Napster suit tests new copyright law

A new copyright law designed to protect the works of songwriters, artists and movie directors is being tested in a case that pits the powerful recording industry against a wildly popular but controversial music start-up.

The Digital Millennium Copyright Act (DMCA), passed two years ago, was considered an important legislative battle for the entertainment industry. But it may already be out of date.

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Lawyers for music upstart Napster are trying to use that same law to derail a multimillion-dollar copyright lawsuit in San Francisco, the outcome of which could weaken the hard-fought act. A decision is expected as early as this week on a defense motion to throw out the suit under the DMCA's so-called safe harbor provisions, despite claims that the service facilitates rampant music piracy by allowing music enthusiasts to swap digital recordings, called MP3s.

"If Napster wins this, then presumably everybody that is propagating MP3 files and movie files will be protected," said attorney Carl Oppedahl, of Oppedahl & Larson in Frisco, Colo. "And every time the music industry faces a technological change or an unfavorable ruling, they run to Congress to plug the latest hole in the dike."

Regardless of the decision, the case underscores serious problems in the music industry's digital media strategies, which have been largely driven by fears of intellectual property theft.

In recent years, entertainment companies have lobbied hard to bolster online copyright protections, winning new tools to enlist the courts as a major line of defense against violators--and drawing criticism that such efforts have shifted legal balances at the cost of consumers. But as the Napster case demonstrates, even relatively recent laws have not kept up with the rapid pace of technological advances.

As such, even if the recording industry wins its battle against Napster, it faces dozens of other copying software programs flourishing on the Net. Services like Wrapster, iMesh, Spinfrenzy and Gnutella will continue to be a threat to the music industry.

"The whole area of music on the Internet is a complicated one," said Jonathan Band, an attorney with law firm Morrison & Foerster in Washington, D.C. "All the new software could have been done by the record companies. But what you see is the industry trying to preserve the old model as opposed to it taking advantage of the new model and being innovative and cutting-edge."

Artists, music studios and the recording industry are angry they don't get proceeds from the swapped files and in court papers accuse Napster of "running an online bazaar devoted to the pirating of music."

At the heart of the dispute is the digital copyright law passed two years ago to expand online safeguards for software, literature and music. The law also shields Net access providers from liability.

That important caveat places the copyright burden on the person using a legitimate service.

In other words, much as Xerox can't be held liable for the actions of people who copy books, songs and artwork on its machines, online service providers can't be held responsible for the actions of their customers.

But how lawmakers define service providers is open for broad interpretation, experts say.

Napster's lawyer, Laurence Pulgram of Palo Alto, Calif.-based Fenwick & West, has argued that his client falls under the law's safe harbor because its services are similar to Web browsers or other applications offered on the Web, such as File Transfer Protocol (FTP) software.

"Napster does not control or supervise the materials transmitted between users in any way," Pulgram wrote in his legal papers.

In the past, courts have almost always left it up to the copyright holder to enforce compliance, steering clear of clamping down on new technology.

In a landmark 1984 case, for example, the U.S. Supreme Court refused to block sales of VCRs. Today, the purchase of movie videotapes by consumers is one of the main sources of revenue for the film industry.

Pulgram's argument is drawing skepticism from the legal community, however.

"I don't know if Napster is going to be able to shoehorn themselves into an exemption in the DMCA," said Neil Rosini, a lawyer at New York law firm Franklin, Weinrib, Rudell & Vassallo, who represents online music firm Myplay.

San Francisco intellectual property attorney Neil Smith of Limbach & Limbach acknowledges that the law is ambiguous but said he believes Congress intended it to protect Net access providers such as America Online, AT&T WorldNet and MCI WorldCom, and definitely not companies like Napster.

"The courts will now have to wrestle with this," he said. "Certainly the digital delivery system is a real threat to the music industry."

It's a problem the industry is well aware of. In court papers, attorneys for A&M Records and other major music labels fear that without strong protections, "Internet piracy of sound recordings will mushroom."

The Recording Industry Association of America (RIAA) sued Napster in early December, seeking up to $100,000 in damages for each copyright-protected song allegedly exchanged illegally using the start-up's software.

Such a finding could put Napster out of business.

In its defense, Napster, an 18-employee company, said it warns its customers to comply with all copyright laws. When the recording industry gave the company a list of about 50 people who were illegally downloading top hits, Napster said it blocked those consumers from its service.

"There is no need for injunctive relief," Napster's lawyer wrote. "Napster itself will block access to the Napster system for any user identified as engaging in infringing activity."

RIAA lawyers late last month sought to expedite their request for a court order to stop Napster from providing its software.

Napster then submitted a motion arguing that the music industry doesn't have a case, citing the digital copyright act as a shield.

A ruling on Napster's motion is pending.

"The defense is a novel one, but if Napster wins this, I predict the law will be rewritten in eight minutes," Rosini said. "The DMCA was never intended for companies like Napster."