Napster Leaps To Its Own Defense

SAN FRANCISCO (07/04/2000) - Laying out a defense that sets the stage for a legal showdown at the end of the year, attorneys representing Napster Inc. responded Monday to the recording industry's request that the song-swap service be immediately shut down.

"Plaintiffs ask this court to do what no court has ever done," wrote attorneys for Napster. "To hold private non-commercial sharing of music by consumers is unlawful; to hold that an Internet directory service is liable for uses made by its users; and to extend judicially copyright protection to stifle a new technology."

Napster's filing is in response to a motion filed by the Recording Industry Association of America (RIAA) on June 12 which asked U.S. District Judge Marilyn Hall Patel for a preliminary injunction that would shut down Napster completely until trial. Now that Judge Patel has Napster's response, she will consider both arguments and make a decision July 26.

For Napster to be shut down, the RIAA must show that it is likely to prevail in a trial, and that the recording industry would suffer "irreparable harm" if Napster is allowed to continue to operate.

To cast doubt on the "irreparable harm" argument, Napster Monday announced the results of a study by Peter Fader at the Wharton School of Business at the University of Pennsylvania that showed that 70 percent of Napster users surveyed use the service to sample music before they buy the CD.

"The data consistently indicates that Napster is not harming the record industry, certainly not so much that it has to be shut down before trial," says Napster lead attorney David Boies, most famous for representing the U.S.

Government in its anti-trust case against Microsoft.

In addition to the survey, Boies laid out a four-point legal strategy to defend the song-swap service.

The RIAA has accused Napster of "vicarious and contributory" copyright infringement. Napster's first line of legal defense will be to argue that what Napster users are doing falls under fair use and therefore does not violate copyright. If Napster users are not violating copyright, than there is no infringement for Napster to enable or contribute to.

To make that case, Boies invokes the Audio Home Recording Act of 1992. That law, Boies argues, allows consumers to make copies of music for one another, as long as they make no profit from the copies. All Napster does is increase the scale of the copying, which he claims is also perfectly legal.

"As long as the consumer is engaged in non-commercial activity, that is something that the Audio Home Recording Act immunizes," Boies says.

In response, the RIAA argues that Napster is disqualified from such a defense because it has built a business around the sharing of its users.

"Whether or not it is unlawful for users to share music one-to-one, it is entirely different for a commercial entity to create a business that induced users to do that," argues RIAA legal counsel Cary Sherman.

Boies's second argument invokes the Sony Betamax case of 1994. In that case, Sony was found not guilty of copyright infringement, because even though a video tape recorder could be used for infringing purposes, it also has legal purposes and therefore Sony should not be held liable for any infringement.

"If you make something that has unlawful and lawful uses, you don't want to ban it," Boies argues. "The courts have a strong reluctance to interfere in a new technology."

The third defense finds safe harbor for Napster under the Digital Millennium Copyright Act of 1998. To make that argument stick Napster must show that it is simply publishing a directory of information like any Internet Service Provider like Yahoo or Altavista.

Napster started behaving like an ISP early this year, posting its own "notice and take-down" policy and threatening to disable the passwords of any users violating copyrights when they are notified by the copyright holder. This led to the deactivation of hundreds of thousands of users after Metallica and Dr.

Dre notified Napster their copyrights were being infringed.

In the final and most controversial argument, Boies reaches back into the Microsoft file and pulls out an antitrust defense of Napster. The RIAA represents five companies that control 85 percent of recorded music sales in the United States.

"This is a new technology that threatens the control of a dominant trade association," Boies says. "If you use copyrights to achieve an anti-competitive purpose, you lose the right to enforce your copyrights."

On that point, the RIAA reminds that the association is not a plaintiff in the case. "Individual music publishers and record companies are the plaintiffs, all of whom have partnerships with multiple legitimate technology companies," Sherman says.

Tough talk aside, there is still a chance the case result in a settlement, not unlike that reached between the recording industry and MP3.com Inc. (MPPP) .

Napster interim CEO Hank Barry says that the staff has been too busy trying to meet Monday's court-imposed deadline to conduct any "meaningful" settlement talks with the labels. Nevertheless, Barry maintains Napster "is willing to talk to anybody."

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