The 9th circuit appeal court has firmly rejected the entertainment companies' appeal in the Grokster case.

"The Copyright Owners urge a re-examination of the law in the light
of what they believe to be proper public policy, expanding
exponentially the reach of the doctrines of contributory and
vicarious copyright infringement. Not only would such a renovation
conflict with binding precedent, it would be unwise. Doubtless,
taking that step would satisfy the Copyright Owners' immediate
economic aims. However, it would also alter general copyright law in
profound ways with unknown ultimate consequences outside the present
context.
Further, as we have observed, we live in a quicksilver technological
environment with courts ill-suited to fix the flow of internet
innovation. AT&T Corp. v. City of Portland, 216 F.3d 871, 876 (9th
Cir. 1999). The introduction of new technology is always disruptive
to old markets, and particularly to those copyright owners whose
works are sold through well established distribution mechanisms. Yet,
history has shown that time and market forces often provide
equilibrium in balancing interests, whether the new technology be a
player piano, a copier, a tape recorder, a video recorder, a personal
computer, a karaoke machine, or an MP3 player. Thus, it is prudent
for courts to exercise caution before restructuring liability
theories for the purpose of addressing specific market abuses,
despite their apparent present magnitude."

Expect another appeal especially with the INDUCE act in the pipeline.