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Grokster, Music Industry Settle

11/07/2005 03:17:00 PM Eastern

Washington — Grokster and the content industries reached an out-of-court settlement that would shut down the Grokster system, but leave answered the standards by which peer-to-peer (P2P) file-sharing companies could be found to be inducing copyright infringement.

The settlement includes a permanent injunction to prohibit Grokster from infringing on the plaintiffs’ copyrighted works, prohibit the distribution of the Grokster application, and permanently turn off the Grokster system and software. The settlement, which goes to a U.S. District Court in California for approval, included the nation’s major record companies, motion picture studios and music publishers, all of whom called it a victory.

In settling the three-year-old suit, Grokster and the music industry avoided a decision by the judicial system on what constitutes the inducement of copyright infringement. Earlier this year, the Supreme Court ruled 9-0 that P2P file-sharing services could be sued and shut down if they intentionally induce copyright infringement, but the Court left it up to the lower court to determine whether file-sharing networks Grokster and StreamCast Networks intentionally encouraged infringement.

The Supreme Court also failed to define the standards by which companies could be found to be inducing copyright infringement, according to the P2P services, the Consumer Electronics Association and the Computer and Communications Industry Association. The ruling’s lack of direction, they contended, will cause technology developers to think twice about pursuing innovative technologies for fear of lawsuits by deep-pocket movie and music companies.

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