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Napster pleads with court for survival

The music-swapping site argues that a lower court ruling against it was legally flawed.

A federal judge made a legal error in ordering Napster to ban the trade of copyrighted music on its service, lawyers for the popular file-swapping service told an appeals court today.

In the first legal filing since an appeals court late last month granted the company what amounts to a temporary stay of execution, Napster's legal team asked a panel of appellate judges to overturn a lower court's order that would require the company to stop most online operations.

"The trial court, in its ruling, misunderstood and misinterpreted the standards for contributory and vicarious infringement," Napster attorney Jonathan Schiller said during a conference call after the legal brief was filed. "What (this brief) does that is new and substantial is that it goes into detail about where the courts are in error."

The year-old company is staking much of its existence on this round of appeals. One judge has already told the company that it has created "a monster" that threatens the viability of the legitimate online music business.

The decision is a result of a lawsuit filed by the Recording Industry Association of America (RIAA) on behalf of its major-label members, and by owners of music publishing rights, which charges Napster with contributing to massive online copyright violation.

The appeals court decision will be closely watched around the industry as a second opinion on the broader viability of online music-swapping of the kind supported by Napster and rivals such as Scour and Gnutella. These software programs allow their users to open up their hard drives to one another and trade songs, with hundreds of thousands of people offering a total of millions of songs for free download at any given time.

But many legal observers say the chances of a significantly different legal opinion are slim. Judge Marilyn Hall Patel's ruling in favor of the recording industry's request for a preliminary injunction against Napster was decisive, even scathing in places.

"Indeed...(Napster) has contributed to a new attitude that digitally downloaded songs ought to be free--an attitude that creates formidable hurdles for the establishment of a commercial downloading market," Patel wrote.

Patel ordered that Napster block the trading of all copyrighted songs on its service. Although she said the company was welcome to keep operating its noninfringing services, such as its new-artist program and electronic bulletin boards, the company said these were too tightly integrated with the main software itself to keep running independently.

In today's brief, Napster's attorneys said the court's decision goes far beyond the immediate dispute with the recording industry, holding significant consequences for the development of communications technology in general.

"If the decision of the District Court is permitted to stand, every new technology used to transmit, route, or exchange data subject to the copyright laws using the Internet--and many existing technologies--will be affected," the brief read.

The brief repeats many of the same arguments that were rejected by Patel last month.

The company reiterated its contention that Napster users themselves are not doing anything illegal by downloading copyrighted music, because they are not making any money from their actions. If the users are protected from liability, then so is Napster itself, attorneys argued.

The company also stressed that the Napster software has a substantial number of uses that clearly do not infringe on anybody's copyrights, which protects the software from being deemed illegal.

New in the brief were contentions that Patel did not give the companies enough time in the previous legal rounds to establish the facts supporting their case.

"She didn't give herself the time to make sure that she understood how Napster even works," Schiller said.

Napster CEO Hank Barry also noted that he would prefer to settle the lawsuit, rather than continue to hash out the issue in court. He said he's made continued overtures to the record labels, all of which have been rejected.

"I continue to believe that the best result would be to reach agreement with the record industry," Barry said. "The record companies have been civil to us. But we have made many proposals, some of which involved compensating artists. They have accepted none of them."

The recording industry has consistently dismissed Napster's arguments, saying that downloading copyrighted works without paying for them amounts to high-tech theft.

In a statement following the appeals court's stay of Napster's injunction, RIAA president Hilary Rosen said she was "disappointed," but was confident of the final outcome.

"It is frustrating, of course, that the tens of millions of daily infringements occurring on Napster will be able to continue, at least temporarily," Rosen said. "In fact, since the district court issued its order, the illegal downloading of copyrighted music openly encouraged by Napster has probably exceeded all previous records."

"Judge Patel issued a thoughtful, well-reasoned opinion that we believe will be upheld on appeal," RIAA spokeswoman Amy Weiss said today.

The recording industry's response to Napster's brief is due on September 8, after which the appeals court will schedule a new day for the two sides to meet in court.