NAPSTER SAYS IT'S OKAY
TO SWAP

Laying out a defense that sets the stage for a legal showdown at the end of the year, Napster attorneys responded to the recording industry's request that the song-swap service be immediately shut down.

"Plaintiffs ask this court to do what no court has ever done," wrote attorneys for Napster. "To hold private non-commercial sharing of music by consumers is unlawful; to hold that an Internet directory service is liable for uses made by its users; and to extend judicially copyright protection to stifle a new technology."

Napster's filing on Monday is in response to a motion filed by the RIAA on June 12, which asked U.S. District Judge Marilyn Hall Patel for a preliminary injunction that would shut down Napster completely until trial (hitsdailydouble.com, 6/13).

Now that Judge Patel has Napster's response, she will consider both arguments and make a decision July 26. For Napster to be shut down, the RIAA must show that it is likely to prevail in a trial, and that the recording industry would suffer "irreparable harm" if Napster were allowed to continue to operate.

Napster, the world's largest file sharing community, in its opposition brief, argued that the non-commercial sharing of music is "common, legal and accepted," and said that increases in CD sales, in part driven by Napster usage, undermine record industry claims of harm. The brief makes six core arguments lending great legal force to Napster's position that neither the company nor its users are violating the law.

"It's clear the RIAA sees Napster as a threat not because it's going to reduce record sales but that it will reduce the RIAA's control over record sales," said Napster attorney David Boies.

On June 12, the RIAA, which has called Napster a haven for music piracy, filed a motion for a preliminary injunction against Napster, seeking to remove all the songs owned by the group's members from Napster's song directories.

"It's the kind of new technology that can threaten the economic control of a dominant trade association based on the existing technology and the RIAA is trying very fast to catch up and shut down Napster until they can dominate," Boies said.

Napster recently hired Boies (hitsdailydouble.com, 6/16), lead attorney for the Justice Department in the Microsoft antitrust case, in an effort to fight the RIAA in court.

Boies cited parallels between the Napster and the Microsoft court cases. "I do think some of the principles are the same, such as whether or not a dominant firm or association should have the ability to use its power to stifle or disable a new technology, and…[whether] consumers are benefited by having access to new technology and are being able to make choices," he said.

At the heart of the dispute between the record companies and Napster is whether or not the online company's software helps or hurts record sales. The RIAA has used surveys showing a correlation between Napster use and decreased CD sales, while Napster on Monday produced data showing that Napster use actually helps CD sales.

RIAA attorney Cary Sherman responded to Boies' remarks by saying the group's members, who are plaintiffs in the case, have relationships with legitimate technology companies.

"Napster has never even sought licenses for their activities. They are engaged in wholesale piracy," he said.

A hearing for oral arguments is set for July 26 in U.S. District Court in San Francisco, but in its brief filed Monday, Napster requested an evidentiary hearing on that date.

Boies said Napster is an Internet service provider and not responsible for actions of its users. Napster maintains its users are not violating copyrights because one-to-one file-sharing for non-commercial use by its users is not illegal.

"In addition to the ISP argument, which is still valid...it is clear that our users are not violating the copyright law under the American Home Recording Act and we're not guilty of contributory infringement," he said.

The RIAA on Monday said Napster could not hide behind what consumers might do to build its own commercial business.

"Whether or not it's lawful for users to share music one on one, it is entirely different for a commercial entity to create a business that induces users to do that," Sherman said. "The courts have repeatedly rebuffed attempts by businesses to hide behind the ‘fair use' privileges of their customers," he said.

During the briefing, Napster interim CEO Hank Barry denied rumors that Napster had been holding settlement talks with the record industry. "We've been too busy to be involved in any meaningful settlement negotiations, so there's nothing ongoing at this time," Barry said.