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AM v. Napster

Christopher Freeland
Case Brief

A&M Records, Inc., v. Napster, Inc.
239 F.3d 1004 (9th Cir. 2001)

Background:
Napster, Inc. was the owner of a computer program that allowed users to share music files over the internet. A&M records, Inc. along with several other major record companies brought this action to prohibit Napster from allowing users to share copyrighted works through this program. The issue in this case is whether a preliminary injunction against Napster’s peer-to-peer file sharing service should be upheld.

Facts:
The standard format for digital music format is MP3 file. An MP3 is a compressed file, as opposed to a file found on a traditional CD which is larger. The smaller MP3 format allows for fast transmission of the file between computers via the internet. Napster’s program facilitates MP3 transmission between users through peer-to-peer (or computer to computer) file sharing. The program works by:
1. Making MP3 files on a computer available to other Napster users,
2. Allowing users to search for MP3 files stored on other computers, and
3. Allowing users to transfer exact copies of those MP3s from one computer to another.

Rules:
The standard for review is whether the district court applied the correct legal standards for issuing a preliminary injunction. As long as the district court got the law right, it will not be reversed just because the appellate court would have come to a different conclusion based on the facts.

Preliminary injunctive relief is awarded if a party demonstrates either:
1. A combination of probable success on the merits and the possibility of irreparable harm; or
2. That serious questions are raised and the balance of hardships tips in its favor.

Plaintiffs must satisfy two requirements to present a prima facie case of direct infringement: First, they must show ownership of the allegedly infringed material. Second, they must demonstrate that the alleged infringers violate at least one exclusive right granted to copyright holders under 17 U.S.C. § 106.

Application:
Plaintiffs have demonstrated ownership. The record shows that "as much as eighty-seven percent of the files available on Napster may be copyrighted and more than seventy percent may be owned or administered by plaintiffs." Napster, 114 F. Supp. 2d at 911.

Plaintiffs have also shown that Napster users infringe at least two of the copyright holders' exclusive rights. Specifically, they infringe the rights of reproduction and distribution. According to the court, “Napster users who upload file names to the search index for others to copy violate plaintiffs' distribution rights. Napster users who download files containing copyrighted music violate plaintiffs' reproduction rights.”

Napster attempts to establish the affirmative defense of fair use. The court considers the following factors to determine whether there is fair use:

1. The Purpose and character of the use
To determine the purpose and character of the use, the court asks two questions. First, is the work replacing the object of the original creation or is it transformative (meaning that it adds further purpose or different character)? Here, the court determines that downloading MP3s does not transform the work.
Second, is the use commercial or noncommercial? Here, the court determines that the use is commercial. The court asserts, "A host user sending a file cannot be said to engage in a personal use when distributing that file to an anonymous requester" and further, "Napster users get for free something they would ordinarily have to buy."

2. The nature of the use
Works that are more creative get more protection. Here, the songs are clearly creative, which goes against finding fair use.

3. The portion used
Greater the portion of the work that you copy, the less likely it is to be fair use. Although wholesale copying does not preclude fair use per se, it is much harder to establish. Here, songs are copied wholesale.

4. Effect of use on the Market
The court next asks if the use is immediately harmful to the market, or if it will become harmful upon widespread use. The court finds that it is harmful. The court looks at evidence in the record that Napster’s use reduces CD sales among college students and raises barriers to entry into the market of digitally downloading music.

After rejecting Napster’s fair use claim, the court determines whether Napster is Liable Contributory Copyright infringement. The court asserts that, "one who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another, may be held liable as a 'contributory' infringer.” Here, Napster engages in personal conduct that encourages or assists infringement because it has both actual and constructive knowledge of direct infringement (according to the record). Furthermore, Napster materially contributes to the infringing activity. Without its support, Napster users would not be able to find and download the music they wanted.
Ruling:
Although Napster is a contributory infringer, it is only an infringer insofar as it fails to prevent the distribution of copyrighted works. The mere existence of a file sharing system is not infringement, but the failure to remove offending files is. Therefore, although an injunction must be granted, the initial injunction was overbroad. The court remanded the case back to the district court to serve an injunction that requires Napster to remove infringing copyrighted material from its program.


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