U.S. District Judge Marilyn Hall Patel late Friday found that Napster is not a "mere conduit" for information, rejecting arguments that the case should be thrown out because the company is not directly responsible for copyright infringement on its network.
In court papers, Napster has argued it is entitled to some of the same protections from copyright liability as Internet service providers are afforded under recently enacted digital copyright laws. ISPs that respond appropriately to complaints of infringement on their systems cannot be ordered to pay damages under the Digital Millennium Copyright Act.
Patel rejected at least part of that logic Friday, saying that Napster provides information allowing two people to connect their computers, but that unlike an ISP "the actual connection itself occurs through the Internet."
The decision leaves much room for legal maneuvering in the case, which is likely to play a significant role in determining how much power traditional copyright law retains in the digital age, according to legal experts.
The Napster software, created last year by 19-year-old Shawn Fanning, allows thousands of computer users to open their hard drives to one another, giving people near-instant access to hundreds of thousands of songs, many of them copyrighted.
Music piracy has long been woven into the Net's fabric, but Fanning's software has raised the stakes dramatically for the music industry. Previously, would-be music pirates were forced to comb hundreds of often short-lived music Web sites for copies of a favorite song. Now that song may be available with a quick search and point-and-click download through Napster's service.
The Recording Industry Association of America (RIAA) sued the small company created around Fanning's software late last year, contending that the software itself contributed to massive copyright infringement. This month, hard rock band Metallica and rapper Dr. Dre followed suit, saying their own work had been pirated by Napster users.
At issue is whether the Napster software, which provides a directory to the songs on its members' hard drives and helps establish a connection between two computers, can be held legally responsible for files that never flow through its own systems.
But the company's first argument, in which it compared itself to an ISP that has no control over the data moving through its services, didn't resonate with the court.
As a result, the RIAA claimed an early victory in a statement today, saying that the decision keeps Napster on the hook for damages that could range into the hundreds of millions of dollars.
"This hearing was Napster's attempt to escape responsibility for aiding and abetting wide-scale piracy and--not surprisingly--they lost," Hilary Rosen, chief executive of the RIAA, said in a statement today.
Napster noted that the judge's decision allows it to seek several different kinds of protections under federal copyright law, however. Other defenses include some that shield ISPs from liability, as well as those that originally kept VCRs from being ruled illegal despite their ability to make copies of protected movies.
"The upshot of the court's decision is to move the case ahead," said Lawrence Pulgram, a Fenwick & West attorney representing Napster.
Patel's decision does contain some new warning signs for Napster, however.
The judge proved skeptical of Napster's assurances that it could block access to any individuals who proved to be repeat violators of its stated anti-piracy policy.
"Napster has not shown that it reasonably implemented a policy for terminating repeat infringers," Patel wrote.
The company also could be held responsible for songs traded through its service before it instituted a copyright policy, she said.
The company's copyright policy is being put to the test by Metallica. Last week, the band fingered hundreds of thousands of Napster users it said had put its songs online, demanding that Napster kick them off its service. Napster has said it would block access to repeat copyright infringers identified by the music industry, but the company is still reviewing Metallica's documents.
If the company does wind up blocking people who have traded Metallica songs on its service, other bands are likely to make the same requests. Los Angeles attorney Howard King, who represents Metallica and Dr. Dre, said the rapper will do a search for people trading his songs if Metallica's requests prove fruitful.
No court dates have been set for the remainder of the industry's suit against Napster.