Transcript of Judge Marilyn Hall Patel's ruling
Now, how one ultimately does identify, I suppose something can be done between now and the permanent injunction time, and I will invite you to submit a proposed injunction, but for the time being, Napster is enjoined from causing or assisting or enabling or facilitating or contributing to the copying, duplicating or otherwise other infringement upon all copyrighted songs, musical compositions or material in which plaintiffs hold a copyright or with respect to plaintiffs' pre-1972 recordings in which they hold the rights.
And you can explain to me why that injunction either is not broad enough or is not narrow enough given what I have said but--and I don't know how you're going to identify all of those items--but you don't get the benefit of the DMCA essentially requiring that they provide notice to you of each and every complaint. But for now, Napster is enjoined from doing the acts that I just described.
Mr. Frackman, is there anything else that should be included in than injunction at this point?
(RIAA attorney Russell) Frackman: I don't think so, your honor. Thank you.
The court: Is there any way it can be narrowed and still--
Frackman: I don't see how, your honor.
The court: --protect your rights?
Frackman: I don't see how, your honor.
The court: Mr. Boies, Mr. Johnson?
(Napster attorney David) Boies: I don't see how that is--with respect, your honor--susceptible of being fairly implemented. We don't even have a list of what is claimed to be copyrighted under the court's order.
Even leaving aside the issues that the court has before it in the record as to how you would implement that, I frankly don't think that the injunction is something that gives us any fair ability to comply with it and still operate simply because of the way, as we've tried to explain to the court, peer-to-peer system works.
Now, as I hear the court--
The court: That's the system that has been created.
Boies: Exactly. And as I hear the court--
The court: And I think you're stuck with the consequences of that.
Boies: Right. And as I hear the court, the court is saying the court understands what the court has done but believes this is the appropriate thing to do, and--
The court: That's right.
Boies: And I --
The court: And I think it's--Napster wrote the software. It's up to them to try to write software that will remove from that, you know, from the users the ability to copy copyrighted material. And that's their problem, I think. They've created the, quote, "monster," for want of a better term, and I guess, you know, that's the consequence they face.
Boies: Just to--
The court: I mean, they can have their chat rooms, and they can solicit those new artists.
Boies: Your honor, without trying to reargue, because I know the court has made up its mind, and I accept that the court has made up its mind, however erroneous I may think it is, but the only thing I want the court to focus on is that when the court says that Napster wrote the software, what Napster did was to take file-transfer software and simply adapt it to exchanging MP3 files.
The court: Whatever it did, it's going to have to figure out how to undo it or how to operate in a way so that it is not facilitating the copying of copyrighted material period--copyrighted material of plaintiffs admittedly--and that' s up to them to figure out.
And I say that because it is such a wholesale copying effort that it's not as if there were just a handful of things that were being--you know, items or songs that were being--infringed upon.
I really am not willing to put the burden on plaintiff. I certainly believe that they should work with defendant during the period of time between now and the next proceeding to see what can be done to make sure that they're only removing--you're only removing--their copyrighted work; but in the meantime--or access to their copyrighted work--in the even meantime, we can't--you know, I can't--just let it go on. A strong case has been made.
Boies: Does the court understand that there are two separate issues that we're talking about here in terms of the scope? One issue is how would you go about changing a peer-to-peer file-transfer program to accomplish what the court wants to do even if you knew what songs were claimed to be copyrighted. That's one issue. The second issue is we don't even have a list of the songs that are claimed to be copyrighted. Do you understand that there are both of those places?
The court: I understand that. But you're--but what your client is doing is facilitating something that involves the infringing upon plaintiffs' copyrighted works, and they're going to have to figure out. Since they're doing it on such a wholesale basis, they're going to have to figure out a way to make sure they don't assist or facilitate in that any longer.
Now, if the users want to share files in some other way, that's between them, and it's up to the plaintiffs to try to enforce their rights as against them, you know, if there is a system that comes into being. And I guess there are some others that are in being that allow people to do pretty much the same thing. That's up to them to enforce those rights.
That doesn't mean that I can't restrain Napster, because they're the only ones before the court right now, from doing what they're doing.
Boies: Could I raise one other question that doesn't go to this issue?
The court: Yes.
Boies: And that is the issue of the timing when this goes into effect. And there are really two aspects of that.
One is whether the court is prepared to grant a stay pending an application to the Court of Appeals for a stay; and, second, if the court is not prepared to do that, how long the court plans to give us to implement the court's injunction.
The court: Why don't you answer the first question.
Frackman: How long?
The court: I mean the second question first. How long should they be given to--
Frackman: Right now.
