Will Napster survive? The wildly popular music-swapping service steps into the 9th Circuit Court of Appeals Monday, starting round two of its battle against the record industry. Oral arguments are expected to last only about an hour, and it's impossible to tell whether the three-judge panel will rule immediately or reserve judgment for later. But regardless of the timing, lawyers say Napster's future looks grim.
"Let's put it this way," says Fred von Lohmann, a copyright expert in the San Francisco law offices of Morrison & Foerster. "[Napster lawyer] David Boies said in Time magazine this week that they have a 50-50 shot. If your lawyer is only giving you a 50-50 shot, that's not a good sign."
Much of the problem lies with how the case has gone so far. Napster's lawyers have argued that its users have the right to trade music because the 1992 Audio Home Recording Act lets them do it. The AHRA permits people to use digital recording devices (a digital audio tape recorder, for example) to make copies of recordings for friends and family.
But "it's a loser argument," says Mark Radcliffe, a partner at Gray Cary Ware & Freidenrich. "This was not a blanket authorization to make copies. It lets you make a limited number of copies with a digital recorder at home, for your friends and family. You can't set up shop."
On Jan. 26, District Judge Marilyn Hall Patel ruled against the company and ordered it to shut down. An appeals court stayed the injunction two days later, but because "Patel thought Napster was a bunch of thieves and had no sympathy for them," says Radcliffe, the stigma implicit in her opinions remains.
There are, for example, her findings of fact. "The Court of Appeals is stuck with these," Radcliffe says. "They can only rule on matters of law." This means that the judges can't go back, for example, and rule that Napster doesn't actually hurt record sales. Because Patel relied on the recording industry's proof that record sales have been damaged, the appellate judges must accept it and move on.
Still, Napster has two chances for survival. If the San Mateo, Calif., company's lawyers can convince the judges that Napster's service is just a glorified VCR -- that it's used for "substantial non-infringing uses" -- it might still escape. Or, Napster could play the "safe-harbor" card. If the judges agree that Napster is a service provider, that the company's terms of service offer users enough of a legal warning and that it is not aware of wide-scale pirating, then they will let Napster live.
How the judges will rule is anyone's guess. There is only a single omen: One of them -- Judge Mary Schroeder -- wrote the 1996 majority opinion on Fonovisa Inc. vs. Cherry Auction Inc., deciding in favor of Latin music giant Fonovisa, which had sued the owners of a California flea market for turning a blind eye to pirated music being sold by its vendors. By not acting to rein in the counterfeiters, the court ruled, Cherry Auction was guilty of "vicarious and contributory copyright infringement" (i.e. knowing and abetting the copyright crime), the exact same charges the RIAA is leveling against Napster.
Nevertheless, says von Lohmann, "None of these judges has a well-developed reputation on intellectual property issues."
Even if Napster is doomed, however, that may not be the end of the road for music trading on the Net, notes Radcliffe.
"I don't think that this is a death knell for peer-to-peer," he says. "It's a death knell for peer-to-peer as done by Napster."