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Napster to Remain Offline, Court Says

As Napster continues to take it in the teeth from the Recording Industry Association of America (RIAA), the San Francisco 9th U.S. Circuit Court of Appeals upheld a ruling this week that will keep the popular file-swapping music service offline until it rids its service of all copyright-protected material.

In what appears to be a smidge inconsistent, the same ruling was set in place by U.S. District Judge Marilyn Hall Patel in March 2001 when it was determined that Napster was not able to block 100 percent of the copyright songs on its service from being accessed. But that ruling was then blocked in July by the same appeals court that issued the overturn this week.

Judge Patel will continue to oversee the lawsuit filed on behalf of the RIAA that charges Napster with violating copyright laws by providing users with the technology to download and swap copyrighted musical properties for free.

From July until now, the Redwood City, Calif.-based company has been technically free to do as it pleased, on a very limited scale, but instead went to work on beta testing a paid version of its online music service to rival subscription services Pressplay, MusicNet, and Listen.com that currently hold licensing agreements with the five major members of the RIAA.

Napster trial tested its new subscription service in January of this year with 20,000 perspective users willing to pay the monthly $5 to $10 fee for unlimited downloads. The beta test drew on a catalog of 110 tracks, mostly provided by independent record labels, but was conspicuously absent of any tracks belonging to the five major record labels currently in litigation with the file-swapping service.

In February 2001, Napster reportedly offered members of the RIAA $1 billion to settle the case if they would license their catalogs to Napster's service, but the RIAA rejected the offer.

In a surprising turnaround earlier this year, Judge Patel gave Napster the opportunity to challenge its litigators by requiring the five major record labels to prove their ownership of the very material Napster is being accused of stealing. Judge Patel also pointed the finger at the Big Five by suggesting that they may have violated antitrust law violation by creating their own online music services Pressplay, MusicNet and Listen.com.

A status conference hearing has been scheduled for March 27 to set the ground rules for gathering evidence that will examine whether of not the RIAA has violated these laws.

In the meantime, Napster has been forced to trim 10 percent of its staff under the crushing weight of legal bills and falling revenue.

Representatives for Napster were not available for comment.