Grokster was a peer-to-peer file sharing client software created by Grokster Ltd. Based on FastTrack, a popular file-sharing protocoal, Grokster was considered to be a second generation of peer-to-peer file sharing software. It was designed in such a way that it allowed users to transmit files without the going through a central server. Any files, including copyrighted files, could be transmitted.
In 2005, the United States Supreme Court rules against Grokster in a suit filed by MGM Studios, a ruling that essentially made Grokster's brand of file sharing illegal. Grokster shut down operations as a result.
Techopedia explains Grokster
Unlike its major predecessor, Napster, Grokster never exercised any control over the files that were shared and transmitted through its service. Napster was ruled illegal in 2000 because it still maintained a fraction of control over what users transmitted through its central server. Grokster and other second-generation file-sharing services were attempting to circumvent this by allowing users to share directly between each other.
During the course of the hearing, it was discovered that most of the files transmitted through Grokster were indeed violating copyright protection rules. Although Grokster maintained that it was not responsible for any restricted file sharing or downloads and that no files passed through the organization's systems, the company was found liable for inducing copyright infringement.
However, copyright protectionists had not won the battle, as P2P file sharing continues to grow.