Napster-Go-Round

Here's the latest take on the world of law from CBSNews.com Legal Analyst Andrew Cohen:

Unless Napster changes the way it does business to comport with existing federal copyright law, the company soon will be legally blocked from providing many of its most valued services to its users around the world.

The federal appeals court agreed with the recording industry - and the trial judge - on virtually all of the legal points which were at issue in the case. Yes, Napster is contributing to violations of federal copyright law by enabling individual users to download copyrighted music for free. And, yes, Napster can be held liable for performing this service even though it itself is not downloading tunes.

There isn't much in the ruling which ought to give much comfort to the upstart company or its attorneys. And, in fact, the language of the ruling makes you wonder what took the judges so long to come down on the company. But even while the appellate judges were putting the hammer down on Napster, they apparently felt that the initial injunction which would have shut Napster down last July was a little too broad.

So the court has remanded the case back to U.S. District Judge Marilyn Hall Patel to determine what the scope of the injunction should be. And, as appellate courts usually do when remanded a case back down the line, the judges have given their colleague some specific guidance about what ought to happen from here.

"Napster may be held liable," the court noted Monday in a key passage, "for contributory copyright infringement only to the extent that Napster knows of specific infringing files with copyrighted musical compositions or sound recordings, knows or should have known that the files are available on the Napster system, and fails to act to prevent the distribution of copyrighted material."

So now Judge Patel probably will schedule a hearing to determine what Napster knows and when it knew it. That hearing likely will be scheduled soon and it likely will take a few days to be completed. Napster will try to convince the judge that the bulk of the services it performs don't fall within the scope of the appellate court's ruling. And the industry, of course, will argue otherwise.

And when the hearing is over, Judge Patel, who already has given us a clear view of where she stands on Napster and the law, will set clear and concise limits on what the company can and cannot do. Already, for example, we know from Monday's ruling that Napster must remove links to users trading copyrighted songs stored as MP3 files.

There has been a lot of talk recently within the industry, and the technology comunity in general, about a comprehensive deal which would permit Napster to continue to perform its function, but also give recording companies (and the artists they represent) the financial compensation the law says that they deserve. Monday's ruling is likely to push all sides towards that kind of deal.

For Napster, there is great incentive now to make some sort of deal which keeps them alive. For the industry, the ruling gives them better bargaining power but certainly doesn't change the fact that the technology which created Napster is here to stay. If the music industry doesn't want to have to fight a hundred future Napsters, or a thousand other companies or individuals even harder to track down than Napster, it would be well-advised to make some sort of peace now, while it still can dictate some terms.

Monday's ruling could have ended the fight. It didn't. But the end now clearly is in sight and, in spite of the ruling, it is still up the parties involved to determine what the future will bring.

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