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For Napster Inc., it may be the day the music died. With a few key exceptions, the 9th U.S. Circuit Court of Appeals on Monday backed the conclusions of a lower court’s injunction against the music-swapping Web site for copyright infringement. The court concurred with U.S. District Chief Judge Marilyn Hall Patel that Napster is likely to be found liable for contributory and vicarious copyright infringement. And, in the decision authored by Judge Robert Beezer, it found Napster has a responsibility to police its own system for infringement. “The district court correctly recognized that a preliminary injunction against Napster’s participation in copyright infringement is not only warranted but required,” the three-judge panel unanimously ruled. Patel must still tweak the injunction, primarily to clarify Napster’s responsibility for determining whether music on the site is copyrighted. But it likely means the end of unfettered file swapping by music fans who use the site. Napster acknowledged the ruling was a blow to the company, but its lawyers almost immediately began plotting an appeal. The attorneys said they planned to request an en banc hearing before the 9th Circuit. “We believe a case of this importance would justify that,” said Napster attorney David Boies, a partner at Armonk, N.Y.’s Boies, Schiller & Flexner, who gained fame in the government’s Microsoft antitrust trial and in the recent Florida election battle. Meanwhile, the recording industry, which sued Napster for infringement, called the ruling an unqualified victory and said the court ruled in its favor on every legal issue. The Napster case has generated an avalanche of publicity. While the basic copyright concepts are familiar, this is one of the first cases to apply them to the Internet. Napster has relied primarily on a few tried-and-true copyright precedents in its defense against the recording industry. Among them is the Supreme Court’s ruling in Sony Corp. v. Universal City Studios Inc., 464 U.S. 417 (1984) — which said that the manufacturers of home video recording equipment were not liable for copyright infringement. But the 9th Circuit — like Patel before them — threw out most of those arguments. They said the company’s “actual, specific knowledge of direct infringement renders Sony’s holding of limited assistance to Napster.” They also agreed the fair use doctrine does not apply, nor does the federal law governing home audio recording. Beezer, who was joined in his opinion by Chief Judge Mary Schroeder and Judge Richard Paez, wrote that “Napster’s failure to police the system’s ‘premises,’ combined with a showing that Napster financially benefits from the continuing availability of infringing files on its system, leads to the imposition of vicarious liability.” Currently, when Napster is informed that someone is repeatedly infringing a copyrighted work, the company blocks the individual’s access to Napster’s system. The court indicated that it may be appropriate for the company to halt infringement of individual songs rather than individual Napster users. The court said Napster has the ability to locate infringing material listed on its search indices and the right to terminate users’ access to the system. “The file name indices, therefore, are within the ‘premises’ that Napster has the ability to police.” However, the panel was not completely enamored of Patel’s injunction. The court said it was “overbroad because it places on Napster the entire burden of ensuring that no ‘copying, downloading, uploading, transmitting, or distributing’ of plaintiffs’ works occur on the system.” Plaintiffs have the burden to inform Napster of copyrighted works available through its system before Napster must disable access to the offending content, Beezer wrote. The panel also disagreed with Patel’s finding that Napster had failed to demonstrate that its system is capable of commercially significant noninfringing uses. “The district court improperly confined the use analysis to current uses, ignoring the system’s capabilities,” Beezer wrote. The court also disagreed that the federal Digital Millennium Copyright Act, which aimed at applying copyright to the Internet, is per se an inapplicable defense for contributory and vicarious infringement liability. The court said the issue should be more fully developed at trial. The court left it up to Patel to determine how to modify the ruling she issued last July. However, it offered some guidance: “In crafting the injunction on remand, the district court should recognize that Napster’s system does not currently appear to allow Napster access to users’ MP3 files.” Jeffrey Knowles, a Coblentz, Patch, Duffy & Bass partner representing music publishers in a suit against Napster, said the 9th Circuit found that “if Napster knows there is a particular song being infringed it has to do whatever it takes to make sure that doesn’t happen.” In other words, he said Napster must “go after the songs rather than the users.” Knowles argued that Napster has to bear the burden of getting permission to allow access to copyrighted works. He said the company’s alliance with Bertelsmann A.G. to create a subscription-based music-swapping service “almost certainly entails that notion” with Napster licensing Bertelsmann’s catalog of music. At Napster’s press conference, however, Jonathan Schiller, Boies’ partner, said the company will show at trial “the burden of having to do a name search.” He said Napster can’t block songs by name “without impacting [significant noninfringing] use” of the system and potentially causing it to crash. Laurence Pulgram, a Fenwick & West partner who represents Napster, said the 9th Circuit’s decision leaves a little room for the company to move when it comes to policing infringement. “The 9th Circuit said to do so to the extent that it is possible,” Pulgram said. “The question is, what is possible?” But Mark Radcliffe, a copyright partner at Gray Cary Ware & Freidenrich, said the ruling certainly “doesn’t bode well for Napster because people are not going to have access to the songs” they are most interested in. “The question is: if Madonna’s ‘Material Girl’ is being shared,” Radcliffe said, “do you knock it off the directory or knock the person with the song off the system?” Related Chart: Timeline of Events in Napster Case

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