Citation: 239 F.3d 1004 (9th Cir. 2001)
Court: The United States Court of Appeals for the Ninth Circuit
Bench: Mary M. Schroeder (Chief Judge), Robert R. Beezer & Richard A. Paez (Circuit Judges).
Napster, a peer-to-peer file sharing platform, used a software called MusicShare, which facilitated the transmission of MP3 files among users. Through this platform, users could search, make copies of, and transfer MP3 music files available on their own or others’ computers. Enraged by this, prominent corporate music record companies like A&M Records, Sony Music Entertainment, MCA Records, Warner Bros. Records and many others, including music publishers, sued Napster in the U.S. District Court, N.D. California for vicarious and contributory copyright infringement. The record companies and the music publishers filed a joint motion to preliminarily enjoin Napster from engaging in or assisting others in unauthorised copying, downloading, uploading, transmitting, or distributing copyrighted music. The District Court found Napster guilty of copyright infringement and granted a preliminary injunction against the company.
The U.S. Court of Appeals for the Ninth Circuit temporarily stayed the injunction and reviewed whether the District Court applied the legal principles correctly while granting the injunction.
Whether Napster is a direct, contributory, and vicarious copyright infringer?
Whether copying, transferring and downloading MP3 files on Napster qualify as ‘fair use’?
28 U.S. Code § 1292 - Interlocutory decisions
17 U.S. Code § 107 - Fair Use
17 U.S. Code § 106 - Exclusive rights in copyrighted works
The Court of Appeals first looked into whether the record companies presented the prima facie case of direct copyright infringement by considering two factors:
a) ownership of the allegedly infringed material; and
b) demonstration that the alleged infringers violate at least one exclusive right granted to copyright holders under 17 U.S. Code § 106.
The District Court was of the view that the record companies satisfied the above requirements, and the Court of Appeals affirmed the same. It was proved that Napster violated at least two of their exclusive rights: the right of reproduction and distribution.
Next, the Court of Appeals determined whether Napster was guilty of contributory and vicarious copyright infringement. It agreed with the District Court’s conclusion that Napster knowingly encourages and assists copyright infringement on its platform. Moreover, Napster’s capability to locate the infringing works and its right to terminate access make the platform guilty of vicarious infringement.
Secondly, the Court of Appeals analysed the District Court’s findings on Napster’s fair use defence as stated in 17 U.S. Code § 107. The District Court concluded that:
Downloading MP3 files does not make the work ‘transformative’.
The users were involved in the commercial use of the copyrighted materials, as repeated and exploitative copying of copyrighted works, even if the copies are not offered for sale, may constitute commercial use.
The users engaged in ‘wholesale copying’ of the copyrighted works.
Napster reduced the sale of audio C.D.s and created barriers to the record companies’ entry into the market.
The Court of Appeals sided with the District Court and confirmed that Napster’s users could not be considered ‘fair users’.
However, the Court of Appeals was of the view that the injunction granted by the District Court was broad and must be modified concerning contributory infringement. Thus, the Court of Appeals partly affirmed and partly reversed the injunction.
Deemed to be a landmark judgement in its time, it was pronounced when the Internet was beginning to become a thing of the present and issues related to peer-to-peer sharing were quite unheard of. It prompted the copyright owners and the Courts to evaluate their outlook toward copyright-protected works in the context of the digital environment.