RealTime IT News

Court Rules Napster Infringed But Won't Lift Stay

Napster is still alive Monday after a federal appeals court maintained a stay on an injunction against the file-sharing phenomenon.

With its site and various other related sites jammed up for the past hour from thousands of users trying to grab a glimpse of the verdict, San Francisco's 9th Circuit Court of Appeals said Napster would be allowed to continue its popular service until a lower court can modify the stay.

However, the business is not in the clear, as the federal appeals court did acknowledge that Napster could be responsible for copyright infringement in certain areas. Still, it called the cause for the injunction too broad.

The ruling details not only Napster's business model, but the way its proprietary MusicShare software functions.

The federal court was in concurrence with the plaintiffs, billed simply as A&M Records, that Napster was infringing on two copyholder's rights -- reproduction and distribution.

Hilary Rosen, president and chief executive officer of the Recording Industry Institute of Association, was ecstatic about the verdict Monday, calling it all but a slam dunk for the recording industry, despite not getting the stay on the injunction thrown out.

"This is a clear victory," Rosen said. The court of appeals found that the injunction is not only warranted, but required. And it ruled in our favor on every legal issue presented."

Napster itself acknowleged the grim picture painted by the verdict Monday as CEO Hank Barry said:

"We are disappointed in today's ruling. Under this decision Napster could be shut down -- even before a trial on the merits. The court today ruled on the basis of what it recognized was an incomplete record before it. We look forward to getting more facts into the record. While we respect the Court's decision, we believe, contrary to the Court's ruling today, that Napster users are not copyright infringers and we will pursue every legal avenue to keep Napster operating."

But others in the industry are not so sure the verdict is as accessible through rose-colored glasses as Rosen's enthusiasm suggests.

Ross Charap, music copyright attorney with Darby & Darby, and former vice president of legal affairs for the American Society of Composers, Authors and Publishers (ASCAP), said the decision in no way ends the fight; Charap believes Napster will take the case all the way to the U.S. Supreme Court if necessary.

"I think this is potentially a Supreme Court case," Charap said. "Remember the arguments that are being made are very similar to the arguments that were made back in the '80s in the Betamax case. The basic premise of the Napster attorneys is that there are a significant number of non-infringing activities taking place in the Napster scheme and if that's the case why shouldn't they get off the hook the way Sony got off the hook in the Betamax case?"

"It's possible, especially now that Bertelsmann has thrown $50 million into the pot, it doesn't cost $50 million to appeal and they've got David Boies so they might want to go to the Supreme Court and say 'Help us out here.' This is a brave new world and the genie is out of the bottle. As far as I'm concerned, it is not po