Manu
02-01-2002, 12:17 PM
A judge's decision allowing Napster to pursue copyright misuse claims against major record labels seems to signal a sea change in the music industry's lawsuit against the peer-to-peer song-swapping service, according to a trio of legal experts.
In a Jan. 16 hearing, the transcript of which was obtained by Newsbytes, U.S. District Judge Marilyn Hall Patel told lawyers that she had decided to begin a discovery phase in the trial, allowing Napster to examine whether music labels have misused their copyrights.
If she were to rule that labels have misused their rights, one expert told Newsbytes, at the extreme it could mean the labels could not enforce their copyrights. Such a decision, conceivably, could kill the labels' case against Napster, which has been accused of contributory copyright infringement for allowing millions of people to tap into a rich mine of free songs on the Internet.
"I decided there are some significant issues with respect to misuse that defendants ought to be able to pursue," Patel told lawyers in the courtroom on Jan. 16. "I'd be first to say that it's anything but a clear area of the law. The case law is a bit murky. But on the theory that if we can see it, maybe we'll know it, then, because the case law is so murky … at least it justifies some inquiry."
One day after the Jan. 16 hearing, most of the record companies in the copyright suit, along with Napster, requested that the case be put on hold for 30 days while a settlement is negotiated. The litigants asked Patel to refrain from issuing "any orders or opinions on this action during this period."
"The stay would encompass the entire litigation, including but not limited to the procedures discussed in the Jan. 16 status conference," the written request says.
Patel granted the motion and put the case, which had been vigorously pursued by the music industry since late 1999, on hold.
The 10 pages of transcript following Patel's statement about copyright misuse remain under seal by order of the judge, so any discussion that followed Patel's statement remains secret. But what is present in the document was described by one lawyer as "a bombshell."
"When the judge says something like that, that's got to put your heart up your throat," said Whitney Broussard, a New York attorney who represents numerous musicians. "Boy, it really seems like a big change from where her head was at a year ago."
Broussard recalled that in the early phase of the trial against Napster in the summer of 2000, Patel had lashed out angrily at Napster, telling the company that "you've created the monster, now you've got to fix it." Patel ordered Napster shut down, a decision reversed on appeal. But her decisions along the line have indicated a tilt toward the record industry's position. At one point she called Napster's copyright compliance efforts "disgraceful." And last summer, she commanded Napster to either achieve 100 percent copyright compliance – a level of perfection deemed impossible by many copyright experts – or shut down. Napster's servers were shut off shortly afterward and the company has remained offline, instead focusing on becoming a paid subscription service.
Eben Moglen, a law professor at Columbia University, said that, for the record labels, the handwriting now is on the wall. "Anytime a judge says she might take it seriously, and she might know it when she sees it, and if she sees that you've been misusing your copyrights and you can't enforce them, that would be the beginning of the end, wouldn't it?"
Moglen is no friend of the record industry, labeling them "a bunch of knuckle-dragging thieves and hooligans." He has long argued that the recording industry's arguments against Napster have been specious.
"An argument that closing down a competing distribution system because you are the one who is fair to musicians and they are the ones who are stealing from musicians, is a ruse," Moglen said. He accused labels of attempting to maintain a cartel, using copyright infringement arguments to shut down a competing distribution that Moglen thinks is defensible under the Fair Use Doctrine, but which could compete record companies out of business.
Moglen suggested that Patel's change of heart might indicate she finally recognizes the music industry's case is shot full of holes. "If it took Marilyn Patel this long to catch on, well, OK," Moglen said. "Judges sometimes listen slowly and they sometimes catch on fast, but she might be getting it. The mills grind slowly, but they grind exceeding small."
Another scholar, Harvard University law Professor William T. Fisher, takes a more moderate view. Asked to respond to Moglen's comments, Fisher said, "If, by 'the end,' he's referring to the collapse of the big record companies, I think that's unduly optimistic, or pessimistic, depending on your perspective."
However, Fisher does indicate that Napster's defense in the case, from a purely legal point of view, was solid. "Specifically, a fair application of the Fair Use Doctrine … to the practice of sampling by a significant percentage of Napster's customers, creates a quite plausible fair use defense for Napster when charged as they were with contributory or vicarious copyright infringement," Fisher said.
Nonetheless, the Harvard professor said he believed all along that Napster would lose its case.
He said that Napster based its plea on a traditional intellectual property defense, holding that the labels misused their copyrights by colluding to prevent other independent companies from licensing music for digital distribution. However, such a defense has virtually no precedent in copyright law, though it is fairly well tested in related patent law, Fisher said. "Nobody very well knows what the idea of 'copyright misuse' entails," he said.
Because of the murkiness of the precedents, Fisher said, courts have had to look elsewhere for guidance, to congressional debates, for instance, and to reactions within the music industry itself. And in both cases, Fisher said, Napster has been painted most often as a digital pirate threatening to snuff out a very powerful business interest.
