Judge Hands Napster Small Win in Copyright Lawsuit

Feb 25, 2002 12:00 PM, Reuters

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SAN FRANCISCO (Reuters) -- A federal judge handed Napster a small victory on Friday, giving the once high-flying song swap service time to gather evidence before ruling on a recording industry request for summary judgement in its copyright infringement lawsuit.

U.S. District Court Judge Marilyn Hall Patel agreed with Napster that more time was needed to decide who owns the rights to musical works involved in the recording industry's lawsuit against Napster.

She also allowed Napster to gather evidence of the record labels' alleged misuse of copyright to monopolize the digital distribution market, saying the potential harm to the public could be "massive."

"Plaintiffs' allegedly inequitable conduct is currently ongoing and the extent of the prospective harm is massive," Patel said in a 32-page ruling. "If Napster is correct, plaintiffs are attempting the near monopolization of the digital distribution market."

The ruling follows a hearing Jan. 23 when Patel delayed issuing a decision in the lawsuit for 30 days to give both sides time to reach a settlement. That stay expired last Sunday, however, without an agreement.

Patel on Friday also ordered both sides to submit relevant documents to a court-appointed Special Master within the next few weeks, and she set up a status conference hearing on March 27.

Representatives of the Recording Industry Association of America (RIAA), which represents the major labels in their lawsuit against Napster, could not be reached for immediate comment.

NAPSTER EMBRACES RULING
But Napster officials embraced the ruling, saying they would continue to fight the lawsuit while engaging in settlement discussions.

"We are pleased that the Court granted Napster's request to examine two critical issues: the record companies' ownership of artists' copyrights and anti-competitive behavior that amounts to misuse of their copyrights," Napster general counsel Jonathan Schwartz said in a statement.

Napster, once the high-flying pioneer of online music swapping, has been sidelined since last July as a result of a preliminary injunction issued by Judge Patel in March last year, barring the trade of any copyrighted material on its site.

The injunction came at the behest of major record labels, which sued the company in 1999, accusing it of facilitating copyright infringement by allowing digital versions of their artists' songs to be shared for free, in many cases thousands of times each.

Napster last month launched a test version of its new copyright-compliant service in a bid to get back in business, although it will not feature copyrighted music from major labels.

It also remains unclear how many of the some 60 million people that Napster attracted at the height of its popularity will return to the service, which now faces online music swapping rivals such as Morpheus, KaZaA and Gnutella.

The big recording labels arrayed against Napster include AOL Time Warner Music, EMI Group, Bertelsmann, Universal Music and Sony Music.

Bertelsmann has subsequently become a major investor in Napster and is working to restart the service.






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