NAPSTER

While in Northeastern University in Boston, Shawn Fanning created, Napster an online music file sharing service. The site facilitated the copying and distribution of MP3 files by users amongst each other as a result the users bypassed the established market for such songs and this lead to the music industry's accusations of massive copyright violations.

Napster started operating in 1999 and by year 2000 it had already had a few suits instituted against it by inter alia Metallica and Dr. Dre both of which it managed to settle. In 2000 however, A&M records and several other recording companies instituted a suit against Napster (A&M Records, Inc. v. Napster, Inc.) under the US Digital Millennium Copyright Act (DMCA) for contributory and vicarious copyright infringement. The Plaintiffs claimed that Napster was responsible for the following:

(1) Napster’s users were directly infringing the copyright of the Plaintiffs;

(2) Napster was liable for contributory infringement of the copyright belonging to the Plaintiff; and

(3) That Napster was liable for vicarious infringement of the Plaintiff's copyright.

The District Court in which the suit was instituted held that Napster liable on all three counts. Napster, after the defeat, appealed to the U.S. Court of Appeals for the Ninth Circuit. The Appellate Court held that:

“.......Napster may be vicariously liable when it fails to affirmatively use its ability to patrol its system and preclude access to potentially infringing files listed in its search index. Napster has both the ability to use its search function to identify infringing musical recordings and the right to bar participation of users who engage in the transmission of infringing files. The preliminary injunction which we stayed is overbroad 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. As stated, we place the burden on plaintiffs to provide notice to Napster of copyrighted works and files containing such works available on the Napster system before Napster has the duty to disable access to the offending content. Napster, however, also bears the burden of policing the system within the limits of the system. Here, we recognize that this is not an exact science in that the files are user named. In crafting the injunction on remand, the district court should recognize that Napster's system does not currently appear to allow Napster access to users' MP3 files.

In response, Napster filed an appeal. Napster contended that in order for it to be liable for contributory infringement, the users of the service had to be infringing directly. Napster asserted this was not true and that a substantial number of its users were in fact engaged in three kinds of fair use:

1. sampling, where users make temporary copies of a work before purchasing;

2. space-shifting, where users access a sound recording through the Napster system that they already own in audio CD format;

3. permissive distribution of recordings by both new and established artists

The Court found that "Napster users infringe at least two of the copyright holders' exclusive rights: the rights of reproduction; and distribution."

exclusive rights: the rights of reproduction; and distribution." The Court further rejected all of the above contentions of Napster on the following basis:

• With regard to the fair use contention: the court said that the case of Sony Corp. of America v. Universal City Studios, Inc. 464 U.S. 417 (for information on this case please refer to http://en.wikipedia.org/wiki/Sony_Corp of_America_v. Universal_City_Studios,_Inc.) could not be relied upon since in that case the manufacturers of VCRs had no control over how people used them after they were purchased. The Court was of the opinion that Napster could control the infringing activities of the users and had a responsibility to do so.

• Sampling was deemed not to be fair use, because the "samples" were in fact permanent and complete copies of the desired media.

• The Space Shifting argument also did not hold good since the shift to a digital format was not limited to personal storage use, but was accompanied by sharing the file with the rest of the world.

The Appellate court partially remanded the case to the district court “for the limited purpose of permitting the district court to proceed with the settlement and entry of the modified preliminary injunction.” (for the judgment please refer to http://cyber.law.harvard.edu/~wseltzer/napster.html). Napster was ordered by the District Court to monitor the activities of its network and to block access to infringing material when notified of that material's location. Due to its inability to comply Napster was shut down and declared itself bankrupt in 2002.