The other element or factor with respect to this fourth element is the harm by reason of raising barriers to plaintiff's entry into the market for digital downloading of music. The potential fair uses of Napster that have been proffered by defendant are, for example, sampling, space shifting and the authorized distribution of the work of new artists. For the following reasons, I don't find that these constitute the kind of fair uses that are substantial and noninfringing within the meaning of Sony.

First of all, with respect to sampling, sampling does not constitute a noncommercial personal use in the traditional sense because it involves the distribution of music among millions of users.

Plaintiffs have shown a meaningful likelihood that if sampling became widespread, it would reduce the market for copyrighted works. The defendants argue, and I think unpersuasively, that the use of Napster for sampling stimulates CD sales. I don't think in fact the reliable evidence in this case supports that.

Even if sampling did increase CD sales, it would still infringe plaintiffs' right to licensing fees, to control their work to derivative markets, and so forth. And if users can sample songs for free on Napster, they're unlikely to purchase individual songs from the online sites affiliated with plaintiffs. And particularly if they cannot only sample them but copy them, there is certainly less incentive to do what you can do on some sites, and that is just to sample the music but not be able to copy it.

The other use that defendants proffer is space shifting. Now there may be a lot of space shifting going on, but I think the evidence shows that that space shifting is going on not independent of, but in fact in conjunction with, the copying of or downloading of music that is being obtained in a way that I just indicated is infringing. I don't find that the substantial noninfringing use within the meaning of Sony.

Also, the court rejects the application of the Audio Home Recording Act to the pacts of this case. It does not immunize the noncommercial use of Napster in the space shifting areas as they have suggested. That act is irrelevant in fact to this action because plaintiffs have not brought any claims under it. And also, under the 9th Circuit law, neither computers nor hard drives are audio home recording devices, nor is there anything else in this case that involves Napster that is an audio home recording device within the meaning of the statute.

I think the lie is given to that by the fact the defendants argue legislative history. But there's nothing in the act that is so unclear that required that the court go to the legislative history to try to interpret the statute.

Second, defendant fails to show that space shifting constitutes a commercially significant use of Napster. Indeed, the most credible explanation for the exponential growth of traffic on Napster is the vast array of files offered by other users, not the ability of each individual to space shift music that he or she already owns.

Finally, the court declines to apply the staple article of commerce doctrine to Napster on the basis of space shifting because defendant is not merely a manufacturer/seller whose contact with consumers ceases when the product is sold. Rather, as I will go into on the contributory and vicarious infringement, defendant, despite his contention to the contrary, exercises a substantial and ongoing control over its service.

Defendants have also made much of the promotion of new artists who authorize distribution of their work. I think this is something that's sort of come lately to the table. I don' t find that, that constitutes a substantial noninfringing use of Napster.

Indeed, the court would certainly not enjoin that kind of a use, nor would it have the authority to do so; and if, in fact, that is a use that is a substantial use of Napster, then I don't see how they are put out of business, what could be a critical aspect of their business by being enjoined from allowing the copying of copyrighted material for which there is no authorization.

The evidence shows that, in fact, promoting the new artist was not the chief strategy in Napster's business plan. Defendant promoted the availability of songs by major stars as, and I quote from some of their papers, "opposed to having to go through page after page of unknown artists."

Suddenly, they found those unknown artists and would seek to use them as a basis for protection against infringement of the well-known artist whose music they were making available or providing access to.

Napster's purported mission of distributing music by artists unable to obtain record label representation, as I said, appears to have been developed later in the game and after the beginning of this litigation.

So with respect to the affirmative defense of fair use, I do not find that defendants have established or met their burden of proving that they're entitled to the affirmative defense of fair use, or substantial noninfringing uses are in fact in place, or that they're capable of substantial noninfringing uses.

Now with respect to the infringement itself, I said, first of all, in order to establish either contributory or vicarious infringement there must be direct infringement by the users, and we've gone over that.

With respect to contributory infringement, to use the words of the statute: "a contributory infringer is one who with knowledge of the infringing activity induces, causes or materially contributes to the infringing conduct of another. The requirements are actual or constructive knowledge and material contribution to direct infringement." I find that plaintiffs have demonstrated a substantial likelihood of success on their contributory copyright infringement claims.

The evidence before the court overwhelmingly establishes that defendant had actual or at the very least constructive knowledge, and this applies as well to the Digital Millennium Recording Act aspect of this under subsection (D), that defendant had actual or constructive knowledge that third parties were engaging and continue to engage in direct copyright infringement by downloading/uploading MP3 files using the Napster service.

This evidence includes internal documents authored by Napster executives stating that Napster was making pirated music available, stressing the need to remain ignorant of Napster users' identities and IP addresses since they are exchanging pirated music; notice from the Recording Industry Association of America that it identified 12,000 infringing files on Napster; the fact that Napster executives had recording industry experience and at least some knowledge of copyright laws; and the fact that Napster executives downloaded copyrighted music to their own computers using the service.

So therefore, I find that plaintiffs have established a likelihood of success, in fact a strong likelihood of success, on the knowledge--or actual or constructive knowledge--of this component as well as for the safe harbor provisions under the DMCA.

