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The music-swapping service Napster must stop trading in copyrighted material and may be held liable for if it fails to patrol its system, a federal appeals court in San Francisco ruled today. In a ruling that Napster officials had said could force the site to shut down, the 9th U.S. Circuit Court of Appeals said Napster must prevent users from gaining access to content on its search index that could potentially infringe copyrights. “This is a clear victory. The court of appeals found that the injunction is not only warranted, but required. And it ruled in our favor on every legal issue presented,” said Hilary Rosen, president and CEO of the Recording Industry Association of America. In the 58-page opinion, a three-judge panel told a lower court judge to rewrite her injunction focusing more narrowly on the copyrighted material and directing the Redwood City, Calif.-based company to remove links to users trading copyrighted songs stored as MP3 files. Napster can stay in business until U.S. District Judge Marilyn Hall Patel retools her injunction, which the appellate court called overbroad. Millions of users had flooded the company’s computer servers this past weekend to download free music, fearing an immediate shutdown of the service that has changed the face of music. Napster has an estimated 50 million users. Webnoize, which monitors the digital entertainment economy, estimated that 250 million songs were downloaded using Napster over the weekend. Webnoize said that, on average, 1.5 million users were logged on to the system at any one time. Major record labels hope today’s ruling will force millions of computer users to pay for music the online music swapping service has allowed them to get for free. If Napster had won, however, the ruling could have given new life to other business ventures that have been waiting for guidance on whether a “personal use” exception to copyright law allows or prohibits trading songs over the Internet. The digital music technology Napster made popular is here to stay either way. The recording industry appears stymied by the notion of funneling music to consumers via the Internet for a price while freely available computer applications allow even the computer novice to do it for free. The five largest record labels — Sony, Warner, BMG, EMI and Universal — sued as soon as Napster took off, saying it could rob them of billions of dollars in profits. In May 1999, Napster founder Shawn Fanning released software that made it easy for personal computer users to locate and trade songs they had stored as computer files in the MP3 format, which crunches digital recordings down to manageable lengths without sacrificing quality. The concept of “peer-to-peer” song trading quickly proved too popular to contain. As Napster users grew by the millions, other file-sharing programs also popped up, such as Gnutella and Freenet. And the labels themselves are looking to use the same technology, only with paying subscribers and secure digital formats that prevent copying. Since the appellate judges began deliberating in October, Napster has made agreements with former business foes like Bertelsmann AG, the parent company of the BMG music unit. The German media giant has promised much-needed capital if Napster switches to a subscription-based service that pays artists’ royalties. The other four major labels are holding out for Napster’s demise. Copyright 2001 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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