| Napster vows fight after ruling Record-industry lawyer: Decision writes 'epitaph' for free Internet song-swapping 02/13/2001 By Doug Bedell / The Dallas Morning News 
AP
Clemson University student Courtney Crawford accesses the Napster.com Web site, which posts the latest developments in the beleaguered company's lawsuit.
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The end to Napster's free Internet music-swapping party may be close.
A three-judge panel from the 9th Circuit Court of Appeals in San Francisco ruled Monday that Napster must stop rampant copyright infringement through its exchange of digital music files.
But the panel directed a lower court to decide what measures must be taken by the company to ensure that its 50 million users stop the practice.
In a statement, Napster, based in Redwood City, Calif., said it was disappointed by the ruling and would appeal it.
"We look forward to getting more facts into the record. We will pursue every avenue in the courts and the Congress to keep Napster operating," the company said. It could appeal its case to the U.S. Supreme Court or seek a hearing in front of the full 9th Circuit on the merits of its case.
Representatives of the Recording Industry Association of America praised the ruling as a major victory for artists and record companies.
"I do think it is fair to say that the decision pretty much writes Napster's epitaph," said RIAA lawyer Chuck Cooper. "Its days as an instrument for electronic shoplifting are over."
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Here, in question-and-answer form, is a look at what's ahead for the embattled operator of Napster, the application that lets users share music for free.
Q: Is Napster still online?
A: Yes. Napster doesn't have to shut down immediately. Monday's federal court ruling sends the case back to a lower court judge to modify her earlier injunction barring Napster from helping computer users from infringing copyrights by swapping music files. But the injunction won't take effect until the original order is narrowed.
Q: And how long will that take?
A: That's not immediately clear. But the 9th U.S. Circuit Court of Appeals urged U.S. District Judge Marilyn Hall Patel to rewrite her injunction quickly. "A preliminary injunction against Napster's participation in copyright infringement is not only warranted but required," the appeals court wrote.
Q: So users can download files until then?
A: Yes. And there are more than 50 million of them. That's why the record companies suing Napster want the plug pulled now.
Q: What is the next step for Napster?
A: Company officials say they plan to appeal Monday's ruling. Chief executive Hank Barry also said Napster is negotiating with major record labels to settle their suit and salvage the company.
Q: Didn't Napster respond to the original ruling by cutting a deal to satisfy its recording-industry critics?
A: After a fashion, yes. The German entertainment conglomerate Bertelsmann A.G. struck a deal with Napster last fall. BMG, a Bertelsmann unit, was part of the original lawsuit. Under the agreement, Bertelsmann dropped the lawsuit against Napster and made its music catalog available on the service in exchange for the right to buy a stake in the company. But the other plaintiffs – Sony Music, the Warner Music Group, Universal Music, the EMI Group and the Recording Industry Association of America – pressed ahead.
Q: How did Napster justify a process that enabled users to skirt U.S. copyright laws?
A: Napster sought to remove itself from the contentious question of whether it was abetting the sharing of copyrighted material. And the appeals panel did back the argument that Napster merely enables computer users to transfer files online.
Q: Then why is Napster on the ropes?
A: The three-judge panel said Napster couldn't argue that it was ignorant of its users' actions as a defense.
Q: So it's pretty much a case of a small company squaring off against some music giants?
A: Not exactly. A number of musicians have sided with the music companies, because lower revenue for the recording industry ultimately means smaller paychecks for the performers. The heavy-metal act Metallica and rapper Dr. Dre filed copyright infringement claims against Napster last year. Chuck D, leader of the rap group Public Enemy, has backed Napster.
Q: Does this herald the end of the line for computerized sharing of music?
