Highlights of Napster Court Decision

Feb, 12 -- Following are some of the most important points from the 9th U.S. Circuit Court of Appeals' decision today in the Napster case.

Napster Users Are Pirates

The record supports thedistrict court's determination that "as much as eighty-seven percent of the files available on Napster may be copyrighted and more than seventy percent may be owned or administered by plaintiffs."

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We agree that plaintiffs have shown that Napster users infringe at least two of the copyright holders' exclusive rights: the rights of reproduction, § 106(1); and distribution, § 106(3). Napster users who upload file names to the search index for others to copy violate plaintiffs' distribution rights. Napster users who download files containing copyrighted music violate plaintiffs' reproduction rights.

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The district court determined that Napster users engage in commercial use of the copyrighted materials largely because (1) "a host user sending a file cannot be said to engage in a personal use when distributing that file to an anonymous requester" and (2) "Napster users get for free something they would ordinarily have to buy." Napster, 114 F. Supp. 2d at 912. The district court's findings are not clearly erroneous. Direct economic benefit is not required to demonstrate a commercial use. Rather, repeated and exploitative copying of copyrighted works, even if the copies are not offered for sale, may constitute a commercial use.

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The district court determined that Napster users engage in "wholesale copying" of copyrighted work because file transfer necessarily "involves copying the entirety of the copyrighted work." Napster, 114 F. Supp. 2dat 913. We agree. We note, however, that under certain circumstances, a court will conclude that a use is fair even when the protected work is copied in its entirety.

Napster Hurts CD Sales

The district court cited both the Jay and Fine Reports in support of its findingthat Napster use harms the market for plaintiffs' copyrighted musical compositionsand sound recordings by reducing CD sales among college students. The districtcourt cited the Teece Report to show the harm Napster use caused in raisingbarriers to plaintiffs' entry into the market for digital downloading of music.Napster, 114 F. Supp. 2d at 910. The district court's careful consideration ofdefendant's objections to these reports and decision to rely on the reports forspecific issues demonstrates a proper exercise of discretion in addition to a correctapplication of the fair use doctrine. Defendant has failed to show any basis fordisturbing the district court's findings.We, therefore, conclude that the district court made sound findings related toNapster's deleterious effect on the present and future digital download market.Moreover, lack of harm to an established market cannot deprive the copyrightholder of the right to develop alternative markets for the works.

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The "record company plaintiffs have already expended considerable funds and effort to commence Internet sales and licensing for digital downloads." 114 F. Supp. 2d at 915. Having digital downloads available for free on the Napster system necessarily harms the copyright holders' attempts to charge for the same downloads.