pending a further decision from the Dutch court.^1878 In late Jan. 2002, Kazaa BV sold its
Kazaa.com web site to an Australian firm, Sharman Networks Limited, which then resumed
operation of the file-swapping service.^1879 In December of 2003, the Dutch Supreme Court
affirmed a ruling of the Court of Appeals in Amsterdam that reversed the ruling of the lower
court, finding that Kazaa could not be liable for the copyright infringements committed by users
of its software because the Kazaa service did not require centralized servers, as did the Napster
service, and the software was capable of sharing many types of files other than audio files and
was in fact being used for noninfringing uses.^1880 In December of 2005, Sharman Networks cut
off Australians’ access to the web site from which the Kazaa file swapping software could be
downloaded in order to comply with orders from Australia’s Federal Court. Sharman Networks
also warned existing Australian users that use of the software was not permitted in Australia,
pending an appeal.^1881
(5) The Supreme Court’s Grokster DecisionIn one of the most significant copyright decisions since the Sony case, the Supreme Court
vacated the Ninth Circuit’s ruling in the Grokster case and remanded it for further proceedings.
In its decision, taking inspiration again from the patent law, as it had in the Sony case, the
Supreme Court introduced inducement liability for the first time into U.S. copyright law. The
Court largely sidestepped, however, the opportunity to clarify a number of open questions about
the scope of contributory liability and the Sony defense, with respect to many of which the Ninth
Circuit and the Seventh Circuit had issued conflicting rulings in the Grokster and Aimster cases,
respectively.
Open Issues Going Into the Appeal. In order to best understand the scope of the Supreme
Court’s decision – both what it decided and the issues it left open – it is useful to begin by noting
the issues of secondary liability with respect to which the Ninth Circuit (in its Napster and
Grokster decisions) and the Seventh Circuit (in its Aimster decision) had issued contrary rulings
before the appeal to the Supreme Court. From the analyses of these cases in earlier sections^1882 it
is apparent that the two Circuits differed in their interpretation of Sony on at least the following
dimensions:
- What types of secondary liability the Sony defense applies to: contributory liability only
(Ninth Circuit) versus both contributory and vicarious liability (Seventh Circuit).
(^1878) Brad King, “Kazaa Halts Download Distribution” (Jan. 18, 2002), available as of Jan. 18, 2002 at
http://www.wired.com/news/mp3/0,1285,49831,00.html.
(^1879) Associated Press, “Kazaa Still Up Despite Orders” (Jan. 31, 2002), available as of Feb. 10, 2002 at
http://www.wired.com/news/mp3/0,1285,50165,00.html.
(^1880) “Kazaa Software Does Not Violate Dutch Copyright Law, High Court Rules,” BNA’s Electronic Commerce &
Law Report (Jan. 7, 2004) at 11.
(^1881) Ian Ferguson, “Sharman Cuts Off Kazaa Downloads in Australia” (Dec. 5, 2005), available as of Dec. 6, 2005
at http://www.news.com.com/2100-1027_3-5983455.html.
(^1882) See Sections III.C.2(c)(1) & (4) (Napster and Grokster, respectively) and III.C.2(c)(4) (Aimster).