In Re Napster, Inc., Copyright Litigation

191 F. Supp. 2d 1087 (2002)

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Nature of the Case

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Facts

D developed a peer-to-peer file-sharing website. Its users can exchange music files with one another. On December 6, 1999, Ps, 18 record companies, filed a complaint for contributory and vicarious copyright infringement against D. Ps' claim that D knew of and failed to prevent its users' unauthorized reproduction and distribution of Ps' copyrighted sound recordings. The court granted Ps' request for a preliminary injunction in July 2000 and prohibited D from 'engaging in or facilitating others in copying, downloading, uploading, transmitting, or distributing plaintiffs' copyrighted works.' In July 2001, Ps advised the court of their intent to file a summary judgment motion. D contends that more discovery was needed. Ps' motion for summary judgment asks that the court find D liable as a matter of law for both contributory and vicarious copyright infringement. Ps also move the court to rule as a matter of law that D's infringement of plaintiffs' copyrights was willful, entitling plaintiffs to increased statutory damages. D contends that it cannot properly oppose Ps' motion without further discovery related to claims of copyright ownership and D's fair use and copyright misuse defenses. While all this was ongoing, Ps’ announced the formation of two joint ventures, MusicNet and pressplay. The aim of these joint ventures is to provide platforms for the digital distribution of music. In June 2001, D signed a licensing agreement with MusicNet, allowing Napster access to all of the copyrighted works licensed to MusicNet. D was unable to obtain individual licenses from any of the recording company plaintiffs. The MusicNet agreement explicitly limits P's ability to obtain individual licenses from any of the five plaintiffs, including the non-MusicNet plaintiffs -- Sony and Universal -- until March 2002. MusicNet can terminate the agreement within ninety days, even after March 2002, if D licenses content from any of the five recording companies other than through MusicNet. In opposition to the summary judgment motion, D alleges copyright misuse and licensing practices that are anticompetitive and against public policy. D made the same misuse argument at the preliminary-injunction stage but the court rejected it. D now revives that argument.