- The Washington Times - Tuesday, February 13, 2001

A federal appeals court ruled yesterday that popular music-sharing Web site Napster Inc. can no longer allow its users to swap files of copyrighted music, jeopardizing the company a college student founded in 1999 so he could share music on line with his friends.

The 9th U.S. Circuit Court of Appeals in San Francisco allowed Napster to remain in business but told a lower court judge to rewrite her injunction ordering the site to shut down pending a trial on a lawsuit filed by the music industry.

The Recording Industry Association of America sued Napster on Dec. 7, 1999, in federal court charging copyright infringement.

The three-judge panel also said yesterday that Redwood City, Calif.-based Napster must lock out users who exchange copyrighted songs without permission.

Napster founder Shawn Fanning said at a press conference in San Francisco he will continue to fight to keep his Web site running.

"We've heard we couldn't survive before," he said. "We'll all find a way to keep this community growing."

Napster attorney David Boies said the company may appeal yesterday's ruling. It has 15 days to make that decision.

The recording industry said the decision is a victory for the musicians who own the copyrighted material freely exchanged on line.

"This is a clear victory. The court of appeals found that the injunction is not only warranted but required. And it ruled in our favor on every legal issue presented," said Hilary Rosen, president and chief executive of the music association.

Napster's software allows anyone with a computer connected to the Internet to download free copies of music converted into the MP3 format, a digital-compression technology. Napster creates a directory of songs available on the hard drives of other Napster users, then links computers through the Internet to transfer the music files.

But "having digital downloads available for free on the Napster system necessarily harms the copyright holders' attempts to charge for the same downloads," the appeals court wrote in its 58-page ruling.

Napster fans continue to use the software. Traffic on Napster increased greatly over the weekend in anticipation of the ruling, according to Webonize, a Cambridge, Mass.-based Internet research firm.

About 250 million songs were downloaded using the service over the weekend. On average, 1.5 million users were logged onto Napster at any one time, the company said.

"Fearing that Napster may close [yesterday], consumers went on a final weekend feeding frenzy," Webonize analyst Matt Bailey said.

Napster became the fastest-growing software application ever used, according to Media Metrix, a New York-based Internet research firm. In February 2000, the first month Media Metrix tracked Napster, about 1.1 million U.S. consumers connected to the Internet downloaded the service.

That grew to 4.9 million users in July, and now the company says it has 50 million users.

Yesterday's decision could harm research into new technology, said Gary Shapiro, chief executive of Arlington-based Consumer Electronics Association.

"This ruling underscores the need for a new approach to intellectual-property issues in the digital age," Mr. Shapiro said.

In fact, yesterday's ruling won't do much to end the debate over intellectual property on line or slow the pace of file sharing, said C. Wayne Crews, director of technology policy at the conservative think tank Cato Institute.

"Napster broke new ground, but it was only the beginning. Dozens of other Napster-like offerings, such as Gnutella and Zaropaid.com, will not only continue, but accelerate on-line file sharing. And not just song files; the Napsterization of movies is already well under way," Mr. Crews said.

Since the lawsuit against Napster was filed in December 1999, Bertelsmann AG, parent of music company BMG, said it will drop its lawsuit against the company and turn Napster into a subscription service.

The company is providing an estimated $50 million to help start the new subscription service.

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