February 10, 2001, 8:20 AM — THE U.S. COURT of Appeals for the Ninth Circuit is expected to hand down a decision Monday that could have drastic implications for Napster, the maverick music-swapping service.
Napster is in the midst of a lengthy legal battle against some of the largest record labels, represented by the Recording Industry Association of America (RIAA). The music powerhouses claim that Napster's service infringes on their copyrights via its free MP3 music file distribution system. Napster holds strong to its own position, claiming it only provides the technological means for deeds actually done by its users.
A three-judge panel heard arguments from both sides in October and, come Monday, will issue a decision that could either shut Napster down until the case has gone to trial or allow Napster to continue its operations. Federal Court Judge Marilyn Hall Patel already ordered Napster to shut down pending the outcome of the trial. The appellate court overturned the decision in favor of holding the October hearing to review the merits of both sides' cases.
The triumvirate of judges have a technology-friendly reputation, which has some legal experts doubting that the preliminary injunction against Napster will be reinstated. Others think the judges will send the matter back to Patel.
"Most legal experts expect the decision to be handed back to the court for further review," said Malcolm Maclachlan, an e-media analyst at IDC.
Maclachlan said Napster has 57 million users, according to the most recent estimates. "I don't really buy that, though, because I am three of them," he quipped, meaning he has registered user names.
If San Mateo, Calif.-based Napster is ordered to shut down until trial, the pressure will be on for the company to maintain its user base long enough to begin profiting from a recently announced fee-based service that the company has said it will launch in June.
If it can hold onto just 1 percent of its 57 million users and collect $5 from each of them, the company would still be a big success, Maclachaln said.
The RIAA issued a brief statement on the matter Friday.
"We're confident that the Ninth Circuit understands the severity of our claim and will uphold the decision of the U.S. Federal Court," Hilary Rosen, president and CEO of the RIAA, said in the statement. "Monday's decision may finally clear the way for the legitimate online marketplace to thrive in an environment that encourages both creativity and a respect for copyright."