The 9th Circuit Court of Appeals has ruled, and found that Grokster is not liable for copyright infringement of its users. You can read the decision here in PDF. The basics of the decision were roughly that Grokster did demonstrate that there was a substantial, non-infringing use for their software and that they had no timely knowledge of any uses of their software to infringe at a time when they could prevent such infringement from occurring.
The opinion of the court also spoke directly to the wisdom of new legislation such as Orin Hatch’s INDUCE act:
As to the issue at hand, the district court’s grant of partial summary judgment … is clearly dictated by applicable precedent. The Copyright Owners urge a re-examination of the law in light of what they believe to be proper public policy, expanding exponentially the reach of the doctrines of contributory and vicarious copyright infringement. Not only would such a renovation conflict with binding precedent, it would be unwise. Doubtless, taking that step would satisfy the Copyright Owners’ immediate economic aims. However, it would also alter general copyright law in profound ways with unknown ultimate consequences outside the present context.
Further, as we have observed, we live in a quicksilver technological environment with courts ill-suited to fix the flow of internet innovation. The introduction of new technology is always disruptive to old markets, and particularly to those copyright owners whose works are sold through well-established distribution mechanisms. Yet, history has shown that time and market forces often provide equilibrium in balancing interests, whether the new technology be a player piano, a copier, a tape recorder, a video recorder, a personal computer, a karaoke machine, or an MP3 player. Thus, it is prudent for courts to exercise caution before restructuring liability theories for the purpose of addressing specific market abuses, despite their apparent present magnitude.
Are you paying attention, Congress?
Addendum: You can listen to an MP3 of EFF attorney Fred von Lohmann’s oral arguments in the case. I haven’t had a chance to yet, but will this evening. (Thanks to Boing-Boing and Cory Doctorow for the pointer!)