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Monday, 12 February, 2001, 23:52 GMT
Court blow to Napster
A US court in California has ruled that Napster, the online music sharing service, must stop trading in copyright material, but has stopped short of ordering the service to close down.
In a complicated ruling, the 9th US Circuit Court has ordered a lower court - the District Court - to modify an original injunction to prevent Napster from operating its service.
Record companies have interpreted the ruling as a victory, while Napster officials have said the ban could force them to close down the site.
Napster said it will "pursue every avenue in the courts and the Congress to keep Napster operating".
The company added it was "very disappointed" by the ruling.
The 9th US Circuit Court of Appeals found that the Napster "knowingly encourages and assists its users to infringe the record companies' copyrights".
The modifications would mean Napster must prevent its users from gaining access to copyrighted content through its list of available songs.
It added that Napster would also be liable if it failed to act to prevent the distribution of copyrighted materials.
Napster fights back
In a press conference after the ruling, Napster's attorney Robert Boies said the decision to close down the service would depend upon the scope of the District Court's modified injunction.
He added it could take days or weeks for the injunction to be modified.
At the same press conference, Shawn Fanning, the founder of Napster, said, "We will find a way to keep this community going. If we work together, we will find a way."
The decision comes amid a copyright infringement case between Napster and the record companies.
The injunction only governs the operation of Napster's service during the court case, but the court's decision will be seen as an indicator of the case's final outcome.
Copyright court case
The Recording Industry Association of America, the trade group representing record labels, argues that Napster illegally connects users bent on giving away copyrighted material without permission.
On Monday after the ruling, Hilary Rosen, president of the RIAA, said, "The court of appeals found that the injunction is not only warranted but required, and it ruled in our favor on every legal issue presented."
The court battle is being seen as the first big struggle over copyrights in cyberspace, and is expected to define how books, films and music are distributed on the internet.
The 9th US Circuit Court of Appeals also said on Monday that the Audio Home Recording Act, which allows people to record videos at home, would not cover the downloading of music files to computer hard drives.
The origins of Napster
Napster was founded in May 1999 by Mr Fanning.
It provides a file-sharing service via the internet for a community of users.
The company's software enables users to access music and media files on other people's computers through a single interface.
Using the MP3 format - which is a form of digital compression - songs can be compressed into relatively small computer files, without losing much sound quality.
The files are then downloaded onto individual computers.
Napster effectively turns the computer of every user in a potential server of MP3 files.
Despite allegations of illegal trading via the service, Napster's base of registered users has exploded to about 50 million.
The federal court case for copyright infringement began in San Francisco in December 1999.
In a ruling in July last year, a US district court judge said Napster was guilty of wholesale copyright infringement and ordered it shut down pending a full trial.
But the appeal court granted a last-minute stay in October, saying it needed more time to consider the issues.
Later that month, Napster succeeded in doing a deal with one of the music companies trying to close it down.
It formed a strategic alliance with the German media company Bertelsmann to further develop Napster's file-sharing service.
Bertelsmann said it would withdraw its lawsuit and make its catalogue available once Napster has successfully introduced a membership-only system.
After the ruling by the 9th US Circuit Court, Bertelsmann said it remained committed to Napster.
"File sharing is here to stay and we will continue working to build a membership-based Napster service that will be supported by the music industry," said Andreas Schmidt, president and chief executive officer of Bertelsmann eCommerce Group.
The other companies that are suing Napster are Seagram's Universal Music, Sony Music, Warner Music and EMI.
Napster was inundated by thousands of fans over the weekend ahead of the ruling by the 9th US Circuit Court of Appeals.
Nearly 10,000 people logged on to each of Napster's 100 computer servers on Sunday, sharing nearly 2 million free MP3 song files.
This compares to a sample taken last July that found 7,300 users sharing 800,000 files.
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