Grokster closes illegal music download service

By Chris Nuttall in San Francisco

Updated: 1:10 a.m. ET Nov. 8, 2005

A landmark case that forced the US Supreme Court to rule on internet file-sharing appeared close to resolution on Monday as Grokster appeased the record industry by closing down its service.

Grokster had eclipsed Napster in notoriety in the eyes of the music business as it became one of the few file-sharing services to fail to reach agreement on preventing illegal downloads of music.

But its website on Monday consisted of just a single page with a statement, agreed with the Recording Industry Association of America (RIAA), which said:

"The United States Supreme Court unanimously confirmed that using this service to trade copyrighted material is illegal. Copying copyrighted motion picture and music files using unauthorized peer-to-peer services is illegal and is prosecuted by copyright owners.

"There are legal services for downloading music and movies. This service is not one of them."

The RIAA is understood to have been holding settlement talks with Grokster on behalf of the major record labels since the Supreme Court ruling in June. The court said file-sharing services could be sued for copyright violations if they encourage illegal activity, but sent the case back to a lower court for further review.

Morpheus, another service involved in the Supreme Court case, is also understood to be the subject of settlement talks.

Mitch Bainwol, RIAA chief executive, said in a statement on Monday: "This settlement brings to a close an incredibly significant chapter in the story of digital music. At the end of the day, this is about our ability to invest in new music. An online marketplace populated by legitimate services allows us to do just that."

Grokster's websites said it hoped to have a safe and legal service available soon and linked to a new site called Grokster3G.

Grokster is reported to have been in talks to be acquired by Mashboxx, a legal music file-sharing service set up by Grokster's former president, Wayne Rosso. Although a deal has yet to be confirmed, Mashboxx is striking digital distribution deals with major labels and would likely adopt the Grokster name.

"It's great that the lawsuit is finally settled," said Mr Rosso.
"What's even more interesting is that there will be a new Grokster. It makes sense because, as a result of the lawsuit, Grokster has built an enormous amount of brand awareness. It's a case of 'The king is dead. Long live the king!'"

The details of Grokster's settlement with the RIAA were being submitted to a judge in a federal court in Los Angeles later on Monday for a consent judgement that would end the three-year legal battle.

The RIAA said the details included a permanent injunction prohibiting infringement directly or indirectly of any of the plaintiffs' copyrighted works. This included ceasing immediately distribution of Grokster's software and ceasing to operate the Grokster system and software.
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