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Grokster Settles, Shutters Service

7 Nov, 2005 By: Erik Gruenwedel

Grokster Ltd., the file-sharing service that turned illegal downloading into a burgeoning mainstay, has shuttered operations. Today's decision came as Grokster ended its legal defense and entered into a reported $50 million settlement with the Motion Picture Association of America, lead plaintiff in the three-year-old piracy case.

Other parties to the settlement include the Recording Industry Association of America and music publishers.

In June, the Supreme Court handed down a unanimous decision stating that individuals or companies that actively encourage copyright infringement by their users could be held liable for their users' activities. The case was then remanded to the federal District Court for the Central District of California for final resolution. Grokster agreed to have the court enter judgment and permanent injunction in favor of the plaintiffs, according to the MPAA.

On the Grokster Web site, a message read: “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.”

Grokster said it hopes to have a safe and legal service available soon.

“The clarity of the [Supreme Court's] decision combined with this settlement provides the content and technology sectors a window of opportunity, which I think ultimately will greatly benefit consumers,” said Dan Glickman, MPAA president and CEO. “I look forward to working with the tech community to deliver our movies to audiences in exciting new ways that both respect copyright law while meeting consumer demands.”

Grokster's decision to shutter operations doesn't hinder the MPAA from pursuing other alleged illegal file-sharing networks, including co-defendants Streamcast and Sharman Networks, owners of the KaZaA file-sharing service.

Representatives from the remaining co-defendants were not immediately available for comment.

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