Napster and the »New« Old Copyright

In February, the United States Court of Appeals for the Ninth Circuit announced its ruling on the appeal by Napster Corporation of preliminary determinations made by the trial court concerning the liability of Napster under copyright law.1 The court affirmed, with slight modifications, a preliminary injunction against Napster. Less than one week after the decision was announced, Napster offered a one billion dollar settlement to the copyright ownership interests that had brought the case. The settlement offer, in effect, proposed a five-year license during which it can continue operations in return for the one-billion dollar license fee. Where Napster would have found the income stream to fund this offer in the unlikely event that it would have been accepted remains unclear. On March 5, 2001, the trial court issued a modified preliminary injunction against Napster which could have been a lot stricter (see http://www.cr-international.com). As the settlement offer suggests, the Ninth Circuit’s decision went decisively against Napster. While some avenues may remain for operation of a Napster-like system within the parameters of United States copyright law, these are narrow at best. The court’s opinion undermined most of the model on which Napster operated, treating most uses of Napster by its customers as mere infringement of copyright.