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

ssible to stop file sharing. So, they have to come up with
some way of legitimizing file sharing or get a court to say file sharing is not inherently bad, so I think there is a good possibility
that there will be further appeals,” Charap said.


And if statistical success has any merit, Napster is clearly in the black. The latest Jupiter Media Metrix reported that the number
of U.S. home users of Napster increased from 1.3 million in February 2000 to 9.1 million in December 2000, an increase of
603 percent.


“Today’s decision by the U.S. Court of Appeals will have a profound effect on how this market is brought to fruition,” said Aram
Sinnreich, senior analyst, Jupiter Media Metrix.


Moreover, some think that just as crackers find ways around security measures on networks, resourceful Napster users will find a way around banned songs.


Tom W. Bell, a visiting professor at the University of San Diego, told InternetNews.com Monday that although the record association may stop by Napster to drop off a list of banned songs, Napster users may use pseudonyms to hide their identities, or numbers instead of song titles to conduct illegal song-swapping.


“Their search of directory listings is limited to song names,” Bell said. “If users encode [banned] songs with numbers instead of names, that might be a way around the banned songs. And whether or not a covert community of song swappers using pseudonyms remains to be seen.


What truly remains to be seen is whether Napster will successfully follow though on its plan to offer a subscription-based service in conjunction with Germany’s Bertelsmann, one of the several recording firms who sued the file-swapping phenom to have the service stopped.


Bertelsmann Monday reaffirmed its plans to move forward with Napster on their music distribution plans.


InternetNews Radio host Brian McWilliams contributed to this story.

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