Legal Aspects of File Sharing - Statute and Case Law By Jurisdiction - United States

United States

In Sony Corp. v. Universal Studios, 464 U.S. 417 (1984), the Supreme Court found that Sony's new product, the Betamax (the first mass-market consumer videocassette recorder), did not subject Sony to secondary copyright liability because it was capable of substantial non-infringing uses. Decades later, this case became the jumping-off point for all peer-to-peer copyright infringement litigation.

The first peer-to-peer case was A&M Records v. Napster, 239 F.3d 1004 (9th Cir. 2001). Here, the 9th Circuit considered whether Napster was liable as a secondary infringer. First, the court considered whether Napster was contributorily liable for copyright infringement. To be found contributorily liable, Napster must have engaged in "personal conduct that encourages or assists the infringement." The court found that Napster was contributorily liable for the copyright infringement of its end-users because it "knowingly encourages and assists the infringement of plaintiffs' copyrights." The court analyzed whether Napster was vicariously liable for copyright infringement. The standard applied by the court was whether Napster "has the right and ability to supervise the infringing activity and also has a direct financial interest in such activities." The court found that Napster did receive a financial benefit, and had the right and ability to supervise the activity, meaning that the plaintiffs demonstrated a likelihood of success on the merits of their claim of vicarious infringement. The court denied all of Napster's defenses, including its claim of fair use.

The next major peer-to-peer case was MGM v. Grokster, 545 U.S. 913 (2005). In this case, the Supreme Court found that even if Grokster was capable of substantial non-infringing uses, which the Sony court found was enough to relieve one of secondary copyright liability, Grokster was still secondarily liable because it induced its users to infringe.

It is important to note the concept of blame in cases such as these. In a pure P2P network there is no host, but in practice most P2P networks are a hybrid (see "Computer science perspective" below). This has led groups such as the RIAA to file suit against individual users, rather than against companies. The reason that Napster was subject to violation of the law and ultimately lost in court was because Napster was not a pure P2P network but instead maintained a central server which maintained an index of the files currently available on the network.

Around the world in 2006, an estimated five billion songs, equating to approximately 38,000 years in music were swapped on peer-to-peer websites, while 509 million songs were purchased online. The same study which estimated these findings also found that artists that had an online presence ended up retaining more of the profits rather than the music companies

In November 2009, the U.S. House of Representatives introduced the Secure Federal File Sharing Act, which would, if enacted, prohibit the use of peer-to-peer file-sharing software by U.S. government employees and contractors on computers used for federal government work. The bill has died with the adjournment of 111th Congress.