Pirates in Cyberspace: the Copyright Implications of a and M Records, Inc. v. Napster, Inc., 114 F. Supp. 2d 896 (n.d. Cal. 2000)

• Publication year: 2021

80 Nebraska L. Rev. 125. Pirates in Cyberspace: The Copyright Implications of A and M Records, Inc. v. Napster, Inc., 114 F. Supp. 2d 896 (N.D. Cal. 2000)

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Note*

Pirates in Cyberspace: The Copyright Implications of A and M Records, Inc. v. Napster, Inc., 114 F. Supp. 2d 896 (N.D. Cal. 2000)

Aaron Johnson

TABLE OF CONTENTS

I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . 126 R
II. Factual Background. . . . . . . . . . . . . . . . . . . . . . 128 R
III. Legal Background. . . . . . . . . . . . . . . . . . . . . . . 132 R
A. The Fair Use Doctrine . . . . . . . . . . . . . . . . . . . 132 R
1. Purpose and Character of the Use . . . . . . . . . . . . 133 R
2. Nature of the Copyrighted Work . . . . . . . . . . . . . 136 R
3. Amount and Substantiality of the Work Used . . . . . . . 137 R
4. Effect Upon Potential Market or Value . . . . . . . . . 138 R
B. Contributory Copyright Infringement . . . . . . . . . . . . 141 R
C. Staple Article of Commerce Doctrine . . . . . . . . . . . . 143 R
IV. Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . 145 R
A. Napster Users Were Not Engaged in Fair Use . . . . . . . . 145 R
1. Use Was Not Wholly Private and Had No
Transformative Value . . . . . . . . . . . . . . . . . . 145 R
2. The Copyrighted Work Was Creative in
Nature . . . . . . . . . . . . . . . . . . . . . . . . . 148 R
3. Napster Users Took the "Whole" and "Heart" of
the Work . . . . . . . . . . . . . . . . . . . . . . . . 148 R
4. Napster Use Was Likely to Adversely Affect the
Market for the Copyrighted Works . . . . . . . . . . . . 148 R
B. Napster's Contributory Liability . . . . . . . . . . . . . 150 R
1. Napster Had Reason to Know of the Infringing
Conduct of Its Users . . . . . . . . . . . . . . . . . . 150 R
2. Napster Materially Contributed to the

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Consciously Providing a Forum for
Infringement . . . . . . . . . . . . . . . . . . . . . . 154 R
3. Staple Article of Commerce Doctrine
Inapplicable to Napster Because Service Was
Used Primarily for Infringing Activities and
Napster Exercised Control Over the Service . . . . . . . 155 R
V. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . 156 R

I. INTRODUCTION

The world goes ahead because each of us builds on the work of our predecessors. A dwarf standing on the shoulders of a giant can see farther than the giant himself.(fn1) Article I, section 8 of the United States Constitution provides that the Congress shall have the power "[t]o promote the Progress of Science and useful Arts, by securing the limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." (fn2) This provision forms the basis of federal copyright law, codified in Title 17 of the United States Code.(fn3) The Copyright Act gives the owner of a valid copyright the exclusive right to reproduce, adapt, distribute, perform, and display the work.(fn4) The Act defines a copyright infringer in part as "[a]nyone who violates any of the exclusive rights of the copyright owner."(fn5) Congress recognized, however, that giving the author of a copyrighted work absolute control over the reproduction of the work would stifle creativity. Thus, it allowed for others to use copyrighted work for a "fair use" without subjecting the user to liability. Section 107 of the Copyright Act provides a non-exclusive list of fair use factors:

127(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work.(fn6)

The fair use doctrine thus seeks to reconcile the interest of the artist in protecting his or her creative work with the public's interest in access to such creative work.

Technology has had an obvious impact on copyright law. Congress has frequently found itself in a reactionary position as advances in technology have necessitated change.(fn7) With the development and expanded use of the Internet over the past decade, new and even more complex copyright issues have arisen. Congress addressed these issues in part with the passage of the Digital Millennium Copyright Act.(fn8) However, Congress has not fully delineated the scope of copyright protection in cyberspace; thus, the fair use doctrine and other traditional copyright principles will play an important role in the resolution of these issues.

