A judge has refused to dismiss a lawsuit against the original funders of music-swapping service Napster.
Napster is now a legitimate downloading service
A number of major record companies brought the lawsuit against Hummer Winblad and Bertelsmann AG who funded the internet site.
The service let music fans to download songs without paying royalties.
It went offline permanently in the
summer of 2001, after a series of rulings, but record companies are still concerned about perceived lost income.
US District Judge Marilyn Hall Patel made the decision to allow the lawsuit to continue on Wednesday.
Universal Music Group and Capitol Records allege that Hummer and Bertelsmann did more than just financially back the service's inventor, Shawn Fanning.
They claim the investors maintained hands-on control over the company and are liable for copyright infringement.
Allowing the legal action to carry on, Judge Patel wrote "courts have long recognised that in certain circumstances, vicarious or contributory liability will be imposed".
Bruce Rich, a lawyer for Bertelsmann, said the company was not deterred by Patel's ruling and would likely ask again for a dismissal.
At its height, the Napster service allowed millions of users around the globe to browse each other's MP3 music collections stored on their computers and download them for free.
Napster has since relaunched as a legitimate service after US software maker Roxio bought the brand name.
The popularity of digital music downloading has spawned some successful legitimate services, including Apple Computer's iTunes service, which recently celebrated its 100 millionth song download.