So did the Court give innovators certainty? Consider how the Grokster rule applies to what everyone thinks should be the easiest case: the Apple iPod. Is Apple clearly free from Grokster liability? Amazingly, the answer is no.
Apple has sold about 15 million iPods, each capable of holding between 1,000 and 15,000 songs. Its iTunes music store has sold about 500 million songs for 99 cents each. That works out to only 30 songs or so per device. Does this surprise Apple? Did it really expect that people would buy a 60-gig iPod for $400 and then put $14,850 of music in it? No. Apple expected precisely what it advertised - that people would "Rip. Mix. Burn." music from CDs to iTunes and, in turn, to their iPods. After all, as the ads say, "It's your music."
Well, is it? That's still unclear. Congress passed a law to give consumers the right to copy music to analog devices - cassette tapes. But courts have held that that law does not extend to digital devices - iPods.And if it took a law (rather than the principle of fair use) to give you the right to make a mix tape, then, as many have argued, it takes a law to authorize transferring songs to an iPod.
Before the Grokster decision, this was not Apple's problem. It had built a machine "capable of" substantial noninfringing uses, like a VCR or cassette tape deck. How people used the iPodwas irrelevant to Apple.
Now a court is supposed to decide whether a company like Apple "promot[ed]" or "fostered" copyright infringement through design, behavior, or words. And while no court would ever actually hold Apple liable, the point that ivory tower sorts miss is that there is nothing in the judges' ruling to stop litigation against Apple before Apple has spent millions on lawyers.
The problem here is that the ruling relies on intent rather than acts. So - a device is apparently ok if the vendor doesn't imply some kind of intent to misuse it. What's wrong with that, you ask? Well heck - the court just put lower courts (and lawyers) in charge of determining intent. Is the iPod ok? That depends on who the court decides to believe - the RIAA's lawyer, or Apple's.
When law relies on intent rather than on acts, things get really, really ugly. Lessig is right - this was an awful ruling, and the pundits who declared that it was all clear for industry and the masses had absolutely no idea what they were talking about. What devices are allowed, and how they are allowed, will now be determined by a set of twisty legal rulings over the next decade or so. Given that, how much money do you think will go towards backing innovation in this space?