On February 8th, 2001, UCLA hosted a panel discussion
entitled "Intellectual Property and the Napster Case: Implications for
Business, Technical, and Legal Professionals." The panel, co-sponsored
by the UCLA Law Alumni Association, the UCLA Engineering Alumni Association,
and the UCLA Bruins in Business, brought together a diverse group of
personalities, professional backgrounds and perspectives on the future
of intellectual property law. The discussion featured a thorough discussion
of the Napster case (A&M Records, Inc., et al. v. Napster, Inc.) and
some memorable moments as well.
The moderator of the distinguished panel, Dennis L. Perez,
a principal with the Beverly Hills law firm of Hochman, Salkin, Rettig,
Toscher & Perez, P.C., began the discussion by asking Roy L. Schults,
litigation department chair and partner of the Los Angeles firm of Mitchell,
Silberberg & Knupp, to introduce the audience to the legal issues surrounding
the Napster case. Mr. Schults was in a particularly fine position to
address the complexities of the case as he served as counsel for the
recording industry.
The Napster case focused on copyright issues. Napster,
for the digitally-challenged among you, is a software program originally
created by a college student, Shawn Fanning, to allow his friends to
share music with one another via the internet. Today, one can open the
Napster program, log onto the central Napster server, and then search
a virtual library of MPEG-3 (MP3) music files that regularly comprise
hundreds of thousands of songs. The recording industry claimed that
Napster was founded on, and its business model rests on, attracting
users by offering free, popular, copyrighted music. A district judge
agreed that the predominant use of MP3s is trafficking in illicit songs
and granted a preliminary injunction which Napster appealed. Mr. Schults
argued that Napster was both guilty of contributory copyright infringement
and vicariously liable for the direct copyright infringement of its
clientele. The charge of contributory copyright infringement focused
on questions such as whether Napster had knowledge of the infringement
and whether they materially contributed to the infringement. The charge
of vicarious liability, on the other hand, focused on questions over
the rightful ability to supervise the infringing activity and whether
Napster had a direct financial interest in the infringing activity.
The recording industry argued that Napster had general knowledge that
copyright infringement was occurring. A final legal issue Mr. Shults
highlighted was whether Napster sustained substantial non-infringing
use. Napster claimed that it had engaged in substantial noncommercial
uses, such as sharing, rather than stealing, music, and "space-shifting,"
which is the transfer of legally obtained music from one venue to another.
Stuart Biegel, a member of the faculty of the UCLA Graduate
School of Education and Information Studies and at the UCLA School of
Law, addressed what the future of peer-to-peer technology, such as Napster,
means to law. In his view, there is an argument to be made that one
should not shut down new technology at its start. Peer-to-peer technology
could, for instance, be of great benefit to future scientific endeavors.
Moreover, the Napster situation is somewhat analogous to the prohibition
movement in that so many people are willing to download music from Napster
despite popular arguments that it is immoral to do so. Professor Biegel
concluded by saying that the Napster case is proof that many intellectual
property laws are not working in cyberspace today.
Michael M. Krieger, a partner in the Century City firm
of Kriger & Nunziato, LLP, added that often times intellectual property
law is a matter of degree. Questions as to what constitutes fair use
or substantial non-infringing use often comes down to what a jury decides.
The Ninth Circuit Court of Appeals ruled against Napster in February
2001. However, the appellate court's conclusions as to what constitutes
fair use and substantial non-infringing use will hardly be the end of
the debate. As peer-to-peer technology continues to proliferate, such
questions will only become more complicated and difficult to answer.
The panel's most lively participant, Stephen D. O'Connor,
President and CEO of Nanostream, a company that makes microfluidic components
for the chemical and biotechnology industries, questioned the role of
intellectual property law in the New Economy. In his view, the copyright
system broke down with the advent of the internet and must be completely
revamped in order to reasonably and efficiently resolve disputes. A
highly animated professor in the audience agreed and the two poked fun,
in a room filled with lawyers, law students, and legalese, at the law's
inefficiency in the field of intellectual property. Still, all seemed
to agree with Professor Biegel's suggestion that the reworking of the
law in this area will take time. Mr. O'Connor pointed out, for instance,
that only a handful of people were using the internet just ten years
ago. Mr. O'Connor went on to explain that the most rational solution
to the recording industry's Napster dilemma would be for the recording
industry, taking the Bertelmann Group's lead, to buy Napster and either
make it profitable or shut it down.
Perhaps the single most memorable moment of the panel
discussion came when Mr. O'Connor asked the audience how much they thought
it cost to obtain a patent. One gentleman responded "a thousand dollars."
A second individual suggested "two thousand." Finally, an unruly law
student in the back of the room loudly opined "one billion dollars."
The remark was no doubt meant to be humorous, but in a strange way it
was representative of the discussion. In this age of rapid technological
change and its inevitable unsettling influence on the legal world, there
seems to be a fine line between what was once worlds apart: stealing
and sharing, copying and space-shifting, illicit use and fair use. And
like Mr. O'Connor, who was certainly shocked by the law student's guess,
it is up to those of us in the legal profession to sort it all out.
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