The EFF has won the Grokster case!!!
Hollywood had sued Grokster claiming that they were liable for infringement because they did not set up their software to make it easier to keep people from using it to infringe copyrights. The Grokster ruling just reinforces and restates the courts adherence to the old Betamax doctrine - that a company is not liable if consumers use their devices to infringe if the device also has substantial noninfringing uses.
The media groups that sued Grokster hoped to weaken the Betamax doctrine by seeking a ruling that P2P nets should be forced to design their nets so that they can be easily policed (policing software is a bad idea).
Here is the judge's opinion, here is the EFF attorney Fred von Lohmann's oral appellate argument.
Boing Boing is very excited about the opinion and has typed up a few important paragraphs, so go there for the abridged version.