For Napster, Monday was not quite the day the music died

The rumors of Napster's death might have been greatly exaggerated . . .
at least for now. After suffering a massive legal defeat yesterday, the
Internet-based music service is still online, but it's only a matter of
time before the company is forced to seriously curtail its business.
Napster started as a way for college students to easily share
copyrighted music; the venture's business model has always been a bit
unclear, given that Napster literally designed its service to let people
acquire music they hadn't paid for. And after a year in court, Napster
is poised for the defeat that so many have expected; the San Francisco
Circuit Court of Appeals ruled that a previous judgment against the
company was essentially correct.
In fact, the only reason Napster is still online is that the appeals
court wanted the case's original judge to slightly rework her decision
against the company. That reworked decision is expected in the next week
or so. But in the meantime, says the appeals court, the service can
remain online. "Napster users who upload file names to the search index
for others to copy violate plaintiffs' distribution rights," the appeals
court said in its ruling. "Napster users who download files containing
copyrighted music violate plaintiffs' reproduction rights." The
conclusion was simple and obvious; the court rejected every legal
argument Napster made.
Napster argued that its service is similar to VCRs, which let users
make copies of copyrighted movies and TV shows. A 1984 Supreme Court
ruling involving Sony concluded that technology couldn't be banned if it
had substantial legal uses, and Napster argued that its service is
covered under that ruling. But the appeals court said that Napster
derives direct profits from the illegal use of its service, and the
previous ruling doesn't apply. Most damaging to the company was the
court's statement that Napster "knowingly encourages and assists in the
infringement of copyrights," a decision that opens the company to damage
Napster, which has reached agreements with a number of music
companies, issued a statement promising to respect the court's decision,
although attorneys for the company expect to appeal all the way to the
Supreme Court, if necessary. "We're fighting for this principle, and we
believe that the actions that the users are engaged in is not copyright
infringement," said Napster CEO Harry Bank. "While we believe this is
legal, respecting the court decision otherwise, it is clearly not
industry supported. And for us to be able to move Napster forward, to
move the technology forward, to move the company forward, we need to
have an industry-supported model."

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