Napster Case Study

Facts of the case:

Napster was a peer-to-peer (P2P) file sharing application that was created by Shawn Fanning in 1999. This application was developed so that users could share compressed music files with other users by searching their hard drives and transferring copies of the files via the free Napster software. Though Napster aided in the facilitation of these file transfers, it did not store music files on a server or any other company owned computer or storage device. Popularity of Napster quickly soared; within a year’s time, Napster’s website was a rated as a top 50 most-visited web address.1 Record companies took notice of Napster’s popularity, and also took issue with the large-scale distribution of their copyright protected music

v Napster, Inc. is arguably the first and most famous case involving P2P file sharing and copyright infringement. Prior to this case, there were no examples for the court to follow. The court’s decision here would not only impact A&M Records and Napster, but it would also set a precedence of how the courts would handle copyright protection of creative works when they can be quickly and widely distributed via the internet.

Copyrights exist to provide the creators of literature, music, art, or other creative work the sole right to publish and sell that work; it provides an incentive to innovate.3 Copyright owners have the right to control the reproduction and distribution of their work, including the right to receive payment for that reproduction and distribution. An author may grant or sell those rights to others, including publishers or recording companies. A goal of copyrights, as set forth by the U.S. Constitution, is "to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries."4 The Copyright Act of 1976 was created to protect owners’ rights from being violated; this includes the sale, reproduction, distribution, adaptation, and modification of copyrighted material so that the owners may benefit from their creative

v Napster Inc. was a significant and defining internet intellectual property case that addressed copyright laws and P2P music file sharing. After rejecting Napster’s fair use claim, the court determined that Napster was liable for contributory and vicarious copyright infringement and ordered the creation of an injunction against Napster’s future copyright infringing activities (Napster’s permissive distribution was permitted to continue, as this is not infringing activity). Napster engaged in conduct that encouraged and facilitated the repetitive and free downloading of copyrighted music files; although the existence of a P2P file sharing system is not by-itself considered infringement, failure to remove copyrighted material that is knowingly downloaded is considered infringing activity. The court highlighted in this case that a service provider is not granted immunity from copyright infringement if it has the means to adopt, implement, and inform users of a policy for policing copyright infringement. 17 Additionally, the court made it clear that even if the activity does not involve the sale of copyrighted songs, infringement of copyright law still occurs if copyrighted material is distributed publically and freely without appropriate authorization. The record industry hailed the court’s decision in A&M Records Inc. v Napster Inc. as a significant victory; it’s impact reinforced the rights of copyright owners and provided much needed help in the fight