A & M RECORDS, INC. v. Napster, Inc.
55 U.S.P.Q. 2d (BNA) 1780, 114 F. Supp. 2d 896, 2000 U.S. Dist. LEXIS 11862 (2000)
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Rule of Law:
An online service provider that knowingly facilitates its users' widespread infringement of copyrighted works may be held liable for contributory and vicarious copyright infringement, especially when the service's value and business model are predicated on that infringing activity.
Facts:
- Napster, Inc. created and distributed free proprietary software that allowed users to log onto its network.
- The software enabled users to search for and download MP3 music files directly from the hard drives of other users connected to the network.
- Napster maintained central servers that indexed the MP3 files available from users currently online, thereby facilitating the search and retrieval process.
- An expert analysis showed that approximately 87% of the files available on Napster were copyrighted, with over 70% owned or administered by the plaintiff record companies.
- The sharing of these copyrighted files was done without the authorization of the copyright holders.
- Napster's internal documents revealed that its executives were aware that users were sharing "pirated music" and that this activity was central to attracting a large user base.
- Although Napster did not charge users, it had a business model to "monetize" its large user base, and its corporate value (estimated at $60-$80 million) was directly linked to the massive library of music its users made available.
- The plaintiff record companies were in the process of launching or had already launched their own commercial digital music distribution services, which were in direct competition with Napster's free service.
Procedural Posture:
- A & M Records and seventeen other record companies filed a complaint against Napster, Inc. in the U.S. District Court for the Northern District of California.
- Separately, music publishers Jerry Leiber, Mike Stoller, and Frank Music Corporation filed a class action complaint against Napster, Inc. in the same court.
- The record company plaintiffs and the music publisher plaintiffs filed a joint motion seeking a preliminary injunction to stop Napster from facilitating the copying and distribution of their copyrighted works pending a full trial.
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Issue:
Does a service that provides the software and network to facilitate widespread, unauthorized peer-to-peer sharing of copyrighted music files constitute contributory and vicarious copyright infringement, making it likely to succeed on the merits for the purpose of granting a preliminary injunction?
Opinions:
Majority - Chief Judge Patel
Yes. A service that knowingly facilitates and financially benefits from the mass infringement of copyrighted works by its users is likely liable for contributory and vicarious copyright infringement. The court found that the plaintiffs demonstrated a strong likelihood of success on the merits, justifying a preliminary injunction. The court's reasoning was threefold: First, Napster users were engaged in direct copyright infringement. Their actions did not qualify for the 'fair use' defense because the use was non-transformative, involved wholesale copying of creative works, and harmed the potential market for the copyrighted music, including the plaintiffs' emerging digital download market. The court rejected Napster's arguments that its service was primarily used for permissible 'sampling' or 'space-shifting.' Second, Napster was likely liable for contributory infringement because it had actual and constructive knowledge of the infringing activity, as evidenced by its own internal documents, and it materially contributed by providing the essential software, search engine, and network infrastructure. Third, Napster was likely liable for vicarious infringement because it had the right and ability to supervise its users' conduct (e.g., by terminating infringing users) and derived a direct financial benefit from the infringing activity, as the availability of free, pirated music was the 'glittering object that attracts Napster’s financially-valuable user base.'
Analysis:
This landmark district court ruling was one of the first to apply traditional doctrines of secondary copyright liability to peer-to-peer file-sharing technology. The decision established that an online service could not shield itself from liability by claiming it was merely a passive conduit, especially when its core business model was built upon facilitating infringement. By rejecting the defenses based on Sony Corp. v. Universal City Studios, the court signaled that services with centralized control and knowledge of infringement could not claim the 'staple article of commerce' safe harbor. This case set a critical precedent for subsequent litigation against file-sharing services and was instrumental in shaping the legal landscape for digital music distribution, ultimately paving the way for licensed services like iTunes and Spotify.