A and M Records, Inc. v. Napster, Inc.,(fn9) serves as an important source of guidance in this unchartered area of the law. Napster "touches upon the gray area of copyright law that tries to strike a balance between protecting intellectual property in cyberspace while shielding Internet Service Providers . . . from liability for the unauthorized actions of their users."(fn10) In Napster, the United States District Court for the Northern District of California held that users of Napster, a service provider which facilitated the transfer of MP3 music files, likely committed copyright infringement when they uploaded and downloaded copyrighted music files, and that Napster could be held liable for contributory infringement based on its users' actions. Accordingly, the court granted a preliminary injunction against Napster, requiring it to take steps to prevent infringement from occur-

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ring.(fn11) The Ninth Circuit affirmed the portion of the district court's ruling relevant to this Note.(fn12) As of this writing, Napster has not appealed to the United States Supreme Court.

Thus, this Note focuses specifically on the question of whether it was proper to deny Napster users fair use protection and to hold Napster liable for its users' actions. Part II of the Note explains the Napster system and gives a factual background of the case. Part III gives a brief legal background of the doctrines involved in resolving the issues presented in the case. Part IV concludes that the district court was correct in holding that Napster users were not engaged in a fair use because the uploading and downloading of MP3 files is not the type of personal use meant to be protected under the doctrine, as the widespread distribution of MP3 files stifles the market for the copyright holders' work. Part IV also concludes that it was proper to hold Napster contributorily liable for the infringement of its users because Napster knew that its users were likely to commit infringement, yet it still offered its service.

II. FACTUAL BACKGROUND

Before explaining how Napster worked, it is necessary to explain the situation present before Napster. Music in compact disc form is a collection of computer data files with "wav" extensions. Each "wav" file represents a separate musical selection.(fn13) Users can "rip" the "wav" from compact discs and store them on computer hard drives.(fn14) Because "wav" files are so large, however, the transmission of music over the Internet initially was not feasible.(fn15)

This changed with the development of the MP3 file format. Developed by the Moving Pictures Experts Group, the MP3 compression algorithm greatly reduced the amount of space necessary to download

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music files, therefore reducing the time necessary to download.(fn16) Because MP3 files could be transferred quickly over the Internet, and copied and distributed without losing their near-compact disc sound quality, the MP3 file became the standard format for downloading music. (fn17) While MP3 technology made downloading easy, users still could not quickly locate specific MP3 files on the Internet. That, in essence, was the genius of Napster.

Napster essentially allowed users to share these MP3 files. A user who wished to employ the Napster service had to first download its free "MusicShare" software.(fn18) The user could then log on to Napster to access, through Napster's server, a directory and index of all the MP3 files on the hard drives of other users who were currently logged into the system.(fn19) When a user chose a file, the Napster server communicated with the MusicShare program of the host user to make the file available for download.(fn20) The file was then transferred over the Internet. At the time of suit, Napster users could obtain these files free of charge.(fn21) While Napster never advertised its product,(fn22) millions of people were using the service at the time of suit.(fn23) The overwhelming majority of the music available on Napster was copyrighted.(fn24) Napster never obtained licenses to distribute the copyrighted music.(fn25)

The implications of Napster go well beyond the sharing of MP3 music files. The Napster technology helped launch a new programming movement involving peer-to-peer sharing. Venture capitalists, as well as established companies such as Intel, have thrown their financial weight behind peer-to-peer start-ups.(fn26) Miko Matsumura, the CEO of Kalepa Networks (a start-up which plans to link peer-to-peer networks and create an Internet alternative) stated, "[t]he old days were all about centralization and control. . . . In this new topology, everyone

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brings their own resources. The new network will be built on top of the old network. Like Rome was built in different layers."(fn27)

The Recording Industry of America was not so pleased. On December 6, 1999, it filed suit against Napster in United States District Court for the Northern District of California alleging contributory federal copyright infringement and similar state law violations.(fn28)

While the Copyright Act does not expressly allow for a cause of action based on contributory infringement, courts have long recognized that such a cause of action exists.(fn29) A contributory infringer is "one...