Judges let Napster play on -- for now

Napster chief executive Hank Barry Monday accused the recording industry of stonewalling repeated settlement attempts, including Napster's offer to charge user subscription fees and split the proceeds with the recording industry.

"Every one of these proposals has been rejected, and the [record companies]) have made no -- and I mean zero -- counter proposals," Barry said after a hearing in front of the 9th Circuit Court of Appeals, which is trying to decide whether to uphold a ruling by US District Court judge Marilyn Hall Patel that would shut the site down.

The appeals court left in place a temporary stay of Patel's order, allowing Napster to continue doing business until the panel issues its final decision. Barry said that, among other things, Napster had offered to charge subscribers $4.95 (£3) a month, a figure he estimated would have earned record companies and artists $500m annually.

Hillary Rosen, chair of the Recording Industry Association of America (RIAA), which is suing Napster for copyright infringement, refused to comment on specific settlement proposals. "Napster has every opportunity to put forth a business deal that makes sense," Rosen said after the hearing.

During the 45-minute hearing, the three-judge panel peppered each side with questions. They asked whether most Napster users were violating copyrights and whether the recording industry had pursued criminal piracy charges.

During the proceedings, which were broadcast on national television, judge Mary Schroeder asked Napster lawyer David Boies about Patel's finding that more than three-quarters of the music swapped on Napster infringed copyrights.

Boies replied that, in similar cases, the courts have allowed companies accused of infringement to continue operating as long as their new technologies had other, legal uses. Boies argued that reinstating Patel's ruling would "deprive the public of something that can be used for non-infringing uses", which in Napster's case include sampling music tracks and promoting new bands.

During another exchange, judge Robert Beezer asked RIAA attorney Russell Frackman how Napster should keep track of alleged copyright violations. "If this is a service, how are they expected to have knowledge of what's coming off some kid's computer in Hackensack, New Jersey, that goes to Guam?"

Frackman replied that the service itself was designed to violate copyrights. "No, they designed it for fair use," Judge Beezer shot back, adding "at least that's what they tell us."

Judge Mary Schroeder asked whether the RIAA had tried to stem piracy by going after Napster users in criminal court. Frackman said it had not, adding, "We don't want to put an individual in jail for using the Napster system, we want to stop it at the source of the problem."

After the hearing, both sides warned against reading too much into the judges' queries. Attorneys said a ruling could come in a few days or a few months. When Patel issued her ruling in July, she said the company had created a "monster" and should have known it was breaking the law. Siding with the recording industry, she agreed with the assertion that Napster's primary use was to promote copyright infringement.

Napster appealed to the 9th Circuit [appeals court], saying Patel's ruling was extreme and would force the company to close up shop. Hours before Patel's ruling was scheduled to go into effect, the 9th Circuit issued a temporary stay. For the past few weeks, the appellate court has been gathering information from both sides and other interested parties in an attempt to determine whether Patel's ruling should stand.

Monday's hearing was a chance for attorneys from both sides to plead their case in person. The RIAA sued Napster in December, accusing the then relatively obscure start-up of promoting copyright infringement by letting people swap songs without paying. Since then, the Napster community has grown to 31 million members, Barry said.

The RIAA represents major music labels including Warner Music Group, Sony Music Group and Universal Music Group.

Take me to the MP3 newroom

Napster may have as many lives as a cat, as yesterday's court proceedings show, but even cats die eventually. Today Jesse Berst takes a look at the Napster users among us and at why Napster's mainstream successors aren't getting it. Go to AnchorDesk UK for the news comment.

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