very little cost, marks the beginning of the digital age for many of the content industries. The emergence of peer-to-peer and related decentralized content storage and distribution technologies disrupted the traditional functioning of many content industry business platforms. These technologies have afforded Internet users a growing number of sources of content outside of the authorized distribution channels. Although copyright’s protections provided a theoretical means for enforcing rights to copy and distribute protected works, various features of the Internet—such as the relative anonymity of file sharers—have made copyright enforcement against end users difficult in many contexts.
As a result, copyright owners have sought to prevent infringing distribution higher up the distribution chain. This has brought into play the online service provider safe harbors that Congress introduced into copyright law in the Digital Millennium Copyright Act of 1998. Subject to several exceptions and limitations, the DMCA afforded copyright owners rights against those who circumvent copy protection technologies but insulated online service providers from liability for infringing acts of their subscribers.
The Supreme Court had already begun to address the issue of indirect or secondary liability—that is, the standards by which defendants can be held liable for infringing behavior by other people such as employees, tenants, or customers which were not clearly defined in the 1976 Copyright Act. In Sony v. Universal City Studios, 464 U.S. 417 (1984), the Court considered whether Sony should be held liable for manufacturing and marketing video tape recorders for home use. The Supreme Court held that “the sale of copying equipment, like the sale of other articles of commerce, does not constitute contributory infringement if the product is widely used for legitimate, unobjectionable purposes. Indeed, it need merely be capable of substantial noninfringing uses.” The Court concluded that Sony’s Betamax device was “capable of substantial noninfringing uses,” including “time-shifting” of broadcast television programs for private home use, which the Court held to be noninfringing fair use.
The Sony decision represented an early attempt to grapple with the balance to be struck between protecting copyrights and technological innovation. The Court explained that the law should “strike a balance between a copyright holder’s legitimate demand for effective—not merely symbolic—protection of the statutory monopoly, and the rights of others freely to engage in substantially unrelated areas of commerce.”
The Supreme Court revisited this balance again in its 2005 opinion in MGM v. Grokster, 545 U.S. 913 (2005), where it considered whether the operators of file-sharing networks could be held indirectly liable for infringing distribution of copyrighted works by users of their services. Notwithstanding the potential noninfringing uses of such services, the