Peer-to-peer (P-to-P) software vendor Grokster has closed down as part of a settlement in a three-year lawsuit against it by the US entertainment industry.

Grokster has stopped operations and agreed to a permanent injunction against directly or indirectly contributing to copyright infringement, the Recording Industry Association of America (RIAA) and the Motion Picture Association of American (MPAA) said.

The settlement follows a June decision by the US Supreme Court which allowed the entertainment industry to sue Grokster and a sister P-to-P distributor for copyright infringements committed by their users.

Bad, bad, bad was stripped of links to the Grokster P-to-P software yesterday. In place of download links was this statement: "Copying copyrighted motion picture and music files using unauthorised peer-to-peer services is illegal and is prosecuted by copyright owners. There are legal services for downloading music and movies. This service is not one of them."

Grokster plans to offer a "safe and legal" service called Grokster3G soon, the statement added.

Representatives of the RIAA and MPAA praised the settlement, which must be approved in court. "This settlement brings to a close an incredibly significant chapter in the story of digital music," Mitch Bainwol, the RIAA's chairman and CEO, said: "This is a chapter that ends on a high note for the recording industry, the tech community and music fans and consumers everywhere."

A high note for music fans

The settlement helps music companies invest in new music, Bainwol added. "An online marketplace populated by legitimate services allows us to do just that."

The RIAA noted a number of legal music download services, such as iTunes, Napster and Yahoo Music, are available, and a handful of legal P-to-P services, such as PassAlong and Wurld Music, are also cropping up. Legal movie downloads are available at a handful of sites, including Ruckus and CinemaNow, the MPAA said.

Those who supported Grokster in the Supreme Court argued the MGM vs. Grokster case had broader implications, saying if copyright owners were able to sue inventors of new technologies for the sins of their users, few technology companies would be safe.

Technology tamed?

The case centred around the Supreme Court's 1984 Sony Betamax ruling, in which judges rejected claims of a movie studio brought against Sony, maker of the Betamax VCR. The court ruled against Universal City Studios, saying that makers of technologies with significant uses other than infringing copyrights were not liable for their users' copyright violations.

The entertainment industry had lost its previous attempts to sue Grokster. The 9th US Circuit Court of Appeals, citing the 1984 Betamax decision, ruled in August 2004 that the P-to-P vendors were not liable for their users' copyright violations.

In a unanimous decision, the Supreme Court in June left the landmark Sony decision untouched, but found that Grokster and another P-to-P distributor were at fault for promoting copyright infringement among users of their products. The Sony decision doesn't provide shelter for promoters of copyright infringement, the Supreme Court found.