"The fact that Napster had a colorable fair-use defense was unlikely to save it," Fisher said, "because the organization Napster was widely perceived – not necessarily rightly perceived it might be, but widely perceived – as global piracy threatening the survival of the music industry."
However, Fisher said, the record industry – which is controlled mainly by five corporate conglomerates – has its own history to contend with. And part of that history includes allegations of colluding to fix consistently high prices for compact discs. There have been efforts by record companies to prevent outside operators from gaining access to their repertoires, he said. And recently, the companies have raised the eyebrows of the U.S. Justice Department, which is conducting an antitrust probe for possible collusion among the record labels related to their joint online music initiatives, Pressplay and MusicNet.
It may be that Patel is beginning to weigh these factors in as she begins to consider a final ruling on the case, Fisher said. Also possible, he said, is that the judge could be giving in to inevitability. Napster has been shut down, but other analogous services have popped up all over the Internet, and peer-to-peer file-sharing activity on the Internet now exceeds the levels reached when Napster was at the height of its popularity.
"So," Fisher said, "an alternative, highly speculative but conceivable explanation for the shift in mood in the Napster decision, is a growing awareness of the futility of trying to hold this particular footing."
Attorney Broussard noted that, most of the time, record industry lawsuits never get decided by a judge. Labels have the clout to win injunctions against companies they take on in court, rendering them virtually powerless, and giving labels the power to dictate terms to their opponent. This is one reason why there is so little case law in the realm of digital music, Broussard said.
In fact, Broussard speculates, it might have been a settlement that Patel had in mind when she uttered her eyebrow-lifting words about copyright misuse. "You know, it sounds a lot like that," Broussard said. "It really seems to give a lot of incentive to the record companies to just get on with it and settle."
If so, the Napster case would be yet more litigation settled without establishing precedent. But there are other cases pending, one against the company formerly known as Aimster, another against three peer-to-peer services – Kazaa, Morpheus and Grokster. And, as GartnerG2 entertainment analyst P.J. McNealy noted, these companies, unlike Napster, have never expressed an interest in joining the industry's mainstream business party. It could be that one of these cases finally establishes the missing copyright-misuse precedent, he said.
"If somebody is vindictive enough to go back after the record labels and just pursue it and pursue it and pursue it, despite offers from the record labels, until it gets tried, that's what it might come down to," McNealy said. .
"Napster still wants to make a legitimate run of it," he added. "It's unclear if any of the other companies have that in mind. You don't hear any of them talking about licensing."
www.technews.com
In a Jan. 16 hearing, the transcript of which was obtained by Newsbytes, U.S. District Judge Marilyn Hall Patel told lawyers that she had decided to begin a discovery phase in the trial, allowing Napster to examine whether music labels have misused their copyrights.
If she were to rule that labels have misused their rights, one expert told Newsbytes, at the extreme it could mean the labels could not enforce their copyrights. Such a decision, conceivably, could kill the labels' case against Napster, which has been accused of contributory copyright infringement for allowing millions of people to tap into a rich mine of free songs on the Internet.
"I decided there are some significant issues with respect to misuse that defendants ought to be able to pursue," Patel told lawyers in the courtroom on Jan. 16. "I'd be first to say that it's anything but a clear area of the law. The case law is a bit murky. But on the theory that if we can see it, maybe we'll know it, then, because the case law is so murky … at least it justifies some inquiry."
One day after the Jan. 16 hearing, most of the record companies in the copyright suit, along with Napster, requested that the case be put on hold for 30 days while a settlement is negotiated. The litigants asked Patel to refrain from issuing "any orders or opinions on this action during this period."
"The stay would encompass the entire litigation, including but not limited to the procedures discussed in the Jan. 16 status conference," the written request says.
Patel granted the motion and put the case, which had been vigorously pursued by the music industry since late 1999, on hold.
The 10 pages of transcript following Patel's statement about copyright misuse remain under seal by order of the judge, so any discussion that followed Patel's statement remains secret. But what is present in the document was described by one lawyer as "a bombshell."
"When the judge says something like that, that's got to put your heart up your throat," said Whitney Broussard, a New York attorney who represents numerous musicians. "Boy, it really seems like a big change from where her head was at a year ago."
Broussard recalled that in the early phase of the trial against Napster in the summer of 2000, Patel had lashed out angrily at Napster, telling the company that "you've created the monster, now you've got to fix it." Patel ordered Napster shut down, a decision reversed on appeal. But her decisions along the line have indicated a tilt toward the record industry's position. At one point she called Napster's copyright compliance efforts "disgraceful." And last summer, she commanded Napster to either achieve 100 percent copyright compliance – a level of perfection deemed impossible by many copyright experts – or shut down. Napster's servers were shut off shortly afterward and the company has remained offline, instead focusing on becoming a paid subscription service.
