What now for Napster users - is their Napster software immediately useless?
It seems it is only a matter of time until the service is shut down.
The California court ruling does not explicitly order the popular internet site to close down, but it calls on Napster to prevent its users from gaining access to copyrighted content through its list of songs which are available for users to download from one computer to another via the internet.
Napster and its users do have a breathing space, as the injunction still has to be amended by the district court.
Napster says it could take days or weeks for the injunction to be modified.
Once this happens, it could take days or possibly a week to close the service, it added.
Is this the end for Napster, the company?
It is possible that Napster in its current form could live to see another day.
The company has promised to appeal the decision.
However, its chances of success appear limited. The appeals court has already said that the recording industry made a good case that Napster knowingly contributed to copyright infringement.
One possibility is that Napster could reinvent itself as a subscription-based service.
Last year, Napster sealed a deal with German media giant Bertelsmann, which loaned the internet maverick $50m.
The two companies have said they are working on introducing a subscription-based service, which Bertelsmann previously said it would roll out in June.
But, it is unclear whether Napster fans will be prepared to pay for the service and this is what ultimately could spell the death knell of the company.
Are there other services or software packages that could replace Napster?
There are other music and media swapping systems out there.
But Napster's key advantage is its ease of use.
Napster has a large, well-established network and library, making it difficult for other services to compete, the Webnoize analysts said.
Webnoize estimates that over the weekend before the ruling, some 1.5 million users traded 250 million music files.
"Some hard-core Napster users will be looking for an alternative, but other systems do not have the ease of use and no where near the level of catalogue that Napster has," the Webnoize experts said.
What does it mean for the recording industry?
Napster's commercial rivals have welcomed the ruling.
The recording industry claims that Napster has delayed the development of an online music marketplace.
Presumably, the way is now free for them to develop their own online services.
But they may owe Napster a larger debt than they would care to admit.
Webnoize are among those who believe that Napster showed the way.
"Really Napster has gone out there and shown the world that there is a huge potential market," they said, adding, "before Napster had shown up, there was really no idea on whether this would catch on with consumers."
What happens now to Napster's alliance with music giant Bertelsmann?
The ruling is obviously a setback to Napster's alliance with Bertelsmann.
For the subscription-based service to be a real success, more music companies need to be persuaded to get on board.
Speaking in the aftermath of the court ruling, Bertelsmann eCommerce group chief executive Andreas Schmidt said the company planned to proceed with talks to introduce a fee-based service, remaining confident that other music companies would join the scheme.
Had the ruling been more favourable to Napster, "it would have been a big incentive for the other labels to embrace a system they were suspicious about. Now, Bertelsmann will have to negotiate with the other labels on an equal footing," the Webnoize analysts said.
AOL Time Warner is reported to be interested in providing its content to a subscription-based Napster service.
The German media giant has also been careful to protect itself when it signed the deal with Napster.
The way the deal is structured should mean that even if Napster goes down, it should not threaten Bertelsmann.