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One-time music-swapping sensation Napster may not make the “what’s in” list at the end of the year. After all, the Redwood City, Calif.-based company’s headline-grabbing battle with the recording industry is winding down. And four months ago the company shut down its file-sharing service to make sure copyrighted songs weren’t being exchanged over its servers. But the legal questions Napster kindled may not yet be extinguished. A spate of suits has followed claiming the technology is being used to infringe copyrighted works. In one case, record labels have teamed up with the motion picture industry to eliminate the next generation of Napsterlike software. In a series of other suits, TV networks and movie studios are trying to block the introduction of a digital video recorder that can eliminate commercial advertising from recorded programs. The recent litigation “shows that Napster didn’t answer all the questions,” said Laurence Pulgram, a partner in the San Francisco office of Fenwick & West, who is representing Santa Clara, Calif.-based SonicBlue Inc. in the latter dispute and is also counsel to Napster. “It opened up a lot of issues that the courts will continue to have to answer with regard to the overall regulation of technology through copyright law.” ANOTHER NAPSTER? After Napster shut its system down, other peer-to-peer filing sharing services sprang up. Unlike Napster, these services lack a centralized database, instead providing software that enables consumers to connect their computers to “supernodes,” large computers that compile digital files available for downloads. Last month eight movie studios and 20 record labels sued Grokster Ltd., MusicCity.com Inc. and Consumer Empowerment BV. The plaintiffs in Metro-Goldwyn-Mayer Studios Inc. v. Grokster Ltd. contend that, like Napster, these new services provide the means for infringement and also use encryption technology to assure that users of their services are anonymous. The studios and record labels have pulled in big guns to tackle the case. David Kendall, a partner at Washington, D.C.’s Williams & Connolly, who represented President Clinton during his impeachment proceedings, is the lead counsel in the case. The National Publishers Association filed a class action against the three companies last week. The association, which recently settled its suit against Napster, claims the defendants are operating a Napster “copycat” service, hoping to attract some or all of Napster’s 40 million users. But attorneys for MusicCity and Grokster say their services are different than Napster’s since they don’t provide a central database and thus don’t control what material their users share. “The Napster case involved a combination of technology and conduct,” said Andrew Bridges, a partner in Palo Alto, Calif.’s Wilson Sonsini Goodrich & Rosati and lead counsel for MusicCity. “The courts held Napster liable for indexing on its servers” and having some control over the exchange of music. MusicCity, he said, does not have control over the files people exchange using its software. “If a nuclear bomb dropped on my client, and it ceased to exist, the software would still be in use out there,” Bridges said. “That brings it purely in the ‘Betamax’ pigeonhole,” referring to the U.S. Supreme Court’s 1984 ruling. In that case, Sony Corp. v. Universal Studios, 104 S. Ct. 774, the Court found that Sony’s Betamax videocassette recorder did not infringe copyright since it was capable of substantial non-infringing uses. Some attorneys believe Grokster and MusicCity will have a hard time applying the “Betamax” decision to their software. The Supreme Court based its decision on the finding that VCR recordings were “mostly done for time-shifting [purposes], not to supplant the market,” said Ian Ballon, a partner in L.A.-based Manatt, Phelps & Phillips. The MusicCity case doesn’t involve time-shifting — where you record a program in order to watch it at another time, Ballon said. Rather, the company’s technology has “an effect on the commercial market.” BETAMAX REDUX The “Betamax” case may be more clearly applied in the dispute over video recording technology, attorneys say. Television networks claim that a new device, the ReplayTV 4000, which automatically deletes advertising from recorded programs, will harm the value of their copyrighted works. In Paramount Pictures Corp. v. ReplayTV Inc., 0109358, they argue that this will deprive them of the means of payment for their works and “disrupt the ability of copyright owners to market their works for telecast.” The ReplayTV 4000, which SonicBlue acquired in its recent acquisition of ReplayTV, is set to come to market this week. In addition to the Paramount suit, MGM and Warner Brothers have filed separate complaints asking the court to halt distribution of the device. The cases are pending in Los Angeles federal court.”This case tries to roll back the ‘Betamax’ case,” Pulgram said. “Industry is claiming that if [you make home copies] with a feature that allows you to skip commercials it isn’t fair use.” The networks also object to a feature that allows owners of the device to transmit a digital copy of a movie or TV program to other people. “The ‘Send Show’ function is similar to the music infringement scheme recently enjoined in the Napster case,” the complaint states. “Just as Napster established a commercial business that was predicated on — and knowingly benefited from — the unlawful copying and distribution of music files by users, defendants plan to create a network in which they facilitate, induce, and profit from the unlawful distribution of television shows and feature films” that cost millions of dollars to produce. But Pulgram said the device limits the number of copies that can be sent to no more than 15 people and also does not allow those who receive a file to retransmit it to someone else. By contrast, he said AOL Time Warner Inc.’s instant messaging service allows consumers to share any file without limit on the number of recipients. NBC spokeswoman Rebecca Tompkins said, however, that “no one is distributing copyrighted material” with AOL’s instant messaging. The new crop of suits illustrates that the boundaries of copyright law are still in dispute. “There is a line between copyright monopoly on one hand and the freedom to build technology on the other,” said Fred von Lohmann, an attorney with the San Francisco-based Electronic Frontier Foundation who is co-counsel for MusicCity. The copyright owners frame the debate differently, of course. “I see it as more of a symbiotic relationship between technology and intellectual property,” said Carey Ramos, a partner with New York’s Paul, Weiss, Rifkind, Wharton & Garrison who is representing the music publishers in the MusicCity case. Conflict occurs when people use technology to try to exploit IP and “not pay a nickel,” he said.

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