password of a particular user from one’s user list, or to the failure to make modifications to
software on one’s own computer.”^1872
The court also found that the defendants had not materially contributed to the
infringement in any other manner. StreamCast maintained an XML file from which user
software periodically retrieves parameters, including the addresses of web sites where lists of
active users were maintained. The owner of the FastTrack software, Sharman, maintained root
nodes containing lists of currently active supernodes to which users could connect. Both
defendants also communicated with users incidentally, but not to facilitate infringement. The
court found all of these activities too incidental to any direct copyright infringement to constitute
material contribution. Accordingly, the defendants were not liable for contributory
infringement.^1873
On appeal, the Supreme Court vacated the Ninth Circuit’s decision, rejecting much of its
analysis, and remanded the case for further proceedings. The Supreme Court’s decision is
analyzed in detail in the next subsection below. In November of 2005, in view of the Supreme
Court’s decision, Grokster agreed to shut down its operations entirely to settle the lawsuits
against it. The settlement bans Grokster from participating directly or indirectly in the theft of
copyrighted files and requires the company to stop giving away its software. Grokster’s web site
was changed to display a message that said, “There are legal services for downloading music and
movies. This service is not one of them.”^1874
Subsequent to the Supreme Court’s decision, Grokster settled with the plaintiffs for $50
million and a permanent injunction,^1875 and Sharman Networks settled with the plaintiffs for
$115 million and agreed to launch a “legitimate” service.^1876
International Lawsuits Against the Kazaa Service. Lawsuits were also filed in the
Netherlands against the operator of the Kazaa service. On Nov. 29, 2001, an Amsterdam court
ordered the service to block customers from trading illegal files by Dec. 13, 2001 or face fines of
$45,000 per day.^1877 On Jan. 17, 2002, Kazaa suspended downloads of the FastTrack software
(^1872) Id. at 1163-64.
(^1873) Id. at 1164. The court noted that the copyright owners had also sought relief based on previous versions of the
defendants’ software, which contained significant, and perhaps crucial, differences from the software at issue on
appeal. The Ninth Circuit noted that it was expressing no opinion as to those issues. Id. at 1166.
(^1874) Ted Bridis, “Grokster Downloading Service Shuts Down” (Nov. 7, 2005), available as of Nov. 7, 2005 at
http://news.tmcnet.com/news/2005/nov/1201939.htm.
(^1875) “Grokster Settles, Streamcast Fights” (Nov. 8, 2005), available as of July 27, 2006 at
http://www.marketingvox.com/archives/2005/11/08/grokster_settles_streamcast_fights/.
(^1876) “Kazaa to Settle File-Share Lawsuits” (July 28, 2006), available as of July 28, 2006 at
http://www.mercurynews.com/mld/mercurynews/business/technology/15143252.htm. Kazaa also subsequently
settled with the music publishers. “Music Publishers Say Kazaa Deal Reached” (Oct. 31, 2006), available as of
Nov. 1, 2006 at http://www.washingtonpost.com/wp-dyn/content/article/2006/10/31/AR2006103100953.htm.
(^1877) Jasper Koning, “Kazaa Plays On Despite Threat of Fines” (Dec. 20, 2001), available as of Jan. 6, 2002 at
http://news.cnet.com/news/0-1005-200-8245314.html.