In its first lengthy legal response to the record industry's attempt to shut down the service, Napster attorneys today said that finding and downloading copyrighted songs for free is protected by law as long as Napster members themselves aren't making money from the recordings.
The brief cited a recent federal court case that decided some noncommercial copying of music is protected by law. That extends even to making a song available for thousands of random Net users to download, the company's attorneys say--and that means Napster is doing nothing wrong.
"If Napster users are not acting illegally, then there is no contributory (copyright) infringement," David Boies, the high-profile antitrust lawyer recently hired by Napster to spearhead its legal team, said in a conference call with reporters.
But Boies also raised a far more ambitious argument that could be hugely damaging for the record companies if it gains legal traction. Citing internal documents he says show the labels have abused their market power to block alternative channels of music distribution, along with an obscure antitrust law, the attorney says the labels have lost the legal ability to enforce their copyrights.
"If you use copyrights to achieve an anti-competitive purpose, you lose the rights to them," he said.
Napster is facing a full-court press by the Recording Industry Association of America (RIAA) and its member record companies, which are asking a judge for a preliminary injunction removing all major-label songs from the file-swapping service while a larger case comes to trial.
The record companies contend that Napster is facilitating copyright infringement on a massive scale by allowing its millions of members to search for songs on each others' computers and to download them for free. In its most recent set of legal briefs, the industry cited surveys that it said proved online file-sharing is already cutting into CD sales.
The file-swapping company responded today with a battery of its own surveys that say Napster actually helps spur CD sales, noting that retail music sales figures have climbed since the service began. According to a survey by a Wharton School of Business professor, 70 percent of Napster members polled reported they've used the service to sample music before buying it, the brief added.
The company first contends that its members' song downloads are legal under the same law that protected Diamond Multimedia's first MP3 player from a different RIAA suit last year. That law, the 1992 Audio Home Recording Act, explicitly bars copyright suits from being brought "based on the noncommercial use by a consumer" of a digital or analog recording device or medium.
Under this argument, copying music through services such as Napster or Gnutella would be legal, but downloads of software or movies would still be copyright violations.
If that argument fails, Napster has several backups.
The company is arguing that its service should have the same protections that saved the Betamax videocassette recorder from being ruled illegal in the 1980s. The movie industry had sued Sony for producing a machine that could make illegal copies of films, but a court ruled that VCRs had other, legal uses as well.
Napster, too, can be used for legal purposes, such as marketing or promoting songs from record label partners or unsigned bands, even if many people are trading copyrighted material, the company noted. Napster simply has to establish that its service is "capable of substantial non-infringing use" to meet that legal test, Boies said.
Finally, the company is repeating its contention that it is simply an online "directory" of music and as thus is not legally responsible for the actions of people using its service. The company lost this argument in an earlier legal round.
The attorneys have cited an obscure legal doctrine dubbed "copyright misuse," which says copyright holders can lose the power to enforce their copyrights if they've used them to achieve an anti-competitive purpose.
Through the legal discovery process, Napster has obtained internal record company documents that Boies said show the RIAA is "misusing copyrights for anti-competitive purposes." That undermines the association's right to sue Napster on copyright grounds, Napster contends.
The "Big Five" record labels--Sony Music, EMI Recorded Music, Bertelsmann's BMG Entertainment, Time Warner's Warner Music and Seagram's Universal Music Group--were recently cited by the Federal Trade Commission for collective pressure tactics that have boosted the price of CDs. Although the labels agreed to change their practices, they never admitted wrongdoing as a result of the suit.
The two sides are scheduled to meet in court July 26, where the judge will decide whether to grant a preliminary injunction against Napster. The technology company is asking that this date be pushed back to allow the court to take a detailed look at the issues and evidence before reaching a decision.