After the entertainment industry partially won its Supreme Court decision against Grokster, it didn't take long at all for the RIAA to start claiming the ruling said stuff it didn't. Specifically, the Supreme Court ruling said that a site could be found liable if it induced infringement by encouraging such uses. This was already quite surprising to many because the idea of an "inducement" standard for copyright is not found in the law (in fact, some in Congress had introduced an "INDUCE Act" to try to put it into the law -- suggesting that even Congress didn't think copyright law includes an inducement standard). However, the RIAA falsely started claiming that the Supreme Court ruling made all sorts of file sharing apps -- even those that did not encourage unauthorized copying -- guilty of infringing copyrights.

So, it should come as little surprise that the RIAA's international wing, the IFPI, appears to be doing the exact same thing with the recent Pirate Bay ruling (which, of course, is still being appealed and is highly disputed due to conflicts of interest with the judge in the case). The IFPI is apparently going around to web hosting firms who host other torrent trackers, and claiming that The Pirate Bay ruling makes them potentially criminally liable if they don't take down the tracker sites. But, of course, The Pirate Bay ruling was specific to the facts in that case, which are somewhat different from a random web host hosting a website for someone. Still, it just goes to show the lengths that the industry will go to in order to twist any legal ruling to try to shut down sites it doesn't like.

We've talked in the past about the importance of various "safe harbor" rules that help maintain that liability for any sort of lawbreaking is actually placed on the lawbreaker, rather than any tool provider/middleman used to break the law. In an ideal world, we wouldn't need such safe harbors, because it should be obvious: the person who breaks the law is guilty, while the person who makes tools that are used to break the law is not guilty. That's just common sense... but apparently not common enough. We were already quite troubled by the Supreme Court's surprising and disturbing decision to create a new "inducement" standard that chips away at the DMCA's safe harbors, but no such "inducement" standard has been applied to Section 230's safe harbors, which protects service providers from most non-copyright law-breaking by users.

Until now, that is.

Eric Goldman points out that in a recent ruling in a lawsuit between the New England Patriots and Stubhub, it appears that a court has suddenly come up with an "inducement" standard for section 230 as well, despite most other court rulings (with one major exception) giving pretty broad protections to any service provider. In this case, which we've discussed before, the New England Patriots were furious that season ticket holders might resell some of their tickets on StubHub, and even had a court force StubHub to hand over the names of its users (despite this being a massive privacy violation that also violates StubHub's own terms of service). While an earlier ruling indicated StubHub was protected by the section 230 safe harbors, this latest ruling says it's not, in part because StubHub knows about, helps and profits from ticket scalping on the site.

This is troubling for a variety of reasons. It still involves putting liability on a party who doesn't actually break the law. Furthermore, when using a standard that involves looking at whether or not the company profits from the law breaking, you effectively kill all safe harbors. Any commercial service provider, almost by default, will profit in some way from the law breaking, but that shouldn't make them liable for it. Also, as we've see quite clearly with the inducement standard encroaching on DMCA safe harbors, those on the other side of lawsuits will continue to try to stretch and twist the contours of what counts as "inducement." If this stands, it will create massive potential liabilities for online service providers, and there will be lots of expensive lawsuits. The end result will be a greatly chilled market for innovation.

The MPAA has been aggressively suing websites that merely link to infringing content claiming that linking is "inducement" to infringe -- which appears to be an attempt to stretch the Supreme Court's Grokster decision beyond its intended meaning. However, when staring down the barrel of a big Hollywood Studio lawsuit, it's no surprise that some sites cave. The MPAA has happily announced that two more such lawsuits have been settled. These are actually consent judgments, meaning both sides agreement to the judgment, but also likely worked out a separate settlement. That way the MPAA gets to claim huge fines found in the judgment, but which the real settlement was probably much less.

Many people think that the Grokster lawsuit ended with the Supreme Court ruling over two years ago. However, that's not the case. The Supreme Court was simply ruling on an aspect of the case (whether software providers were liable for what their users for doing) and then sent the case back to the lower court to then review its original decision. Grokster, whose name the case is most identified with, shut down, but Streamcast was also involved in the case and it decided to fight on, claiming that it did not "induce" infringement, and therefore was not guilty of copyright infringement. Unfortunately, the judge wasn't convinced and still found the company guilty. Since then, there's been an ongoing process of determining just what the punishment should be. The judge clearly hoped that Streamcast would make life easy by settling, but the company is nothing if not persistent in standing by its various lawsuits. Ed Felten points out that the judge is now trying to carefully weigh the punishment options for Streamcast, which seems rather odd, because it's pretty clear that no matter what the punishment, Streamcast is done. There's basically no way for the company to stay in business after losing this case, so Felten can't figure out why the company would keep fighting this -- though, the longer it stays alive, the more chances the RIAA has to claim yet another victory over the company.