A European perspective on the peer-to-peer model post-grokster : How far is european law harmonised and what triggers a filesharing company's liability in european common law jurisdictions?

The recent decision of the US Supreme Court in MGM Studios Inc v. Grokster Limited (US Supreme Court, 27 June 2005, CRI 2005, 109-115 with remarks by Wittow) has drawn a curtain on the long-running litigation between music studios and distributors of file-sharing software. The decision has been well received by most concerned parties, as it seems to strike a reasonable balance between the interests of bona fide software innovators and music copyright owners. In essence, the Supreme Court has affirmed with qualification its earlier ruling in the Betamax case (Sony Corporation of America v. Universal City Studios Inc 464 US 417 - a case concerning the liability of VCR manufacturers for the infringing activities of home-users), where it held that makers of devices that are capable of commercially significant non-infringing uses are not liable for the infringing acts of third parties who use those devices. Under the Grokster ruling this exemption from liability is lifted where it can be shown that a person distributed devices (including software) with the object of promoting their use to infringe copyright, as evidenced through clear expression or other positive acts. In such circumstances the promoter of the device will be liable for the resulting infringing acts of third parties. The Grokster ruling has introduced what has been termed a new inducement theory of contributory copyright infringement: distributors of devices, which have a non-infringing use, will be liable for copyright infringement if they positively promote the device on the basis of its infringing uses. While this decision provides a welcome clarification of the position under US law with respect to the liability of file-sharing software companies, the position in Europe remains uncertain. From an industry perspective, the main difficulty in assessing the liability of individual file-sharers and file-sharing companies is the fact that at present there is not a fully harmonised and unified copyright law in Europe. The entitlements of copyright owners remain creatures of national law and accordingly must be individually enforced in each of the 25 Member States of the European Union. Over the past 15 years some degree of harmonisation of Member State copyright law has been achieved, however, significant aspects of copyright law, including the concept of infringement, remain unharmonised. This article aims to summarise and explain the liability of file-sharers under European law (to the extent that such law is harmonised) and will focus in particular on the potential liability of file-sharing companies under the EU's two common law jurisdictions - Ireland and the UK.