As of Friday at midnight PDT, Napster must shut down -- or find some way to prevent its 20 million users from trading any songs copyrighted by the 18 record companies suing the MP3-swapping service for copyright infringement. This was the order of U.S. District Judge Marilyn Hall Patel, who on Wednesday granted the recording industry the preliminary injunction it was looking for, after poking holes in Napster's arguments throughout a tense two-hour hearing.
"It's pretty much acknowledged by Napster that this is infringement, because of the users' agreement which implies infringement and by statements made in their own documents," Patel said, in explaining her ruling -- which, barring last-minute legal maneuvering or reversal between now and Friday, will remain in effect until she reaches a final decision in the case. The "statements" she refers to are early e-mail messages written by Napster's teenage founder Shawn Fanning and others who helped build the business, touting their software as a way to get your favorite songs.
Patel's decision was an instant defeat for Napster, the wildly popular tune-swapping service that has threatened to dethrone the record companies by helping music lovers find digital files on the hard drives of other music fans. And it was a harsh blow to David Boies, Napster's lead lawyer -- who is hardly finished celebrating the victory he won against Microsoft as the Justice Department's counsel in the antitrust case.
Soon after taking on $15 million in venture capital and an attorney as its new CEO in May, Napster hired the high-profile Boies -- an act widely seen as one of the first smart moves made by the revenue-less company. Basically, CEO Hank Barry felt the company's legal defense should take precedence over figuring out a business plan -- and he was right. But if Judge Patel sticks to the path she's started down in this case, Barry may never need a spreadsheet.
Boies based his defense largely on two precedents. In the Sony vs. Universal Studios case, also known as the Betamax case, the Supreme Court held that VCRs were not illegal, because in addition to letting users make copies of copyrighted films, they were "capable of substantial non-infringing uses" such as recording television programs for later enjoyment, an idea the court called "time-shifting." In the RIAA vs. Diamond Multimedia Systems case, an appeals court held that Diamond had a right to make Rio portable MP3 players because consumers have the right to create and transfer -- "space shift" -- digital music for non-commercial uses.
Boies and Daniel Johnson Jr., another attorney for Napster, argued that, like Sony's Betamax, Napster could be used for "non-infringing" purposes -- in this case, sampling new music before buying CDs or searching out unknown artists.
But Patel would have none of that argument, and sided with the record companies that say 87 percent of the songs found on Napster are copyrighted material. "While it may be capable of other things, these seem to pale in comparison to what Napster was created for, promoted for and how it's used today," she said. Napster's claim that it was built for David not Goliath, small artists as opposed to big, looked like an afterthought, she added, something "that's come lately to the table, after the suit started."
And then she threw out the Rio argument. In her view, Napster is a whole different beast than a portable MP3 player or a VCR, in part because it takes advantage of the vastness of the Internet to connect a great number of people to each other's music collections: "It's not just a sharing among friends, not the typical kind of personal use."
It was clear from early on in the Wednesday afternoon hearing that Judge Patel was not to be easily swayed by Boies. Less than halfway into the 20 minutes she had allotted him to present his case, Patel cut Boies off and gave him a minor tongue-lashing. As Boies explained that Napster is capable of substantial non-infringing uses, she interrupted to ask why, if people are using Napster for non-copyright infringing purposes, an injunction would put Napster out of business. "Isn't that inconsistent with your argument?" she queried.
After Patel issuing her ruling, Boies stood up to ask for some leeway. The tan-faced attorney argued that by demanding that Napster prevent users from trading copyrighted songs, the judge was in essence asking Napster to shut down. Napster, he argued, can't separate the copyrighted songs from everything else without listening to every file, in its entirety. "We don't even have a list of songs that plaintiffs claim have been copyrighted," he said.
But Patel would have none of it: "That's their problem. They've created the monster and this is the consequence they face," she said, adding, "They can have their chat rooms. They can have their new artists."
Boies' cohort Johnson also failed to woo the judge with his argument that the record industry created its own problem and that Napster shouldn't be held responsible for it. "The ripping software [used to copy music from CDs to MP3 format] isn't created by Napster, it's created by Sony," he told the court. "They have created their own monster and the monster is MP3." The record industry, he argued, could have created an encryption system for music as early as 1988, but failed to do so and now -- no matter what happens in court -- MP3 files will exist and people will likely trade them. "It's not my fault, it's not Napster's fault, it's their fault," he exclaimed.
But Patel found the arguments of Russell Frackman, an attorney for the record industry, far more compelling. In his opening remarks, he suggested that Napster's wild popularity should be considered a black mark against it and estimated that within the few minutes it took for people to find their seats in the courtroom, 30,000 songs -- the vast majority of which would be copyrighted -- were downloaded using the service. "This is just the beginning," he prophesied, "and your honor has the ability to nip this in the bud."
Even after the injunction, his words ring true. Anything could happen. The full trial has not yet even begun. But it now seems even more unlikely that Napster will slip out of its tangle with the recording industry. Judge Patel has now ruled twice: once against Napster's attempt to have the case thrown out, and now against Napster's ability to continue unhindered while the RIAA's copyright infringement case snakes its way through court. All evidence suggests she will remain a tough customer for Napster to win over.