The Supreme Court has addressed the problem of second party liability in a series of cases that go back to the 1980’s with Sony. In that case, the Supreme Court addressed the question of whether a neutral technology such as the VCR, with substantial non-infringing uses, could survive a copyright infringement lawsuit, and by extension, whether the manufacturer of that technology could be liable for the infringement of its end users. The Court held by a narrow margin that the VCR, because it could be used to record non-copyrighted materials or could be used for time shifting of copyrighted materials for later viewing, was covered under the doctrine of fair use.
In the late 1990’s, technology had advanced with the sharing of mp3 music files on such popular file sharing programs as Napster, Gnutella, LimeWire, and Grokster. Each of these variations on the mp3 file sharing technologies got its day in court, and all were held to be infringers who were not exempted by section 107’s fair use safe harbor. Why the change? Sony in the 1980’s was not marketing expressly to infringe on the copyrights of others. In addition, the parties representing the copyright holders were a smaller group of the overall parties with a copyright interest in the Sony case. However, by the time that Napster came to court, the Recording Industry Association of America (RIAA) represented most of the interested copyright holders as plaintiff, and evidence of illegal file sharing was quite clear from the statistical analysis and data collected from the defendant applications by the plaintiffs.
Justice Suter, writing for the Court in Grokster summed it up as there could just be no way that a court could find for the defendants, given the enormity of the evident theft of copyrighted materials via the Grokster service. Further, the defendant specifically marketed itself as a way to continue to infringe otherwise valid copyrights once Napster’s service was shut down by court order.