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Appeals court to hear Napster case Monday
(CNN) -- A federal appeals court in San Francisco will hear arguments Monday in a copyright-infringement lawsuit filed by the music industry against popular Internet music-swapping site Napster Inc.
The Recording Industry Association of America, which represents a host of record companies, alleges that Napster should be held liable for enabling millions of users to share music for free, depriving artists and the publishers and producers of music of revenue they are entitled to under copyright statutes.
Napster Inc., whose software allows users to dip into one another's computer hard drives to share downloaded music, maintains that it did not perpetrate or encourage music piracy. The San Mateo, California, company also says it will be forced to shut down if the appeals court rules in the industry's favor.
The fight before a three-judge panel of the 9th U.S. Circuit Court of Appeals pits a $40 billion industry against a wildly popular company started by a teenager.
The broader theme in the dispute is how copyright laws apply in a digital age and what copyright protections the "authors" of creative works -- books, music and art -- have in cyberspace, University of Pittsburgh law professor Michael Madison told CNN.com. Madison concentrates on intellectual property law.
Napster, Inc. v. A & M Records, Inc. is a potentially precedent-setting case because it was one of the earliest cases - and easily the most watched - to raise such issues, according attorney Steve Lieberman, an intellectual property litigator at Rothwell, Figg, Ernst & Manbeck in Washington.
Indeed, Napster's attorneys acknowledged as much in legal briefs filed with the appeals court: "This case is one of the most important, and closely watched, cases involving the application of copyright laws to Internet activities."
Granting Napster's request, the 9th circuit temporarily blocked U.S. District Judge Marilyn Patel's July order barring Napster from allowing users to swap copyrighted files. That order would have effectively shut down the 40-employee company, Napster attorneys said in court papers filed in July.
The appeals court scheduled arguments in the case Monday. The three judges will decide the broader question of whether Napster violated copyright laws and the narrower issue of whether to lift or extend the temporary order allowing the site to continue operation.
Napster's legal arguments
The lower court decision was "impermissibly broad" because the judge ordered Napster to block the copying of music -- though the music industry did not identify which songs were protected by copyright, Napster's attorneys argued in legal papers submitted to the 9th Circuit in July.
In addition, Napster's attorneys said technological complexity would make it "impossible" for Napster to "monitor and control what its users share." That means, they said, the site would have to stop all music sharing - or, in effect, shut down.
The attorneys also argued that the trial judge ruled against Napster even though they presented "uncontradicted evidence that a significant amount of music copying by Napster does not infringe any copyright."
In fact, the attorneys said, the judge herself had found that as much as 87 percent of songs available through Napster "may" be copyrighted, leaving the actual number vague.
Patel's decision, if affirmed by the appellate court, would inflict "irreparable injury" on Napster, barring its 20 million users from using the service and forcing the company to lay off 40 employees, the attorneys argued.
Even if Napster goes off line, the core problem of alleged copyright infringement on the Internet would not end because of an explosion of Napster-like World Wide Web sites, the attorneys argued.
The music industry's arguments
RIAA countered in its filings that Napster actively set out to destroy the recording industry and deserves to be sanctioned under copyright laws.
Quoting from Napster's business documents, industry lawyers said the company wanted to "usurp" and "undermine" the industry, and do business "unhindered by cumbersome copyright schemes."
In its bid to "seize control of digital distribution," Napster "expressly designed a system to make available to millions of users unlimited copies of what Napster itself accurately labeled 'pirated music,'" RIAA said.
"Napster's claim that the (lower court) injunction would put it out of business is both untrue and legally irrelevant," RIAA argued. "The law does not allow a company deliberately built on copyright infringement to complain that its business will be devastated if it is forced to stop trafficking in pirated music."
RIAA further argued that 14,000 recordings are downloaded using the Napster system every minute and Napster itself estimates it will have 75 million users by the end of the year, up from some 200,000 in December 1999 when the company was established and the RIAA filed suit.
Such "explosive" and "unprecedented growth" causes "extensive harm" to copyright owners, RIAA argued, because they are not getting paid.
Time Warner, which owns CNN and CNN.com, belongs to RIAA.
How Napster works
A 19-year-old college dropout named Shawn Fanning formed Napster, naming the service after the nickname he earned from friends for his short, "nappy" haircut.
Users first have to download software from Napster's Web site. When launched, the software searches the user's hard drive for music files and compiles a directory listing the files found.
Then the program sends the directory back to Napster's computer, where it is added to a database along with the directories all of the other Napster users.
The program allows users to access music from each other's databases, creating an online community of music lovers as Napster would have it, or a multimillion-strong band of copyright pirates, as the music industry would argue.
David Post, who teaches intellectual property law at Temple University's law school, said Napster-like services could widely distribute not just music but other works of art, raising fundamental questions about the viability of copyright protections in cyberspace.
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