The Supreme Court has ruled unanimously in favor of the entertainment industry in MGM v. Grokster. Disappointing, to be sure, but the net's early IANAL consensus seems to be that the ruling is fairly limited. The decision states:

One who distributes a device with the object of promoting its use to infringe copyright ... is liable for the resulting acts of infringement by third parties using the device, regardless of the device's lawful uses.

That would seem to indict Grokster for basing its business model on infringement, but exempt applications like BitTorrent that are promoted as being meant for distributing legal content.

Regardless of the specific contours of liability that emerge from this decision, it seems likely that there'll be a lot less investment in companies developing consumer media technology. In the hardware space, this is a real shame -- the next Tivo will take that much longer to emerge.

But for software, it's probably irrelevant. The open source movement is well-positioned to avoid Grokster-style liability, and doesn't need to find brave venture capitalists in order to ship a product. With private industry slowed by litigation, open source offerings already dominate P2P. This decision will probably cement that position.

(crossposted at Begging To Differ)