Inducement rule

The inducement rule is a test a United States court can use to determine whether liability for copyright infringement committed by third parties could be assigned to the distributor of the device used to commit infringement.

ummary of the rule

Originating from patent law, the inducement rule test was articulated in Justice Souter’s majority opinion in "MGM Studios, Inc. v. Grokster, Ltd." [ Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. (2005)] , a significant 2005 copyright and peer-to-peer file-sharing Supreme Court case.

The inducement rule holds that "one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties." ["Id." at 19.] Justice Souter elaborated on the details of the test by illustrating its application to "Grokster". He noted that liability could not be assigned through "mere knowledge of infringing potential or of actual infringing uses"; further, actions incident to the distribution of the product such as technical support would not "support liability in themselves." Instead, "the inducement rule ... premises liability on purposeful, culpable expression and conduct." ["Id." at 19-20.] In the case of Grokster, the Court found such "purposeful, culpable expression and conduct" by noting that the two file-sharing software companies actively sought former Napster users and attempted to establish themselves as the alternative to Napster once it became clear that it would cease to exist through judicial action; the companies further refused to build filtering mechanisms into its software to reduce the infringing use of it by their users [It should be noted, however, that several parties with no interest to the outcome of the case have submitted amicus briefs to support the companies’ position that creating such filters would be highly difficult, impractical, and non-effective.] ; finally, the Court had found a correlation between the infringing use of the software and the companies’ profit.

Criticism

Since the decision was released, several intellectual property scholars, including Lawrence Lessig [ Robert Hof, "Ten Years of Chilled Innovation", BusinessWeek Online, "at" http://www.businessweek.com/technology/content/jun2005/tc20050629_2928_tc057.htm] and Fred von Lohmann ["The Supreme Court: The File Sharers," NY Times, June 28, 2005, Section C, Column 2.] charged that the inducement rule has created a great deal of uncertainty around technological innovation, and suggested that this uncertainty will create a "chilling effect" on future technological development.

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