Grokster

Grokster Ltd. was a privately owned software company based in Nevis, West Indies that created the Grokster peer-to-peer file-sharing client in 2001 that utilized the . Grokster Ltd. was rendered extinct in late 2005 by the United States Supreme Court's decision in MGM Studios, Inc. v. Grokster, Ltd. The court ruled against Grokster's peer-to-peer file sharing program for computers running the Microsoft Windows operating system, effectively forcing the company to cease operations. The product was similar in look and feel to Kazaa which is marketed by Sharman Networks and Morpheus which was distributed by StreamCast. Grokster along with Morpheus and Kazaa are considered second-generation peer-to-peer file sharing programs because unlike their predecessor Napster these file sharing programs allowed users to trade files directly between one another without these transactions passing through a centralized server. Because Napster maintained this fraction of control over the transaction of files through its server it was ruled illegal because it should have exercised its power over the server to stop the sharing of copyright infringing files. Grokster and this second generation of peer-to-peer file sharing programs sought to avoid this legal obstacle.

It has been estimated that 90% of files shared on Grokster were downloaded illegally. Whether such downloads have substantially affected the retail sales of music, videos, and other works protected by copyright and the intellectual property laws is a matter of debate. Grokster claimed they did not violate any copyright laws because no files passed through their computers. They assigned certain user computers as "root supernodes" that acted as music hubs for their company. Thus they were not responsible for controlling any specific file downloads.

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