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Napster provides users with software that enables access to its network of computer servers. Once logged onto the Napster servers, users may communicate, share files, and access content from others. Sound familiar? It should. Many, if not most, employers have intranet communities and computer systems with capabilities that let employees communicate and share files through a browser interface with the Internet. Consequently, the music industry and Internet community are certainly not the only ones closely monitoring A&M Records Inc. v. Napster Inc., now pending in the 9th U.S. Circuit Court of Appeals. Employers also are watching to see if Napster will be found liable for its users’ prolific unauthorized activities. The District Court opinion rendered in early August now being appealed involves only copyright issues and does not explicitly speak to employer intranet communities. Even so, the trial court’s holding sheds light on the potentially broad range of risks associated with operating a company computer system. At least a few issues come to mind. First, there are risks associated with continuing to provide employees with computer network systems with sophisticated features, if the employer knows or has reason to know that unauthorized use has occurred. Also, an employer may be putting itself at risk when it has the ability to monitor the company’s computer services but fails to do so. And if a company is responsible for its employees’ computer usage, then the company may have to bear the burden of ongoing responsibilities, such as continuously monitoring the network. Below, I list a few of the pertinent issues that Judge Marilyn Hall Patel focused on in her opinion, and then offer ideas of how this language may affect employers. FACILITATING USERS Napster opinion: In rendering the District Court’s decision, Judge Patel found that the plaintiffs had established a reasonable likelihood of success on their claim of contributory infringement. In support of this basis for legal liability, she found from evidence contained in internal Napster documents that Napster knew about the infringing activity. She also found that Napster materially contributed to its users’ conduct by offering search and directory functions specifically designed to allow users to locate and access unauthorized files. Employer’s note: Employers may have an affirmative duty to stop any actual or suspected misuse of their computer system, or otherwise face the potential risk associated with being a participant in the unauthorized conduct of its users. By offering employees sophisticated computer services to facilitate increased productivity and online activities, employers may be putting themselves at risk for contributing to their employees unauthorized conduct. If the employers become aware, or even if they merely believe, that their networks or systems are being used to conduct inappropriate online activity, the Napster decision indicates that they may be liable. TOLERATING USES Napster opinion: The plaintiffs established a reasonable likelihood of success on their claim of vicarious liability, since Napster has the right and ability to supervise its users’ infringing activity, and also benefits financially from its users’ activities. Employer’s note: Employers similarly can, and sometimes do, monitor the computer networks they have established. And they presumably set up their networks at least in part for an economic benefit. Therefore, they may have an affirmative duty to supervise and prevent users from accessing unauthorized material, and to the misuse of their systems. Otherwise, they may face the potential risk associated with being responsible for the actions of those who use their systems. RESPONSIBILITY FOR USERS Napster opinion: Napster argued it was not responsible for the acts committed by its users on the premise that the unlawful content at issue was transferred over the Internet between the users themselves and not through the Napster servers. The court nonetheless held Napster responsible, finding that its users would not have been able to access the file information and corresponding routing data without signing on to Napster’s systems. Employer’s note: Employers that provide employees with a computer network server, or system of servers, should recognize that they have essentially provided employees with an instrument through which both authorized and unauthorized online information may flow. Cautious employers will recognize that while a company computer network system is a tool intended for beneficial use, there is a reasonable likelihood that employees may abuse such a computer system. The Napster case is a good reminder that the responsibility for providing a computer system does not end with a maintenance program. Rather, employers should maintain ongoing accountability for the operation of the system by its users. The Napster case remains unresolved as the 9th Circuit reviews it. At this stage, there clearly is no guarantee as to how future courts will choose to apply the District Court’s opinion to employers’ computer systems. Furthermore, many of the potential liability issues facing employers as they move forward into the digital environment are unresolved. It appears likely, however, that the Internet will continue to grow. As it does, it will offer users increased opportunities for both appropriate and inappropriate access to online information. At the same time, employers will likely continue to expand their computer network systems and services to enable employees to take full advantage of the broad range of opportunities that sophisticated networks provide. As authorized use expands, however, so will the potential for unauthorized use. Even before Judge Patel issued her opinion, universities and colleges with high-speed internal networks that connect to the Internet had already begun to confront this problem, as an increasing number of them banned students and employees from using Napster and similar technologies. This points to a predictable course of action for employers in the future. Prudent employers, and their counsel, will recognize the precautionary message contained within the preliminary ruling in Napster. That lesson is that they should exercise good judgment, responsibility, and control over the operation of their companies’ computer systems. Otherwise, they may have to face the potential consequences.

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