Introduction
Napster, the defendant, was a peer-to-peer file-sharing platform that allowed internet users to access music for free. Individuals could connect to a network of computers and search for mp3 files downloaded to other devices. The files mentioned above were created by “ripping” tracks from CDs and changing their format to mp3, which allowed for non-commercial sharing through the internet. The files under discussion were created, recorded, and licensed by plaintiffs, including A&M Records and several other corporations. Thus, plaintiffs alleged Napster engaged in copyright infringement, including vicarious and contributory infringement.
The defendant opposed this claim, stating that the platform had many uses and its structure allowed for limited control over shared files. First, the legitimate functions of Napster included space-shifting (accessing already owned files), making a decision for future record purchases, and exchanging or downloading distributions that were authorized by the creator or label. Second, as Napster was a peer-to-peer network, its primary type of control was to establish the validity of mp3 files and monitor potential offenses in the file names. Therefore, Napster argued that it had a fair use claim to the files.
Procedural History
The case was brought to the United States District Court for the Northern District of California. The plaintiffs filed for a preliminary injunction to stop the functioning of the peer-to-peer network immediately. The injunction in favor of the plaintiffs was granted by the court; the defendant appealed to the United States Court of Appeals for the Ninth Circuit. The Ninth Circuit, reviewing the case, ordered a stay of the injunction. Later, the decision of the district court was affirmed and reversed in part and remanded.
Issue
Does sharing and downloading copyrighted works using a peer-to-peer network without payment or authorization fall under fair use?
Rules
The case identifies several applicable laws and prior rulings, mainly connected to fair use and copyright infringement limits. In particular, fair use is described in 17 United States Code (U.S.C.) § 107 – Limitations on exclusive rights: fair use. 17 U.S.C. § 107 lists four main factors to consider: the character of the use, the nature of the work, the portion of the work used, and the potential or actual effect on the market and value. Next, 17 U.S.C § 106 – Exclusive rights in copyrighted works – is applied to determine whether plaintiffs presented a prima facie case to confirm that the defendant infringed. The law requires two factors – plaintiffs should prove that they own the material and that defendants have violated one or more exclusive rights.
Application
Based on the facts and rules, the district court ordered an injunction which the court of appeals paused. The main argument that Napster had was based on fair use – the court of appeals determined that the defendant’s platform did not fall under fair use due to it not meeting the four central factors outlined in 17 U.S.C. § 107. Napster users downloaded and shared music without any financial compensation to the copyright owners, they used it for their own purposes, and the tracks were downloaded in full. These aspects of the network held immense potential risks for the music industry as they disrupted sales of licensed tracks.
Furthermore, the court decided that the plaintiffs had all grounds for a prima facie case. A&M records owned some of the tracks shared through Napster, and the above-described nature of using the music confirmed copyright infringement under 17 U.S.C § 106. As the tracks were shared between different users and not between one user’s devices, the space-shifting argument did not hold. However, the court also recognized that Napster could not have known about every instance of copyright infringement on the platform. While Napster has some understanding about infringing material and should remove it, it cannot access mp3 files, therefore having limited control over shared files. It is the responsibility of copyright holders to find these tracks and inform Napster of infringement.
Conclusion
Napster’s peer-to-peer network was infringing on copyright holders’ rights to music tracks, which had negative sales outcomes.