by the U.S. Supreme Court in June that allowed the entertainment industry to sue Grokster and a sister P2P distributor for copyright infringements committed by their users (see "Supreme Court: File-trading networks can be held liable"). The Supreme Court sent the case back to a lower court for further action. Courts in South Korea, Australia and Taiwan also ruled against P2P distributors this year.

The Grokster.com Web site today was stripped of links to Grokster P2P software. In place of download links was this statement: "Copying copyrighted motion picture and music files using unauthorized peer-to-peer services is illegal and is prosecuted by copyright owners. There are legal services for downloading music and movies. This service is not one of them."

Grokster said, however, that it soon plans to offer a "safe and legal" service called Grokster3G soon.

Representatives of the RIAA and MPAA praised the settlement, which must be approved in court. "This settlement brings to a close an incredibly significant chapter in the story of digital music," Mitch Bainwol, the RIAA's chairman and CEO, said in a statement. "This is a chapter that ends on a high note for the recording industry, the tech community and music fans and consumers everywhere."

The settlement helps music companies invest in new music, he said. "An online marketplace populated by legitimate services allows us to do just that."

The RIAA noted a number of legal music download services, such as iTunes, Napster Inc. and Yahoo Music, are available, and a handful of legal P2P services, such as PassAlong and Wurld Music, are also cropping up. Legal movie downloads are available at a handful of sites, including Ruckus Network and CinemaNow Inc., the MPAA said.

Those who supported Grokster in the Supreme Court argued that the MGM vs. Grokster case had broader implications, saying that if copyright owners were able to sue inventors of new technologies for the sins of their users, few technology companies would be safe.

The case centered around the Supreme Court's 1984 Sony Betamax ruling, in which judges rejected claims of a movie studio brought against Sony Corp., maker of the Betamax VCR. The court ruled against Universal City Studios, saying that makers of technologies with significant uses other than infringing copyrights were not liable for their users' copyright violations.

The entertainment industry had lost its previous attempts to sue Grokster. The 9th U.S. Circuit Court of Appeals, citing the 1984 Betamax decision, ruled in August 2004 that the P2P vendors weren't liable for their users' copyright violations.

In a unanimous decision, the Supreme Court left the landmark Sony decision untouched, but found that Grokster and another P2P distributor were at fault for promoting copyright infringement among users of their products. The Sony decision doesn't provide shelter for promoters of copyright infringement, the Supreme Court found.

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