forward through commercials, which Judge Posner found to be the creation of infringing
derivative works.^2136 However, he concluded that the court need not reach the issue because
Aimster’s “ostrich-like refusal” to eliminate the encryption feature in its system and “discover
the extent to which its system was being used to infringe copyright” made it a contributory
infringer, and that was a sufficient basis to affirm the grant of the preliminary injunction without
reaching the vicarious liability issue.^2137
(f) The StreamCast/Kazaa/Grokster LawsuitsThe facts of the case of StreamCast/Kazaa/Grokster lawsuits are set forth in Section
III.C.2(c)(4) above. In that case, the court granted summary judgment to the defendants
StreamCast and Grokster on the plaintiff’s claim for vicarious liability. With respect to the
financial benefit prong, the court ruled that both defendants derived a financial benefit from the
infringing conduct of the users of their software, since the ability to trade copyrighted songs and
other copyrighted works acted as a “draw” for many users of the software. The defendants also
derived substantial revenue from advertising displayed through the software.^2138
With respect to the control prong, the court distinguished the Napster system, in which
centralized search indices and mandatory registration system gave Napster both knowledge of
what was being exchanged and the ability to police those exchanges. By contrast, the court
found no evidence before it that the defendants had the ability to supervise and control the
infringing conduct, all of which occurred after the product had passed to end-users.^2139
The plaintiffs argued that the defendants’ software could have been altered to prevent
users from sharing copyrighted files and the court should require such alterations, as the Ninth
Circuit required Napster to do. The plaintiffs noted that the defendants’ software already
included optional screens for pornographic/obscene file names and that it could just as easily
screen out copyrighted song titles. The plaintiffs also argued that an effective “meta data” screen
could be implemented, as well as emerging “digital fingerprinting” technology.^2140 In a
significant holding, the court rejected these arguments, stating that “whether these safeguards are
practicable is immaterial to this analysis, as the obligation to ‘police’ arises only where a
defendant has the ‘right and ability’ to supervise the infringing conduct.”^2141 Unlike Napster,
whose client software was an essential component of the integrated Napster system, the
defendants provided software that communicated across networks entirely outside defendants’
control.^2142 “The doctrine of vicarious infringement does not contemplate liability based upon
the fact that a product could be made such that it is less susceptible to unlawful use, where no
(^2136) Id. at 647, 654.
(^2137) Id. at 654-55.
(^2138) Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 259 F. Supp. 2d 1029, 1043-44 (C.D. Cal. 2003).
(^2139) Id. at 1044-45.
(^2140) Id. at 1045.
(^2141) Id. (emphasis in original).
(^2142) Id.