Eben Moglen, a law professor at Columbia University, said that, for the record labels, the handwriting now is on the wall. "Anytime a judge says she might take it seriously, and she might know it when she sees it, and if she sees that you've been misusing your copyrights and you can't enforce them, that would be the beginning of the end, wouldn't it?"
Moglen is no friend of the record industry, labeling them "a bunch of knuckle-dragging thieves and hooligans." He has long argued that the recording industry's arguments against Napster have been specious.
"An argument that closing down a competing distribution system because you are the one who is fair to musicians and they are the ones who are stealing from musicians, is a ruse," Moglen said. He accused labels of attempting to maintain a cartel, using copyright infringement arguments to shut down a competing distribution that Moglen thinks is defensible under the Fair Use Doctrine, but which could compete record companies out of business.
Moglen suggested that Patel's change of heart might indicate she finally recognizes the music industry's case is shot full of holes. "If it took Marilyn Patel this long to catch on, well, OK," Moglen said. "Judges sometimes listen slowly and they sometimes catch on fast, but she might be getting it. The mills grind slowly, but they grind exceeding small."
Another scholar, Harvard University law Professor William T. Fisher, takes a more moderate view. Asked to respond to Moglen's comments, Fisher said, "If, by 'the end,' he's referring to the collapse of the big record companies, I think that's unduly optimistic, or pessimistic, depending on your perspective."
However, Fisher does indicate that Napster's defense in the case, from a purely legal point of view, was solid. "Specifically, a fair application of the Fair Use Doctrine … to the practice of sampling by a significant percentage of Napster's customers, creates a quite plausible fair use defense for Napster when charged as they were with contributory or vicarious copyright infringement," Fisher said.
Nonetheless, the Harvard professor said he believed all along that Napster would lose its case.
He said that Napster based its plea on a traditional intellectual property defense, holding that the labels misused their copyrights by colluding to prevent other independent companies from licensing music for digital distribution. However, such a defense has virtually no precedent in copyright law, though it is fairly well tested in related patent law, Fisher said. "Nobody very well knows what the idea of 'copyright misuse' entails," he said.
Because of the murkiness of the precedents, Fisher said, courts have had to look elsewhere for guidance, to congressional debates, for instance, and to reactions within the music industry itself. And in both cases, Fisher said, Napster has been painted most often as a digital pirate threatening to snuff out a very powerful business interest.
"The fact that Napster had a colorable fair-use defense was unlikely to save it," Fisher said, "because the organization Napster was widely perceived – not necessarily rightly perceived it might be, but widely perceived – as global piracy threatening the survival of the music industry."
However, Fisher said, the record industry – which is controlled mainly by five corporate conglomerates – has its own history to contend with. And part of that history includes allegations of colluding to fix consistently high prices for compact discs. There have been efforts by record companies to prevent outside operators from gaining access to their repertoires, he said. And recently, the companies have raised the eyebrows of the U.S. Justice Department, which is conducting an antitrust probe for possible collusion among the record labels related to their joint online music initiatives, Pressplay and MusicNet.
It may be that Patel is beginning to weigh these factors in as she begins to consider a final ruling on the case, Fisher said. Also possible, he said, is that the judge could be giving in to inevitability. Napster has been shut down, but other analogous services have popped up all over the Internet, and peer-to-peer file-sharing activity on the Internet now exceeds the levels reached when Napster was at the height of its popularity.
"So," Fisher said, "an alternative, highly speculative but conceivable explanation for the shift in mood in the Napster decision, is a growing awareness of the futility of trying to hold this particular footing."
Attorney Broussard noted that, most of the time, record industry lawsuits never get decided by a judge. Labels have the clout to win injunctions against companies they take on in court, rendering them virtually powerless, and giving labels the power to dictate terms to their opponent. This is one reason why there is so little case law in the realm of digital music, Broussard said.
In fact, Broussard speculates, it might have been a settlement that Patel had in mind when she uttered her eyebrow-lifting words about copyright misuse. "You know, it sounds a lot like that," Broussard said. "It really seems to give a lot of incentive to the record companies to just get on with it and settle."
If so, the Napster case would be yet more litigation settled without establishing precedent. But there are other cases pending, one against the company formerly known as Aimster, another against three peer-to-peer services – Kazaa, Morpheus and Grokster. And, as GartnerG2 entertainment analyst P.J. McNealy noted, these companies, unlike Napster, have never expressed an interest in joining the industry's mainstream business party. It could be that one of these cases finally establishes the missing copyright-misuse precedent, he said.
"If somebody is vindictive enough to go back after the record labels and just pursue it and pursue it and pursue it, despite offers from the record labels, until it gets tried, that's what it might come down to," McNealy said. .
"Napster still wants to make a legitimate run of it," he added. "It's unclear if any of the other companies have that in mind. You don't hear any of them talking about licensing."
www.technews.com