On March 2, 2000 the Ninth District Court of Appeals upheld a preliminary
injunction issued by District Court for the Northern District of California
shutting down Napster's peer-to-peer file swapping system. The District
Court granted the preliminary injunction because it found that there was a
strong likelihood that Napster was liable for contributory and vicarious
copyright infringement. A&M Records, Inc. v. Napster, Inc. , 239 F3d 1004
(C.A. 9 2001.) The Court of Appeals decision marked the end of a long battle
between Napster Inc. and the Recording Industry Association of America
(RIAA) over the legality of operating an internet file swapping service that
allowed millions of user to share free digital copies (MP3's) of copyrighted
music.
The RIAA appears to have been successful in addressing its copyright
concerns with respect to Napster. Since the Ninth Circuit decision, traffic
on Napster's file swapping system has decreased dramatically. The decrease
is due largely to Napster filtering out copyrighted material from its
central data base (at Napster's height between 70 to 85 percent of the MP3's
traded on Napster were protected by copyrights held by the recording
industry) and a later attempt by Napster to charge users a monthly fee for
downloading copyrighted MP3's. Brad King, Napster Settles, Eyes Relaunch
(Sept 24, 2001), available at www.wired.com/news/mp3 /0,1285,47075,00.html.
In sum, the recording industry, with the help of the courts, forced Napster
to shut down its file swapping system until it can block access to
copyrighted audio files. This action has drastically decreased the number of
free audio files Napster users have been able to download since the District
Court decision.
However, the initial success against Napster might prove to become a pyrrhic
victory for the RIAA given language in the Ninth Circuit decision that can
be used as a defense to contributory and vicarious copyright infringement by
some of the file swapping services that have replaced Napster. Since the
Ninth Circuit decision, Internet users downloaded 3.05 billion audio files
from file swapping services, namely Music City, Kazaa, and Grokster as
compared to 2.79 audio files from Napster at its height. Brad King, File
Trading Sites in Crosshairs (Oct. 3, 2001), available at
www.wired.com/new/mp3/0,1285,47296,00.html. Accordingly, the RIAA recently
filed a copyright infringement suit against the new file swapping services.
But the technology used by the new services is more decentralized thus
presenting a host of problems for RIAA lawyers. John Borland, File Swapping
Case Breaks New Ground., (Nov. 6, 2001) available at
www.new.com.com/2100-1023-275465. The difference between the technology used
by Napster's file swapping service that required Napster to maintain and
operate a central server and the more decentralized technology used by Music
City, Kazaa, and Grokster begs the question can the reasoning used by the
Ninth Circuit to uphold the District Court decision be used to support a
claim against the new file swapping services for contributory and vicarious
copyright infringement.
The fact that Napster operated a service that allowed the transfer of
copyrighted material from one centralized location allowed both the district
court and the Ninth Circuit court of appeals to find a strong likelihood
that Napster was liable for Contributory Copyright infringement. Napster
provided technical support for the indexing and searching of MP3 files and
operated network servers that allowed users to search for MP3 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. A&M Records,
Inc. v. Napster, Inc. , 239 F3d 1004, 1011 (C.A. 9 2001.) The centrality of
the service offered by Napster allowed the district court to find actual
knowledge of direct copyright infringement, an element of contributory
copyright infringement.
Contributory liability exists if, one who, with knowledge of infringing
activity, induces, causes or materially contributes to the infringing
conduct of another. Id. at 1019. Knowledge of infringing activity can be
either actual or constructive. The Ninth Circuit Court of Appeals found that
Napster in all likelihood had both actual and constructive knowledge of
direct copyright infringement. The court stated, "that if a computer system
operator learns of specific infringing material available on his system and
fails to purge such material from the system, the operator knows of direct
infringement." Id. at 1021. Napster had actual knowledge of specific
infringing material because a document authored by a Napster executive
mentioned the need to remain ignorant of users' identities because users
were exchanging pirated music and the RIAA informed Napster of more than
12,000 infringing files on its system. Id. at 1021. The fact that Napster
operated a service that was used to download copyrighted audio files allowed
the court to find actual knowledge of direct infringement. Further, the
Ninth Circuit agreed with the district court's assertion that Napster
materially contributed to infringing activity because without the support
services of Napster, Napster users could not find and download the music
they want. The finding of both required elements allowed the Ninth Circuit
Court to affirm the District Decision that all likelihood Napster was liable
for contributory copyright infringement.