The court: And you're looking at the clock.
Frackman: Yes, I am, your honor.
The court: Not the calendar.
Frackman: That's right.
Your honor, we filed this lawsuit on Dec. 7. We told them at the time we filed the lawsuit we would be seeking a preliminary injunction. This motion has been pending for two months. They've known since that time at least that today would very well be the day of reckoning.
If this injunction does not go into effect immediately, I think your honor knows and I think we know what's going to happen with those 20 million users until it does go into effect, and that's going to be a rush to the computer and enormous amounts of downloading.
And it's not unfair, your honor. They've had eight months of notice, and so I would say immediately would be my request.
Boies: There is obviously no way that we could fairly implement it immediately. The only way you could do it immediately is to stop the service; and if the court is going to order that--I mean, the court will obviously order what the court will order--but I would respectfully suggest to the court that to say to Napster, "You've got to figure out a way of preventing the copying of copyrighted works that are not even identified and you must do so immediately," is simply saying, "You must shut your business down."
And if the court believes that, that is the appropriate thing to do, the court will order that, but I would simply urge the court that, that goes far beyond what even the court has found.
The court: I'm not ordering them to shut their business down. I want to make that clear. What about all those substantial noninfringing uses you were trying to convince me of earlier?
Boies: Right. Well, but the problem is, your honor, is that those substantial--it's a problem of separating out the noninfringing uses from what the court finds to be infringing uses. And what I'm saying to the court and what I think the papers quite clearly demonstrate is that, that is not possible to do today. It's not possible to do. I'm not sure--
The court: None of this should come as a surprise to anyone, really.
Boies: Well, your honor, all I can--
The court: I mean, this litigation has been going on for some time now, and it should not come as a surprise.
Midnight tomorrow night, OK?
Boies: Will the court--
Today is August the 26th--
Frackman: July, your honor.
The court: I really want to be in August. I'm sorry.
July the 26th. Is that right, or 25th? 26th.
Boies: 26th, I think, your honor.
The court: Until Friday midnight, July the 28th, midnight.
No, I will not grant a stay. If you want a stay, you can go to the 9th Circuit. OK?
Boies: And is the court going to grant a bond?
The court: Why not? And if so, how much?
(RIAA attorney Carey) Ramos: Your honor, if I may address that.
The court: Maybe you should say first. How much? You answer that question.
Boies: Your honor, we think a minimum--we said in our papers we thought that the value of the business is between $800 million and a billion-and-a-half dollars. And we think it should be a minimum of $800 million.
These are substantial companies, but they're not that substantial without the posting of the bond; and we think the law absolutely requires it. This is not a matter we think is committed to the court's discretion in terms of posting an adequate bond. And I think that particularly given the breadth of the injunction that the court is issuing--and the time frame that the court is requiring at the plaintiffs' instance this be done at--the court is obligated to impose that bond.
The court: Yes?
Boies: There is no evidence in the record to the contrary in terms of the amount of the bond from the plaintiffs. We do not have anything from the plaintiffs that contradicts the need for that amount of bond.
Ramos: Your honor, that's not correct.
The court: Yes?
Ramos: I begin by reference to your honor's analogy about the orphan asking for the mercy of the court. This is the orphan not only asking for the mercy of the court but asking the court for compensation for the loss of the parents the orphan killed. I think it turns this case on its head.
Your honor indicated that the court had found a very strong likelihood of success on the merits and, frankly, I think to require us to put up a bond of anything like the amount that's been requested would be adding insult to injury.
The value of this company, if there is any value in this company, is the value of the copyrighted music of my client and Mr. Frackman's client, and to ask us to pay again for the creative efforts of our clients by posting a bond of that size I think is completely inappropriate.
The court: What are you proposing?
Ramos: Having said that, your honor, and, frankly, under the circumstances, genuinely believing that no bond here is required, I believe that there are cases in the 9th Circuit that support that conclusion. If your honor so decides, I believe the maximum, and this is in the record, the maximum should be the amount that was invested in this company prior to the filing of this lawsuit, which I believe was no more than $2 million.
I believe that any money invested after the lawsuit was filed was invested at the peril of investors and that they were on ample notice that there could be a finding of copyright liability as there, at least on a preliminary basis has been in the court.
I'm speaking for, I believe, for both sets of plaintiffs in that regard, your honor.
The court: Well, I will set a bond at $5 million.
Can that be posted by midnight--well, four o'clock on Friday?
Frackman: Most definitely, your honor.
The court: OK. Thank you. And you're excused.
Frackman: Thank you, your honor.
Whereupon proceedings adjourned at 4:53 p.m. PT