Napster keeps rocking as injunction blocked

Napster Inc.’s CEO Hank Barry posted the following message to the company’s Web site on July 28, after the injunction to have Napster shut down was blocked:

“We’re gratified and appreciative of the 9th Circuit Court’s decision today to allow the Napster community to continue operating while our appeal of the injunction is pending. We want to thank the Napster community for their support during this period.

“I believe the Napster technology can help everyone involved in music – including artists, consumers, and the industry. New technologies can be a win-win situation if we work together on building new models – and we at Napster are eager to do so.”

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Quote: “We’re encouraged that the court has decided to take a closer look at all the issues involved.” – Rodrigues.

Napster keeps rocking as injunction blocked

Software company will not be silenced – yet

By Hane C. Lee

IDG News Service

Napster Inc.’s been given a little breathing room.

In a dramatic last-minute development that averts a curtailment of Napster’s MP3-sharing service, a panel of federal appellate judges granted an emergency stay of a lower court’s injunction that would have forced Napster to temporarily halt the swapping of major-label music as of midnight Pacific Daylight Time, Friday July 28.

The ruling means that the software company’s 20 million-plus users can continue downloading copyrighted MP3s from one another’s hard drives – and Napster can stay in business – while the company prepares its appeal of the injunction decision. The 9th U.S. Circuit Court of Appeals in San Francisco has set an Aug. 18 deadline for the initial rounds of briefs.

In requesting the emergency stay, Napster “raised substantial questions of first impression going to both the merits and the form of the injunction,” the appeals court’s order reads. In other words, the court found Napster’s arguments opposing the injunction compelling enough to reconsider.

“I am happy and grateful that we do not have to turn away our 20 million users and that we can continue to help artists,” Napster co-founder Shawn Fanning said in a statement.

The surprise injunction sent tremors throughout the Internet economy and prompted at least one company, GlobalSCAPE, to restrict access to its CuteMX peer-to-peer software program.

U.S. District Judge Marilyn Hall Patel issued a scathing response along with her decision, in which she categorically dismissed all of Napster’s key defences. Napster contends that its users have the right to share MP3s for personal use and that file sharing ultimately benefits the record industry.

In a curious effort to show the major record labels just how much commerce Napster promotes, a day after the injunction was issued the company urged its users to purchase CDs of artists who have spoken out in support of Napster. The company hoped the weekend “buy-cott” would prove that its service is helping rather than harming record sales. The record industry probably was hoping for a surge in CD sales while Napster was disabled (had the injunction taken effect), thus reinforcing Napster’s argument.

Attorneys for the Recording Industry Association of America (RIAA), which sued Napster in December, had asked the court to enjoin Napster from helping users download copyrighted songs pending a full trial, saying that the activity is causing “irreparable harm” to the traditional record business. In a statement, RIAA president Hilary Rosen said Friday’s court order to stay the injunction was “a disappointment, but we remain confident that the court will ultimately affirm (the motion for preliminary injunction) once it has had an opportunity to review the facts and the law.”

The RIAA, along with the National Music Publishers Association (NMPA), a co-plaintiff in the case, also filed a brief in the appeals court, reiterating its arguments favouring an injunction. The appeals court now will hear formal testimony in the record industry’s motion for an injunction in advance of a trial.

The stay order is good news for, a multimedia search engine that was sued last month by the RIAA, NMPA and the Motion Picture Association of America.

“We’re encouraged that the court has decided to take a closer look at all the issues involved,” said Scour president Dan Rodrigues. “It hasn’t changed anything for us – we believe our service is legal and believe the courts will find that it is legal.”

According to Nielsen NetRatings, traffic to Napster’s Web site jumped 71 per cent in less than a week, as consumers hurried to stock up on digital music in anticipation of a shutdown.

That’s bad news to Rosen. “Since the district court issued its order,” she lamented, “the illegal downloading of copyrighted music openly encouraged by Napster has probably exceeded all previous records.”