Napster judges bash record industry lawyers

Two months ago, the record industry won a slam dunk victory against online music Web site Napster. This week, the industry found itself on the defensive during a legal grilling by two of the three judges on the Appeals Court panel. The judges are reviewing the order by U.S. District Judge Marilyn Patel that would force Napster to shut down its popular Web site.

All three judges asked questions covering a broad spectrum of issues. But some of the toughest questioning was directed at the representatives for the record industry. Two of the judges took particular issue with the industry’s claim that Napster has the ability, but refuses, to keep track of whether its users are illegally downloading copyright music. "How are they expected to have knowledge of what's coming off a kid's computer in Hackensack and being downloaded in Guam?'' asked U.S. Circuit Judge Robert Beezer, a 1984 appointee of President Reagan.

Russell Frackman, a lawyer representing the Recording Industry Association of America replied that the answer lies in Napster's ability to take a list of copyrighted song titles and redesign its service to

transmit those files. But the legal argument may be mute if the judges rule in favor of Napster’s claim that its service is merely an online "device,’ much like a VCR that allows duplication of copyrighted material by consumers. Napster has used this as one of the company’s strong arguments. This right has been firmly established by the U.S. Supreme Court in a 1984 ruling on a consumer’s right to use a Betamax system to copy movies and TV programming. The recording industry’s argument would be similar to requiring VCR makers to program a list of copyrighted movies into their machines and prevent those titles to be copied.

Judge Beezer also asked why the industry hasn't sued or filed criminal charges against Napster users, which it knows are downloading copyrighted music. "We don't want to put individuals in jail for using Napster,'' replied Frackman.

Judge Mary Schroeder, meanwhile, questioned the industry's reliance on a 1996 decision in which the 9th Circuit held a flea market operator could be liable for copyright infringement if its vendors sell counterfeit goods. "This is different, since Napster cannot control what goes on between its users," said Schroeder, who wrote the 1996 opinion.

Analysts said the judges may also be tough on the industry for its refusal to settle with Napster which has made a number of offers. One such deal would generate some $500 million in first-year royalties alone.

"Every one of these proposals has been rejected and the record companies have made no counter-proposals,'' said Napster Chief Executive Hank Barry. Some 945,000 people visit Napster's Web site each day. It is estimated that Napster users have about 1.5 billion music files in circulation.

The appeals court can either uphold the injunction, reject it or send the issue back to the trial judge for further hearings. Napster argues that Patel should have gathered more evidence before issuing her July order. Napster lawyer David Boies wants the case to be send back for additional trial hearing. "We're looking for a trial without being shut down. We want a trial as soon as possible.''