Ironically, language in the Ninth Circuit decision might prove a useful
defense to potential contributory copyright infringement claims by the RIAA
for Music City, Kazaa, and Grokster. The Ninth Circuit cites Universal City
Studios, Inc. v. Sony Corp., that held that the manufacturers and retailers
of video tape recorders are not liable for contributory infringement despite
evidence that such machines could be and were used to infringe plaintiff's
copyrighted television shows. Id. at 1020. Thus, the ability of technology
to allow end users to infringe copyrights does not require a finding that
the individual that distributes or maintains the technology has actual or
constructive knowledge of contributory copyright infringement. The Ninth
Circuit applies this principle to the Napster context by stating, "we are
bound to follow Sony, and will not impute the requisite level of knowledge
to Napster merely because peer-to-peer file sharing technology may be used
to infringe plaintiff's copyrights." Id. at 1021. The Ninth Circuit language
provides an incentive for the new file swapping agents to argue that their
level of knowledge about the direct infringement of end users is more like
the distributors and manufacturers of VCR's and less like that of those that
operated and maintained Napster's servers.
This argument seems plausible given the characteristics of the technology
used by Music City, Kazaa, and Gorkster. These file swapping agents
distribute software called fast-track that allows users to create their own
network to swap audio files. The network, called Morpheus by Music City, is
not run from a central location like Napster. Instead it exists as an
amalgamation of individual users that connect to each other via the internet
to share audio files with the fast-track software. John Borland, File
Swapping Case Breaks New Ground., (Nov. 6, 2001) available at
www.new.com.com/2100-1023-275465. Hence, it can be argued that Music City,
Kazza, and Gorkster are distributors of software that could be used to
download copyrighted music instead of the operators of a network that allows
such use like Napster. This reasoning will allow those at Music City,
Kazzaa, and Grokster to invoke Sony by claiming that they do not have
knowledge of specific infringing material because they do not monitor and
index the audio files available to their users. For instance, RIAA warnings
about infringing material available on Morpheus will not take the same
importance in a case against Music City as similar warnings in the Napster
case because of the inability of Music City to filter copyrighted material
from its system.
The difference between the system operated by Napster and the network
created by the fast-track software also poses an obstacle to finding
vicarious copyright infringement. Vicarious copyright infringement exists
where the defendant "has the right and ability to supervise the infringing
activity and also has a direct financial interest in such activities." A&M
Records, Inc. v. Napster, Inc. , 239 F3d 1004, 1023 (C.A. 9 2001.) The Ninth
circuit agreed with the district court that in all likelihood Napster was
liable for vicarious copyright infringement. The court found that Napster
was able to stop copyright infringement on its network either by filtering
copyrighted songs from the network or shutting the network down all
together. In addition the court found that Napster materially benefited from
the copyright infringement of its users. Financial benefit exists where the
availability of infringing material acts as a draw for customers. Id. at
1024. Napster sold ad space that appeared on the screen of users logged on
the to Napster network. Napster financially benefited from infringing
activity because the availability of copyrighted material on its network
attracted users that in turn were exposed to ads Napster sold.
It appears unlikely that Music City will be held liable for vicarious
copyright infringement. Nonetheless, like Napster, Music City might
financially benefit from the direct copyright infringement of Morpheus
users. The availability of infringing material on the network created by the
fast-track software acts as a draw to new users. Music City, Kazaa, and
Grokster sell add space, like Napster did, that appears on the user's screen
when he/she opens the fast track software. The more copyrighted material
available on the network the more likely new users will download the
fast-track software and view the ads sold by Music City. However as
mentioned, unlike Napster, Music City does not have the right ability to
supervise the infringing activity that it financially benefits from. As a
result it is doubtful that a plaintiff can satisfy all the required elements
for vicarious copyright infringement to hold Music City, Kazaa, and Grokster
liable.
