Saying the recording industry is likely to prevail in its copyright infringement case against the popular song-sharing company, U.S. District Judge Marilyn Patel's ruling could, in effect, shut down the free music swapping service.
Patel ruled from the bench immediately after a two-hour hearing, telling a packed courtroom her order would keep Napster from "copying or assisting or enabling or contributing to the copy or duplication of all copyrighted songs and musical compositions of which the plaintiffs hold rights."
The Recording Industry Association of America filed a lawsuit in December, just five months after Napster's launch, saying the company's song-sharing service promotes copyright infringement. The case is scheduled for trial later this year.
Patel denied a motion by Napster attorney David Boies, which asked her to delay the order. Outside the courtroom, Boies vowed an appeal and, separately, Napster executives said the company would file papers Thursday morning.
Boies said the order was "impossible to implement or obey" since Napster hasn't received a list of songs it's required to block.
And, while Patel's order stopped short of pulling the plug, Boies said the injunction could cripple the business.
"Between now and the actual trial, Napster's service obviously is going to be seriously curtailed" if the injunction isn't lifted, Boies said, adding that a settlement, though possible, was unlikely.
RIAA general counsel Cary Sherman applauded the order, saying that it laid the groundwork for legal music downloads and that it could send a message to other song-swapping firms.
The RIAA recently sued another file sharing company, Scour Inc., on similar grounds. "Our hope is that the court's decision, which is very, very clear, and very, very strong, will send a very clear signal to all those other companies," Sherman said.
In issuing the order, Patel denied virtually every defense claim by Napster.
She said swapping songs with Napster wasn't protected under the Audio Home Recording Act, as the defense had argued, in part because it involved so many people. She added that evidence so far in the case, including internal Napster memos, had convinced her that most people used the service primarily to download copyrighted materials.
Patel bought the recording industry's argument that Napster resisted complying with federal law by failing to pay royalties to copyright owners.
Recording industry attorney Russell Frackman told the judge that 20 million songs were downloaded daily, of which roughly 90 percent were copyrighted. He said that Napster planned to have a user base of 75 million users by the end of the year.
"The record companies not only get no return on their investment, but Napster is piggy-backing," Frackman said, adding that reining in the company would only become more difficult in the future. "The longer this goes on, your honor, the more impossible it will be for us and the court to do anything realistic," he continued, asking her to "nip this in the bud."
He also said studies showing that CD sales were rising even as Napster gained momentum were "weak" and "irrelevant."
At some points Patel was clearly irritated at Napster attorneys, challenging many of their assertions and asking them many more questions than she had asked the recording industry attorneys.
After reading internal Napster planning documents related to the case, "pirating be damned is pretty much the sense one gets," she said. "Free music for the people!" she quipped, prompting chuckles in the courtroom. Later, Patel abruptly ended Napster's presentation after an exasperated Napster attorney, Daniel Johnson, told her "you're not listening."
"You may have a seat," Patel shot back. And he did.
After her ruling, Patel gave both sides a chance to respond. Boies asked Patel directly if she intended to close Napster down.
"I'm not ordering them to shut their business down. I want to make that clear." Patel said.
During the hearing, Patel seemed not to understand that Napster was not the only site that allowed users to download free music. When Napster attorneys pointed out that people could swap songs through other -- though decidedly less popular -- means, such as chat rooms and gnutella, Patel challenged them, saying "but you have to pay."
At one point, Patel asked Johnson, "What about gunutella, do you have to pay?"
Johnson told her she did not.
On Wednesday evening, company founder Shawn Fanning and CEO Hank Barry held a brief Webcast to address user concerns.
"We will keep fighting for Napster and your right to share music over the Internet," Fanning said. Barry said the company would work through the night on a solution to an injunction he said could shut the service down in its current form. "Although we sharply and firmly disagree with the judge's decision, we understand the basis for it and we plan to comply."