The Ninth US Circuit Court of Appeals has rendered a mixed decision on a lower court's injunction against Napster, which has been stayed pending appeal.
While the injunction will not be imposed immediately, the appellate court has found that many of the district court's findings against Napster were sound, in particular its rejection of Napster's argument that because the service allows "time shifting" (e.g., when a VCR is used to record a TV broadcast for later viewing), it should be protected by the Sony decision which upheld time shifting.
The appeals court, however, found otherwise "because the methods of shifting in these cases did not also simultaneously involve distribution of the copyrighted material to the general public; the time or space-shifting of copyrighted material exposed the material only to the original user."
"We find no error in the district court's determination that plaintiffs will likely succeed in establishing that Napster users do not have a fair use defense."
That's bad, since Napster has based much of its defence on the principle of fair use.
It gets worse. The court also shot down another of Napster's defences, namely that the service has enough non-infringing uses to deserve protection from charges of contributory infringement (enabling others to infringe copyrights).
While the appellate court did reject the district court's finding that Napster's non-infringing potential is negligible, it also concluded that "plaintiffs have demonstrated a likelihood of success on the merits of the contributory copyright infringement claim."
And it gets worse still. Napster may well be found guilty of vicarious infringement, such as occurs when one fails to prevent infringing acts on one's premises when it should be obvious to one that it's going on.
"Our review of the record requires us to accept the district court's conclusion that plaintiffs have demonstrated a likelihood of success on the merits of the vicarious copyright infringement claim. 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."
And as to Napster's claim that it would be destroyed by an injunction, the court found that the recording industry would suffer far greater ills if Napster were allowed to continue operating as it does until the case is decided finally.
"The district court considered ample evidence to support its determination that the balance of hardships tips in plaintiffs' favor: Any destruction of Napster, Inc. by a preliminary injunction is speculative compared to the statistical evidence of massive, unauthorized downloading and uploading of plaintiffs' copyrighted works -- as many as 10,000 files per second by defendant's own admission. The court has every reason to believe that, without a preliminary injunction, these numbers will mushroom as Napster users, and newcomers attracted by the publicity, scramble to obtain as much free music as possible before trial."
The only scrap of good news is that the injunction is too broad. But that can be fixed.
"The preliminary injunction which we stayed is 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. As stated, we place the burden on plaintiffs to provide notice to Napster of copyrighted works and files containing such works available on the Napster system before Napster has the duty to disable access to the offending content."
So, as soon as the injunction can be tweaked, Napster will either have to prevent every work cited by industry watchdogs from being traded, or shut down. It's hard to imagine the service remaining in business as we know it in either case.
"We direct that the preliminary injunction fashioned by the district court prior to this appeal shall remain stayed until it is modified by the district court to conform to the requirements of this opinion," the court stated finally.
Sad news for free MP3 lovers. Get 'em while you can.... ®