tools underscored the defendants’ intentional facilitation of their users’ infringement.^1910
Moreover, the record established that the defendants had responded to questions from their users
about how to play infringing movies they had downloaded.^1911
Gains Proportional to Infringing Activity. Third, StreamCast’s and Grokster’s monetary
gains were proportional to the volume of infringement by their users. Because both companies
made money by selling advertising space directed to the screens of users, the more their software
was used, the more ads that would be sent out and the greater their advertising revenues. The
companies therefore had incentive to encourage high volume use, which the record showed was
infringing.^1912 Again, the Court noted that “[t]his evidence alone would not justify an inference
of unlawful intent, but viewed in the context of the entire record its import is clear.”^1913
Summary of Significant Aspects of the Court’s Ruling. Based on the preceding analysis,
the following key aspects of the majority opinion can be summarized:
- A defendant can be liable for inducing copyright infringement where the defendant takes
acts or other affirmative steps with the subjective intent to promote infringement. The
Court has, however, established a high standard of proof for demonstrating the required
subjective intent to induce infringement, for its opinion uses language requiring “clear
expression or other affirmative steps taken to foster infringement,”^1914 “purposeful,
culpable expression and conduct,”^1915 and “a patently illegal objective.”^1916 The purpose
of this high standard is so as not to “compromise legitimate commerce or discourage
innovation having a lawful purpose.”^1917 - Inducement liability cannot be based on the mere “characteristics” of a product, including
its functional capability for use for infringing purposes, or on the mere “knowledge that it
may be put to infringing uses.”^1918 Instead, for inducement liability, “statements or
actions directed to promoting infringement” through use of the technology are
required.^1919 Thus, the Court’s rule for inducement liability focuses on subjective
purpose of the defendant rather than the technology itself. Two vendors of the same
(^1910) Id. at 393.
(^1911) Id. at 923.
(^1912) Id. at 940.
(^1913) Id. Thus, “the business models employed by Grokster and StreamCast confirm that their principal object was
use of their software to download copyrighted works.” Id. at 926.
(^1914) Id. at 937.
(^1915) Id.
(^1916) Id. at 941.
(^1917) Id. at 937.
(^1918) Id. at 935.
(^1919) Id.