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"Legitimate commerce must be able to flourish without having to compete with free."
—RIAA head Hilary Rosen

STAY JUST A LITTLE BIT LONGER:
NO CHANGE IN NAPSTERLAND

Appellate Judges Keep Patel’s
Injunction Suspended
by Marc Pollack and Simon Glickman

Don't start the funeral march just yet.

The latest showdown over Napster's alleged copyright infringement saw the three-judge panel of the U.S. Ninth Circuit Court of Appeals leave in place the stay previously granted on Judge Marilyn Patel's injunction order shutting down the MP3-swapping directory.

Before a packed house in San Francisco, litigants once again aired the fundamental claims that have shaped this historic confrontation.

Each side had 20 minutes to address one point: Whether the stay should or should not be lifted. This time out, judges Robert Beezer (72), Mary Schroeder (59) and Richard Paez (53), took a somewhat harsher stance toward RIAA claims as articulated by attorneys Russell Frackman (who represented the recording-industry consortium) and Carey Ramos (who spoke on behalf of songwriters and publishing groups).

The panel heard Napster lead counsel David Boies argument that Napster's services included several non-infringing applications. Boies added that Judge Patel had unfairly placed the burden of proof of non-infringement on Napster, a burden that properly belonged with the plaintiffs in the case.

"We want a trial," Boies emphasized, "and we don't want to be shut down while we're waiting for a trial."

After both sides presented their arguments and answered queries from the judges, the stay was upheld. A decision on where the case heads next is expected within the next few weeks.

RIAA chieftain Hilary Rosen—reportedly resplendent in an orange suit—was quick to downplay today's result. "Nobody expected a ruling from the bench today," she insisted, "but we were pleased with the court's understanding of the issues. We hope the court will render a decision as promptly as possible.

"This case has never been about technology," Rosen added. "Rather, it is about Napster's abuse of peer-to-peer technology for its own commercial benefit. It is our hope that the court sends the message that this activity will not be tolerated, so that legitimate businesses who pay creators can enter the Internet market and compete fairly. Legitimate commerce must be able to flourish without having to compete with free."

Rosen fended off press inquiries about why settlement talks haven't led to a deal with Napster by asserting, "The RIAA can't make business deals. It's up to the individual labels and publishers to settle and talks are ongoing." She was also careful to question the validity of studies claiming file-sharing has helped CD sales, declaring that sales had been increasing for some time.

"We are very grateful for the opportunity to have our case heard before the Ninth Circuit," Napster CEO Hank Barry noted in a statement, "and look forward to the court's decision. We strongly believe that members of the Napster community who share music on a person-to-person non-commercial basis are not violating any law. I am very proud of our legal team."

Barry's declaration also registered "surprise" that negotiations with labels have thus far yielded no results. "Over a period of many months," reads the statement, "Napster has made serious proposals to each of the major record companies and their publishing affiliates that involve payments of substantial percentages of expected company revenues to compensate artists and rightsholders—proposals whose most conservative estimates would result in payments of over $500 million to the industry in just the first year alone. Every one of these proposals has been rejected, and the record companies have made no counterproposals. Just as we will continue to press our case in court and on Capitol Hill, we will continue to seek an agreement with the recording industry because we believe that our 32,000,000 users deserve nothing less."

David Simutis contributed material for this story.

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