No decision on Napster yet

Sue Zeidler

SAN FRANCISCO: Controversial song-swap company Napster Inc. seemed to strike

an upbeat chord in federal appeals court on Monday as a three-judge panel

decided to allow the popular service to continue, pending further deliberations.

The panel for the 9th Circuit Court of Appeals in San Francisco took no

immediate action on the request by the Recording Industry Association of America

(RIAA) to lift a stay on a ban on Napster, which enables the popular song

sharing service to remain in business pending a final decision.

"The judges seemed to need more information from the recording industry

and were more antagonistic to the RIAA. They don't really seem satisfied with

the status quo," said copyright expert and lawyer for Gordon &

Glickson, Leonard Rubin, who observed the proceedings.

Monday's hearing marked the latest clash between Napster, which has amassed

some 30 million users, and the RIAA, which represents the biggest recording

companies in the world.

The court battle has come to be viewed as the first big battle over

copyrights in cyberspace, and is expected to define how books, movies and music

are distributed on the Internet.

In July, US District Court Judge Marilyn Hall Patel found Napster guilty of

"wholesale" copyright infringement and ordered it to be shut down

pending a full trial. But the 9th Circuit granted a last-minute stay, saying it

needed more time to consider.

Judges appear more critical of recording industry



On Monday, the judges appeared to question some of Patel's earlier conclusions.
"Napster doesn't have any idea what's being transmitted," Judge Mary

Schroeder said in response to RIAA lawyer Russell Frackman's argument that

Napster should be held liable such as when a swap meet owner is held liable for

bootleg CDs sold at his market.

Napster, based in Redwood City, California, lets fans swap songs for free by

trading MP3 files. MP3 is a compression format that turns music on compact discs

into computer files. On Monday, research firm Webonize said 1.4 billion songs

were downloaded using Napster during September.

"I thought the judges on balance more critical of the recording industry

than Napster," said Rioport.com vice president and lawyer Ron Moore.

Napster has said the RIAA, representing Seagram Co. Ltd.'s Universal Music,

Bertelsmann AG's BMG, Sony Corp.'s Sony Music, Time Warner Inc.'s Warner Music

Group and EMI Group Plc, is trying to keep a chokehold on music distribution and

ignores the many legitimate uses the Napster software provides.

Furthermore, it says it is not responsible for its users' activities and also

argues that file-sharing among its users for the most part is noncommercial,

constituting fair use.

Napster lawyer David Boies, best known as the lead Justice Department

attorney in the Microsoft anti-trust case, cited a 1984 legal ruling validating

the use of video cassette recorders despite potential copyright infringement

uses.

After Judge Robert Beezer questioned some aspects of Napster's argument,

Frackman of the RIAA said, "I think you had it right..." but Beezer

quickly shot back, "I have some problems with you too," drawing

laughter in the courtroom.

Judge Schroeder also appeared to question the "fairness" of a music

industry, which promotes the sale of albums over singles. "I can no longer

go out and buy a 45 record. I have to buy an album," she said.

"Napster's users are getting songs."

Frackman responded by saying the recording industry was not objecting to the

technology or digital downloading of music or singles. "We're not talking

about technology. We're talking about a business model," built on

infringement, he said.

(C) Reuters Limited 2000.