A: That doesn't seem likely. First, there's already another free software service called Gnutella that allows users to be in direct contact with one another about sharing files. Gnutella isn't as easy to use as Napster and hasn't caught on, but there is no company to sue. Second, someone else might come up with a way to make Gnutella more convenient, or devise another lawsuit-proof way to swap files. In either instance, the lid would be back off. And third, there is some momentum behind the idea of online music file sharing – albeit with rules that assure some payments to the copyright holders. That was part of the thinking behind the Napster-Bertelsmann agreement. Andreas Schmidt, chief executive of Bertelsmann's e-commerce group, said in a prepared statement Monday: "File-sharing is here to stay, and we will continue working to build a membership-based Napster service that will be supported by the music industry."
From Staff and Wire Reports
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But many song-swapping Napster users said they doubted the ruling will affect their online habits for long. "What Napster started, no one can stop," said 20-year-old Frank Benson, a Dallas Community College student. "People have always shared music. We'll do it with or without Napster."
That sentiment seems to be shared by active users.
Even as the ruling was being announced, Napster's site listed more than 2.1 million MP3 song files being shared among more than 11,500 users worldwide on its 100 servers. That number of songs – at an average playing time of four minutes per song – would take almost 16 years to listen to if played back to back.
Webnoize, which monitors the digital entertainment economy, estimated that 250 million songs were downloaded using Napster over the weekend. Webnoize said that, on average, 1.5 million users were logged on to the system at any one time.
The outcome of the case holds broad implications for all sorts of Internet exchanges. Movie, books and music can all be digitized and exchanged using the Internet technology made famous by Napster.
The largest record companies, movie-makers and publishers have been scrambling to roll out their own digital Internet models predicated on selling access to their copyrighted holdings. To them, the issues raised by Napster are crucial to a profitable future.
"The biggest beneficiary from today's decision will be the consumer, because it will encourage content owners to put their creative works online knowing that the courts have confirmed what everybody knows: You cannot take for free what belongs to someone else," said Jack Valenti, president of the Motion Picture Association of America.
Copyright and intellectual property laws allow people to make copies for their own use and exchange them as long as there is no profit involved. The Napster case presented a daunting legal problem because the company's Web site only facilitates exchanges by creating a worldwide directory of available files for download. The actual exchange of files occurs between individual computers on the Internet.
In Austin, intellectual property expert Kelly Kordzik of Winstead Sechrest & Minick said the Napster ruling essentially means people can't publish an index because users may improperly exchange copyrighted materials.
If courts rule that Napster must patrol its directory to eliminate the exchange of known copyrighted materials, problems still threaten, Mr. Kordzik said.
All users have to do is create a coded file name that obscures the actual copyrighted title. "People will come up with some way to foil this," Mr. Kordzik said. "There may be an underground encryption process that evolves. Or maybe a Web site will pop up to tell people how to trick the policing methods.
"It's just going to go on and on," he said. "The law eventually catches up with technology, but always temporarily."
In Dallas, former Assistant U. S. Attorney Matthew E. Yarbrough, now head of the Fish & Richardson Cyber Law Group, said the lack of a definitive ruling makes it difficult for the plaintiff record companies. "The case keeps going," Mr. Yarbrough said. "It almost makes you wonder if someone on the 9th Circuit Court is a closet Napster fan.
"The message is, basically, 'Keep on downloading.'"
At Richland College in northeast Dallas, that's exactly what Napster user Jenny Boros, 22, said she intends to do. "I'll bet the whole thing's all clogged up tonight," she said. "This is stupid. CD sales are up, but the music industry just wants to dominate."
A recent survey of college students showed about 70 percent were receptive to paying for access to all titles by all artists for up to $20 a month. However, other subscription model music Web sites such as EMusic.com have yet to turn profits.
In May 1999, Napster founder Shawn Fanning released software that made it easy for personal computer users to locate and trade songs they had stored as computer files in the MP3 format, which crunches digitally recorded files down to manageable sizes.
The concept of "peer-to-peer" song trading quickly proved too popular to contain. As Napster users grew by the millions, other file-sharing programs also popped up, such as Gnutella and Freenet Washington intern Mara H. Gottfried and the Associated Press contributed to this report.
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