Napster was started in 1999 by US teenager Shawn Fanning who wrote the software for the service that allows users to swap MP3 music files stored the hard drives of their computers. It was the first public application of what is known as peer-to-peer computing.
Napster users download the file sharing software and can then exchange song files for free. Napster as a company hosts on its servers a directory of all MP3 files stored on users’ hard drives, but it does not store the files themselves. The company has over 50 million registered users.
Napster was sued by the five largest record labels in the world and others, represented by the Recording Industry Association of America (RIAA). The record companies claimed that Napster was guilty of copyright infringement because it carried on its service without the permission of the copyright owners. Napster argued that, because it did not actually store the music files on its own servers, it was not guilty of infringement.
In July last year, the RIAA won a preliminary injunction prohibiting Napster from “copying or assisting or enabling or contributing to the copy or duplication of all coyprighted songs and musical compositions of which the [record companies] hold rights”.
In effect, it would have taken Napster off-line. However, just before coming into force, a federal appeals court granted Napster a stay on the injunction pending a full hearing of the copyright infringement case. It was this stay which the RIAA appealed to the 9th US Circuit Court of Appeals.
The court yesterday backed the conclusions of the lower court's injunction against Napster, with some exceptions.
The court agreed with US District Chief Judge Marilyn Hall Patel that Napster is likely to be found liable for contributory and vicarious copyright infringement and said that Napster has a responsibility to police its own system for infringement.
However, the court ordered Judge Patel to amend the terms of her original injunction to clarify Napster’s policing responsibility.
Napster’s lawyers say they plan to request an appeal hearing before the full bench of the 9th Circuit Court of Appeals.
Napster failed in its argument that it could rely on a 1984 case between Sony and Universal Studios which said that the manufacturers of home video recording equipment were not liable for copyright infringement. The 9th Circuit said that Napster’s “actual, specific knowledge of direct infringement renders [the Sony case] of limited assistance.”
The court also rejected Napster’s arguments that it’s service was excused by principles of fair use and a federal law governing home audio recording.
The judges wrote, “Napster's failure to police the system's 'premises,' combined with a showing that Napster financially benefits from the continuing availability of infringing files on its system, leads to the imposition of vicarious liability."
Napster can reject users from its system if it is given notice that they are repeatedly infringing copyrighted works. The court took the view that this does not go far enough (it is easy for the user to re-access the site with a different username). Instead, the court said the company should halt infringement of individual songs.
In one of the few concessions to Napster's arguments, the court said that the terms of Judge Patel’s injunction went too far “because it places on Napster the entire burden of ensuring that no 'copying, downloading, uploading, transmitting, or distributing' of plaintiffs' works occur on the system."
Instead, the record companies have the burden to inform Napster of copyrighted works available through its system before Napster must disable access to the offending content. The court told Judge Patel that when amending the terms of the injunction, she should recognise that “Napster's system does not currently appear to allow Napster access to users' MP3 files."