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The Supreme Court held 6/27/05 that one who distributes a device with the object of promoting its use to infringe copyrights, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties. Although the devices in question (peer-to-peer file sharing computer networking software) may have some lawful uses, the Court noted that the recipients of the software use them primarily to share copyrighted music and video files without authorization. The Court held that the distributors of the software may be held indirectly liable for their users’ copyright infringement under a theory of contributory or vicarious infringement, if the distributors took affirmative steps to encourage direct infringement (e.g., advertising an infringing use or instructing the users how to engage in an infringing use). The Court found ample evidence in this case that the distributors intended to and did profit from third-party acts of copyright infringement, and therefore, the distributors’ activities went beyond mere distribution of the software. The Court based its analysis on the fact that the distributors advertised their software as an alternative to Napster, they failed to develop filtering tools to diminish the infringing activity, and they made money by selling advertising space. This decision is important to businesses that own or control copyrighted motion pictures or sound recordings, or distribute devices that allow peer-to-peer file sharing computer networking software.

Decision Below: 380 F.3d 1154 (9th Cir. 2004)