It's possible to look at some of the things StreamCast and Grokster did and conclude (like the jury at the end of The Producers) that they aren't just guilty, but so guilty.
The technical term for guilt in this civil case is "liability." And in the American legal system, to be found liable it has to be clear what law was broken.
What everyone knows in this case is that the defendant's products, like many P2P products, are clearly about getting media freely and easily. It doesn't seem like they got into the game to promote independent bands and film doing their plucky best against the man. And few of you out there that did the downloading exclaimed, "Finally, a nonlabel source for the obscure amateur music collection I've always dreamed of!"
But what does that make them guilty of? It lives in a space that society at large isn't comfortable with. We know certain people who make certain products that are beyond the pale: bombs, or bank accounts for genocidal dictators. Others, while dodgy or even a bit slimy, aren't actually illegal. Free-basing gear, spying equipment, and censorship software for China—these are all legal businesses, despite being unsavory. So too the case with the limbo of Grokster; even if you feel violating copyright is wrong as well as illegal, and find what they do to be morally dubious and in questionable taste, it's hard for anyone yet to say whether they were technically liable. For that matter, there's some question as to what they might be liable for, and what is the appropriate remedy (the legalese word for punishment).
Supreme Court Reply Hazy, Try Again Later
People looking for the Grokster decision to answer any of the great outstanding questions of copyright in the digital age went away largely disappointed. The court failed to clarify issues like vicarious liability, appropriate damages, and if the fair uses established in the Sony case still really apply in the digital age.
Much of this decision picks up qualities of patent law and puts them into copyright law. Given the lack of direction regarding remedy by the Supreme Court, it's interesting to look at the nature of remedy in similar patent cases. While most recent copyright cases have famously focused on damages, huge damages (and in the case of one student, damages around $97 billion), patent cases usually focus on injunction. In other words, if you lose your case you just have to stop doing the thing that started the case off.
Professor of Law at the University of Chicago, Doug Lichtman, a legal scholar who filed Amicus in favor of MGM, is excited by the idea that injunctions could provide a better answer than damages. "That might be a fantastic thing for copyright; I'm much less chilled if I'm only going to be told to stop it already, rather than pay the music companies." Then losing a lawsuit means the technology is a no go rather than total financial ruination, and no-go technology is hardly a new thing for the industry. But it remains to be seen. A judgment without damages doesn't satisfy some observers. "Grokster ought to write a check. They ought to stop what they're doing, but they ought to write a check," says Randy Picker. But neither an injunction nor damages can have much effect on a technology genie that's already out of the bottle. Distributed technologies ruled illegal are for most purposes unstoppable after release. Then the only answer is more technology, which the malware/spam arms race has shown to be no panacea.