Permanent injunction issues in MGM v. Grokster, Pt. 1

Over two years after the Supreme Court's decision in MGM v. Grokster, the trial court has issued its ruling on remand concerning whether and what type of permanent injunction should issue against Streamcast, the lone remaining defendant/manufacturer of the P2P file-sharing software at issue. (Grokster previously settled out of the case).

The order is quite lengthy -- 83 pages -- and contains a wealth of analysis.  Of particular interest is the court's analysis of whether or not there should be a presumption of "irreparable harm" in favor of an injunction.  Traditionally, many courts had presumed when intellectual property rights were involved that such presumptions were proper in order to preserve the IP owner's exclusive right to control their copyrighted or patented material.  However, after the Supreme Court's recent eBay v. MercExchange decision, courts have been questioning this presumption, asserting that IP case are like any other civil case and IP owners should not receive special favors toward meeting their burden of proof.

However, despite finding there is no presumption, the court goes on to find irreparable harm to copyright owners from the P2P software provider for two reasons:

1. Streamcast's inability to pay statutory damages for all the files it induced infringement of, and
2. The ongoing viral nature of infringements empowered by the P2P architecture that Streamcast helped to create.

On this second point, the court emphatically states that StreamCast is responsible for irreparably harming copyright owners because Morpheus end-users "obtain 'perfect copies' of Plaintiffs' work that can be inexpensively reproduced and distributed ad nauseam."

It also found that StreamCast's inducement has "eviscerated Plaintiffs' ability to protect and enforce their statutorily-created property rights" because "Plaintiffs' power to control their rights has been so compromised by the means through which StreamCast encouraged end-users to infringe (digital files plus the internet) that the inducement amounts to irreparable harm."

So, if one follows this logic, a viral distribution system on the internet could well lead to a presumption of irreparable harm for any infringements it induces.  Given that the power of the Internet is based on such dynamics and efficiencies, this could be a dangerous rule for future distribution technologies.

[More on the filtering discussion later]