The next element, the second element after--I should say the third because we've talked about direct infringement and knowledge--is that the defendant terribly contributed to copyright infringement by parties under 9th Circuit law.

The evidence shows that among other activities, defendant supplies the proprietary software, search engine, the means of establishing a connection between Napster users' computers, and without those services Napster users could not find and download the music they want--at least not via Napster. In fact, that was the whole reason for Napster's existence, if you look at their early business plans, and what they purported to do, and what they told their consumers or users they were doing.

With respect to vicarious copyright infringement, not only must direct infringement be shown, and we've gone over that, but there also must be the right and ability to supervise the infringing activity and a direct financial interest in such activity.

Again, the court finds that plaintiffs have established a likelihood of success on vicarious liability, although I could leave it at contributory infringement. I'm going to move to that one as well. That way when you take me up if I'm wrong on one, maybe I'm right on the other, whatever else, or I'm wrong on both.

(laughter)

The court: But plaintiffs have argued, and I think persuasively, that defendant is capable of exercising supervisory powers over its service. And I have to add here that though it may be technologically difficult, when you create a program that had the very purpose that Napster espouses that it had, and then you--you know it's sort of like, you know, becoming an orphan because--by your own hand and then throwing yourself on the mercy of the court because you're an orphan. It's rather hard to hear that sound of throwing themselves on the mercy of the court because this technology just isn't going to allow them to do or control the infringement.

In fact, I'm sure that anyone as clever as the people who wrote the software in the case are clever enough, as there are plenty or those minds in Silicon Valley to do it, can come up with a program that will help to identify infringing items as well. I think the evidence shows that there's no desire to do that.

Although defendant, as I said, contends that it is technologically difficult to distinguish copyrighted and authorized from not copyrighted or copyrighted and unauthorized, defendant has taken great paints to inform the court about methods it uses for blocking users about whom rights holders complain. The defendant can in fact police, and will have to given the nature of its program and the very purposes of it, police its service. And the court finds that, in fact, the defendant does have the right and ability to supervise.

With regard to the financial interest, it is true that defendant is not charging a fee, receiving any money in exchange for this service. However, it is clear also from the record that there have been substantial investments in the service and that part of the business plan or discussions among the persons who operate and direct and control Napster include talks or plans about monetizing its user base through one of several revenue-generating models.

The availability of a myriad of popular music files, most of which are copyrighted, certainly attracts people to the user base, and the court rejects defendant's argument that its noninfringing use lures customers to its service. I don't think that's what lures them. What lures them is the infringing use.

And they have, in fact, discussed among themselves ways to monetize that, that they intend sometime to make a profit. I recall reading--I think in Richardson's deposition--that, in fact, it was not a not-for-profit organization. They intend someday to make a profit.

Even if that were not the case, there certainly is, when one gets to irreparable injury, a presumption as well that is invoked by reason of having found a likelihood of success on the merits of irreparable harm, and that dovetails with this area that I'm just talking about.

Because plaintiffs have shown a likelihood of success--and I think a strong likelihood of success--on the merits, on both contributory and vicarious copyright claims, infringement claims, they're entitled to a presumption of irreparable harm, and I reject the defendant's contention that it's de minimis.

Plaintiffs presented evidence that they're likely to be injured by reduced CD sales and impediments into entry into the digital downloading market--I can't give much weight to the fact that defendants' content this will put them out of business. They have contended that there are other uses that Napster can be put to and is capable of, and if that is in fact the case, they're not deprived of doing that. Nor are they deprived of assisting the new artists or publishing the music--or assisting, rather, in the publishing of music--or copying of music of persons who authorize them to do so or to present new artists with an opportunity to be heard over the Internet, and so forth.

The court has to, of course, tailor an injunction that is narrow enough to meet only the needs that are invoked by plaintiff's copyrights. At the same time, while it may in fact have a significant--is likely to have a significant--negative impact upon defendants, I don't think that the burden shifts--or, rather, the balance of hardships shifts--in their favor because to hold otherwise would essentially allow wholesale infringing, as has been going on in this case, without the ability of plaintiffs to stop the hemorrhaging of that.

So the question is: What should that injunction look like? And I think, given the language in the Disney vs.--is it Disney vs. Powell? I'll pull it up here in a minute--case and a number of other cases have talked about the problem of whether all the copyrighted material has been identified, that the court can in fact enjoin not only that which is in suit, such as what was enumerated in the complaint or the appendix to the complaint in this case, but also all other copyrighted works owned by the plaintiff for which authorization for use has not been permitted.

And the reason that I believe that the court can fashion an injunction of that nature and of that breadth, but it does not go beyond plaintiffs, it does not go to other copyrighted works of parties who are not--persons who are not--parties to this litigation, the reason I believe I can do that is because where the business itself, the nature of the infringing is the wholesale magnitude. What is involved here, and where defendants have acknowledged that, it's very difficult to identify what is infringing and what isn't. I cannot essentially sit by on that, and plaintiffs are entitled to enforce their copyright rights and not have them infringed just because the nature of the technology is such that it's too hard to identify.