MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005), is a United States Supreme Court decision in which the Court ruled unanimously that the defendants, peer-to-peer file sharing companies Grokster and Streamcast (maker of Morpheus), could be held liable for inducing copyright infringement by users of their file sharing software.

The Sony precedent was partially modified by the Ninth Circuit in A&M Records v. Napster (2001), which addressed the ease of sharing music files online, and how the designers of the technology could be held liable for contributory copyright infringement and vicarious copyright infringement if such behavior was the primary use of the technology and the company benefited from it.

[5] The MGM v. Grokster case is frequently characterized as a re-examination of the issues in Sony precedent, in light of rapidly progressing technologies and consumer behaviors.

Napster, having lost its similar lawsuit about its enabling of users' copyright infringement, filed a brief in support of the entertainment companies.

[9] During oral arguments, the Supreme Court justices appeared divided between the need to protect new technologies and the need to provide remedies against copyright infringement.

"[10] On the other hand, the justices seemed troubled at the prospect of ruling that Grokster's alleged business model of actively inducing infringement and then reaping the commercial benefits was shielded from liability.

On the one hand, Justice Ginsburg, joined by Kennedy and Rehnquist, claimed that "[t]his case differs markedly from Sony" as there was insufficient evidence of non-infringing uses of the technology.

Legal researchers hailed the Grokster ruling for striking a fair balance between the need to respect the copyrights of artists, and the benefits of allowing and promoting technological innovation.

[12] As part of a civil lawsuit enabled by this Supreme Court ruling, Grokster was forced to pay $50 million to various companies in the music and movie industries.