Question
A small Internet start-up company, founded in May 1999 by a 19-year old college dropout Shawn Fanning, revolved around a program which builds communities around
A small Internet start-up company, founded in May 1999 by a 19-year old college dropout
Shawn Fanning, revolved around a program which builds communities around types of
music. Since going on-line in September 1999, the Napster site has raised $15 million in
venture funding, attracted over 20 million users, and facilitated the download of over 1400
songs per minute. In 1999, several major recording labels filed an action seeking damages
and injunctive relief against Napster. Napster was not sued for direct infringement, due to the
fact that the technology did not directly copy files on to its central server but merely allowed
peer-to-peer sharing. Instead, it was claimed by the recording industry that Napster's peer-topeer
file-sharing technology and Internet directory service made Napster contributorily and
vicariously liable for its users' alleged copyright infringement. Napster raised an assortment
of defences for its conduct, including
the fair use defence on the part of Napster users, including the Sony defence;
the AHRA non-commercial user exceptions;
the "safe-harbour" defence provided under the DMCA.
The Napster network allows music aficionados to, inter alia, make MP3 music files stored on
individual computer hard drives available for copying by other Napster users; search for MP3
music files stored on other users' computers; and transfer exact copies of the contents of other
users' MP3 files from one computer to another via the Internet. Napster's "peer-to-peer"
architecture replaces the traditional method of using large centralised information servers to
supply the requested files. Important factors in considering the technology are:
Napster servers do not create, copy, store or make available any of the MP3 files on its
servers (whether transient or otherwise);
the contents of all MP3 files are held at all times on the users' computers;
the contents of the MP3 files are not routed or transmitted through Napster's servers;
Napster merely holds a database of MP3 file names and, if requested, the IP address
information of each user.
It is difficult to definitively categorise Napster: it can simultaneously be viewed as a service
provider, a search engine, and a provider of information location tools such as directories or
indexes.
Direct Infringement by Napster Users
In order to prove that Napster was liable for contributory and vicarious copyright
infringement, the industry had to prove that Napster users themselves were actively engaged
in the unauthorised reproduction and distribution of copyrighted works. In order to counter
this claim, Napster had to prove that all or some of the activities indulged in by its users
exempted them from the charge of direct infringement, under the fair use defence, and if this
is the case, Napster itself could not be held liable. The district court held that the recording
industry had presented a prima facie case of direct infringement by Napster users. In doing
so, it accepted the industry's claim that more than eighty percent of the files available on
Napster may have been copyright protected and owned or administered by plaintiffs, thereby
violating the plaintiff's exclusive rights of reproduction and distribution under 106, U.S.
Copyright Act. The Court of Appeal found nothing wrong in the district court's finding and
Napster did not further argue this point. It instead relied on the fair use defence and claimed
that it could avail itself of the "safe harbour" provisions under the DMCA.
What Does "Sharing" Entail?
Napster contended that users could not be considered to be direct infringers as they were
engaged in fair use of the material. Both the district court and the appellate court concluded
otherwise. The Court of Appeal emphasised the point of unfair dealing stating that, as
opposed to direct economic gain by the users, the key issue was the "repeated and
exploitative copying of copyrighted works, even if the copies are not offered for sale".
Another hotly disputed feature was whether Napster use harmed the market for copyright
music. The district court held that Napster use harms the market for copyright musical
compositions and sound recordings, especially in relation to sales within college markets (a
high proportion of Napster users are students). The court rejected Napster's report which
showed that Napster is beneficial to the music industry because MP3 music file-sharing
stimulates more audio CD sales than it displaces. Market harm is viewed from the perspective
of the current market and any potential market into which the copyright holder may have an
interest in. The district court determined that Napster had harmed the music industry's market
in two ways: it reduces audio CD sales among college students and it raises barriers to
plaintiffs' entry into the market for the digital downloading of music. The Court of Appeal
concurred with this finding, adding the that
"lack of harm to an established market cannot deprive the copyright holder of the right
to develop alternative markets for the works
Space Shifting
What about "space-shifting"? This is where a user accesses and downloads an MP3
formatted sound recording through the Napster system in order to listen to music that she
already owns in an audio CD format. As discussed above in the RIAA v Diamond decision,
space shifting of musical compositions and sound recordings can be a fair use, and this strand
of defence stems from the Sony decision. The district and appellate courts refused to apply
the "shifting" analyses of Sony and Diamond to the MP3 decision on the basis that Napsterbased
activities had an inherent distributive element within its users' activities. Diamond and
Sony were distinguished in that the methods of shifting employed by the users did not also
simultaneously involve distribution of the copyright material to the general public; the time
or space-shifting of copyright material exposed the material only to the original user.
Conversely, it is obvious that once a user lists a copy of music he already owns on the
Napster system in order to access the music from another location, the song becomes
"available to millions of other individuals," not just the original CD owner.
The objection here revolves, once again, around the fact that Napster facilitates the
downloading and distribution of music; whereas, the end destination in the case of Diamond
and Sony hardware was the media storage device i.e. the Rio player and the Betamax VCR,
respectively.
Contributory Liability
A party is liable for contributory infringement if he has knowledge of the infringing conduct
of another, and induced, caused or materially contributed to the infringing conduct. Could
Napster really be said to have encouraged and assisted in the infringement of the plaintiffs'
copyright? Did it not have a disclaimer on its site and a specific injunction to its users against
the download and distribution of copyright music? Finally, can knowledge be assumed to
Napster? The district and appellate courts concluded that Napster had both actual and
constructive knowledge that its users exchanged copyright music in spite of the fact that the
plaintiffs' could not definitively identify more than 200 song titles.
What of the decentralised nature of peer-to-peer technology which prevents Napster from
knowing the nature of their users' activity and of the files shared. The only information that
Napster can access is to the user-given file names. First, these file names do not necessarily
reveal whether the work is copyright protected or not. The situation is more difficult in the
case of classical music as file names are usually identified by the composer and the name of
the work (for example, Beethoven, 1st symphony, 2nd movement), without any indication as to
the performers or the recording label. Secondly, Napster does not control the file names and it
is open for users to either inadvertently or deliberately misidentify their files: thus, an
unknown artiste, in order to receive maximum publicity, may name his file:
"B. Spears, Oops, I did it again".
The technology does not enable Napster to determine whether this is an infringing file or not
except by downloading and listening to all songs which appear to have potentially suspect file
names on its servers. This confirms the fact that file names, per se, do not identify the artist
or the song title, or whether the music is from a CD (in which event the Plaintiff recording
companies may own the rights) or a recording of a live concert (which many artists allow to
be freely circulated for promotional reasons). Moreover, programs such as Aimster allow
users to circumvent Napster filters by automatically transcribing copyrighted song titles into
Pig Latin. Even the District Court agreed that it would be too "burdensome or even
impossible to identify all of the copyrighted music they own"; instead, the court, in reliance
on previous case-law, held that knowledge need not relate to "specific acts of infringement".
Nonetheless, it still held that the plaintiffs had demonstrated a likelihood of success in
relation to material contribution. Relying on the district court's findings, the 9th Circuit held
that without the support services that the defendant provides, Napster users could not find and
download the music they wanted with the ease of which defendant boasts and that Napster
provides "the site and facilities" for direct infringement.
A.Briefly discuss the important issues/facts related to the case.
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