No one paying attention to Grokster expected the Court to give an unequivocal thumbs up to Sony's substantial non-infringing use test. The question was whether Sony would be supplemented, altered, or discarded. Which, if any, of those possibilities will actually come to fruition is still anybody's guess. Sony's applicability appears to have been definitively limited to refuting imputed intent, but Grokster offers little by way of substantive clarification of the standard.

But one thing is clear. Despite the Court's misleading pronouncements and the flurry of hurried blog punditry, Grokster does not provide for an active inducement test. Instead, the court announced an intent-based test, one that holds developers liable not only for specific actions that encourage end users to infringe copyrights, but also for the "object" of their endeavor.

A quick perusal of the facts the Court determined relevant to Grokster and Streamcast's liability demonstrates that active inducement in the 271(b) sense is not all that underlies Grokster's potential liability. Active inducement looks to behavior that encourages users to infringe. Most of the actions taken by appellees consist of communications never delivered to users. Internal emails, communications with potential advertisers, and proposed advertisements do not inducement make. Moreover, the caselaw is clear that designs that fail to guard against infringement don't constitute inducement. Nor does the fact that a company's business model depends on a high volume of served ads have any bearing on the actual inducement of infringement by users. Although other evidence considered by the Court is of arguably greater relevance to inducement, we are left with a test better characterized as "intent to induce infringement."

So why such a test? Given the procedural posture of this case, which came to the Court on a partial summary judgment motion limited to the current version of the appellees' software, the Court needed a way to introduce past behavior. The actions in question under a pure active inducement standard appear beyond the scope of the question presented to this court. The court was limited to considerations of the distribution of the current software programs and only by looking to the intent with which that software was distributed could the Court include past actions otherwise not properly before it.

While many would have welcomed a true active inducement standard as the best realistic outcome, we're left with an intent based standard that offers no guidance to potential innovators. But on the bright side, we managed to dodge the primary use bullet.

The DRM restrictions and click-though agreements ubiquitous in the legitimate music download market may lead us to believe that we license rather than purchase our iTunes/Rhapsody/Napster content. Thankfully the folks at Warner Music have stepped in to clarify that misconception.

According to Reuters, in response to a lawsuit filed by bourbon-soaked-lounge-singer-turned-junkyard-percussion-artist Tom Waits, Warner emphatically contends that downloads are purchases not licenses. Waits claims that under the terms of two 1970s publishing contracts, which call for royalties of either 25% or 50% from revenues derived from third-party licenses, Warner has short changed him, paying out a mere 9% royalty rate for downloads - the same rate he receives for sales of physical copies. In its reply to the District Court for the Central District of California, Warner claims downloads "are sold to customers such as iTunes and Listen.com just as physical product is sold to...Best Buy and Virgin."

If that's true why can't we sell our downloads on eBay? Once again the music industry is talking out of both sides of its collective mouth. But this time it may be forced to choose who it wants to screw more - artists or consumers. Tough call.