7PM. PST, at www.napster.com will have some long faces on a live webcast.
Michael Pugliese
http://news.cnet.com/news/0-1005-200-2354002.html?tag=st.ne.1002.tgif.ni
Judge issues injunction against Napster By John Borland and Cecily Barnes Staff Writers, CNET News.com July 26, 2000, 5:45 p.m. PT update A federal judge today ordered Napster to halt the trading of copyrighted material, saying the founders of the enormously popular music-swapping site had "created a monster." Napster proponents said the injunction, which takes effect at midnight PT on Friday, will essentially cripple the service. An estimated 20 million people have used Napster's software to download countless MP3-encoded songs since last year.
"Napster is enjoined from copying or assisting or enabling or contributing to the copy or duplication of all copyrighted songs and musical compostions of which the plaintiffs hold rights," U.S. District judge Marilyn Hall Patel ordered during a hearing in San Francisco federal court. The timing of Patel's ruling was a surprise, but not necessarily the content. The injunction was issued during a hearing at which Patel grilled Napster attorneys and was highly critical of some of their arguments. The hearing was part of suit the Recording Industry Association of America filed suit against Napster earlier this year alleging the company's technology facilitates massive music piracy. In granting the RIAA's request for a preliminary injunction today, Patel found that the plaintiffs had provided enough evidence to show a strong likelihood of success at trial. She also ordered the RIAA to post a $5 million bond to compensate Napster for lost business should Napster eventually prevail in the case. "Napster wrote the software, it's up to them to write software that will remove from users the ability to copy copyrighted material," Patel said. "They created a monster…that's the consequence they face."
Attorneys for the recording industry praised the decision as a vote of confidence for copyright holders who say the Internet is fostering unprecedented piracy of their property. "Now Napster understands that they need the authorization of copyright owners to engage in their business we hope they will work with the record companies to devise novel ways to use their technology for legitimate purposes with permission," Cary Sherman, general counsel for the RIAA, said in a statement. Attorneys for Napster expressed doubts that the service could continue under the terms of the injunction. "By getting an injunction that requires us to block an unidentified set of songs, it makes it impossible for us to comply with the injunction without removing the main components of our service," said Napster attorney David Boies. He added the company would seek a stay of the decision, noting that if a stay is not granted it would "greatly curtail or even eliminate the service." Napster's attorneys ran into trouble early at the hearing as Patel systematically shot down key defense arguments. She found, for example, that computers and hard drives are not audio home recording devices. She also said the potential for non-infringing uses of Napster is minimal and that the commercial and substantial purpose of the site is copying popular music. "'Piracy be damned' was pretty much the sense one gets from reading some of the early (Napster documents)," Patel said. "Isn't that what the guts of Napster is all about...essentially a system created to facilitate the download of music?" Napster lead attorney David Boies countered that just because a recording is made doesn't mean copyright infringement takes place. He said the Audio Home Recording Act explicitly allows unlimited copying for personal use. He also cited two earlier court cases--RIAA vs. Diamond Multimedia Systems and Sony Corp. vs. Universal City Studios--in which courts have waived copyright liability for companies that make copying devices. Patel seemed unconvinced, pushing Boies to show how those cases apply to Napster, which is not a device but an Internet technology. She also flatly rejected some of the arguments. Asked by one Napster lawyer how she would deal with the Diamond case, she responded: "Easy. It doesn't apply." Boies found himself in the hot seat following a 30-minute presentation by lawyers for the Recording Industry Association of America (RIAA), who asked Patel to issue an immediate injunction against Napster. RIAA attorney Russell Frackman said the step was necessary to stop further illegal downloads and to counter what he called a growing perception among consumers that taking music from the Internet is legal. Frackman estimated that 3.6 billion music files could be downloaded illegally in the six months before a scheduled trial in the case if Napster were allowed to continue. Napster and the record industry are meeting in court today for the first time in months--and the first time since Napster hired high-profile antitrust lawyer Boies to represent its case. The decision in this preliminary injunction hearing could spell life or death for the popular Net start-up, some legal observers say. The case has drawn enormous attention as one of the first legal confrontations pitting novel Internet technologies against the rights of intellectual property holders. Nearly the entire 40-seat courtroom was filled by lawyers representing the two sides in the case, forcing all but a handful of public observers to view the proceeding over closed circuit television in an adjacent room. Napster co-founder Sean Fanning, 20, was also spotted in the crowd, eschewing his usual baseball hat for a suit and tie. The record industry has been put on the defensive by Napster's surge in popularity over the past year. At any given time, tens of thousands of people are online swapping songs, many of them copyrighted by the major labels. That is an intolerable level of piracy, the industry argues. Napster has made some moves to establish a rapprochement with the record industry, saying that it wants to respect copyrights and work with the labels. But so far, the gap between the two sides' views of what is legal and acceptable has proved unbridgeable. The judge's decision sets an influential precedent in an online music world still casting about for rules. The record industry, along with movie studios and music publishers, have also sued Scour.net, charging that it too violates industry copyrights by allowing widespread copying of files. Nevertheless, many analysts say that the decision could have a more symbolic effect than actual efficacy in slimming the stream of online music piracy. Other programs such as Gnutella and Freenet have sprung up in recent months that allow people to trade files of any kind without using a central server that can be shut down by legal action. At the same time, Napster aficionados have created a way to run their own servers unaffiliated with the company. If Napster itself is shut down, many of these servers will likely continue without it. The effect of such file-swapping programs on the music industry is still ambiguous. The record industry cites studies that indicate Napster has had a deleterious effect on record sales. Napster and its backers have in turn cited their own studies that have found Napster users are likely to increase their record purchases.