Napster's Legal Strategy Relies
On 1984 Sony Betamax Ruling
By LEE GOMES
Staff Reporter of THE WALL STREET JOURNAL
Can the Betamax save Napster?
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With a key hearing date looming, and with the legal tides running against it, the Web music trading site Napster Inc. is pinning its courtroom hopes on the 1984 Supreme Court decision that not only legitimized Sony Corp.'s Betamax VCR, but also provided legal groundwork for future clashes between copyright law and a new technology.
Napster is seeking to reverse an earlier ruling by a district-court judge requiring it to stop listing most copyright-protected music on its Web site. The high court's 5-4 decision 16 years ago in favor of the Sony Betamax is one of the pillars of Napster's defense as it heads toward an Oct. 2 hearing before the Ninth U.S. Circuit Court of Appeals in San Francisco. Discussion of the Supreme Court's Betamax ruling dominates the "friends of the court" briefs that have been introduced in support of Napster's legal position.
"Sony is the best argument they have," said Silicon Valley attorney Mark Radcliffe.
The reason: In the Sony case, the high court ruled that a technology that might be used for piracy and other copyright violations cannot be banned -- as long as it was also capable of "substantial noninfringing uses" that were legal. The context of the ruling was the complaint by the movie industry back in the late 1970s that the then-new videocassette recorder should be taken off the market in part because it could be used to make pirate copies of movies. The court was saying, in effect, that society shouldn't be deprived of a potentially useful new technology just because of a few bad apples.
Napster, along with its supporters, is citing the Sony case to say that even if the downloading of copyright songs is illegal -- something Napster contests -- the company should prevail because other parts of Napster are legal, such as its promotion of works by unknown artists who have consented to have their songs listed on the site for downloading.
"If a new technology has a single present or potential legal use that is of social or commercial importance, then there cannot be a bar against the use of that technology," said Jonathan Schiller, who is representing Napster along with his law partner, David Boies. Mr. Boies gained fame as the special Justice Department attorney in its antitrust case against Microsoft Corp.
Of course, that's not an argument everyone buys -- including one of the attorneys who argued on behalf of the Betamax before the Supreme Court in the 1980s. Donald E. Sloan, a Los Angeles attorney who has since retired from law, says the legal parts of Napster's operation aren't substantial enough to meet the high court's rather amorphous threshold for being "substantial."
It's no surprise that the Betamax case is playing so large a role in the Napster controversy, since the parallels between the two are striking. In both instances, an array of powerful entertainment industry forces argued that a new technology threatened it with doom. Napster says that just as the film industry was wrong about the VCR -- which has since proved to be the foundation for billions of dollars in tape rentals and sales -- so too will the music industry prove one day to be wrong about Napster.
Peter Jaszi, a law professor at American University who helped draft a brief in support of Napster's arguments, said that in the Sony case, the Supreme Court recognized that "it's not a good idea for copyright owners to have an effective veto over new, evolving technologies, since they will often try to suppress those technologies to protect their monopolies."
But just as there are similarities between the two cases, so too are there differences -- so much so that most outside legal observers say the odds are running heavily against Napster.
The biggest difference is that in the Betamax case, an entire technology, the home VCR, would have been taken off the market if the suit had been successful. That was one reason the court was so cautious in moving against Sony. But in the Napster case, the record industry argues that "Napster is not a technology. It is a business created to facilitate the anonymous theft of music."
Indeed, Napster has no patents, and relies on generic and widely used database and file-transfer software in its operations, programs that will continue to exist even if Napster shuts down. The "peer-to-peer" computing system that Napster helped popularize has attracted a number of Silicon Valley start-ups, which plan to use it for unambiguously legal purposes, such as searching for information.
"The record industry suit won't preclude all the use of a technology, but it will preclude a business using a technology to facilitate infringement," said Samuel Oddi, a professor at the University of Akron who has written extensively on the Sony case.
What's more, while the movie industry would have happily banned the Betamax altogether, the record industry's suit doesn't seek to shut down Napster, but instead to simply prevent it from listing copyrighted music without the permission of the copyright holders. Napster would still be free to feature, for example, its "new artists" program, which the company has lately claimed is one of its most important functions.
Napster argued in court that since there is no practical way for it to distinguish approved from nonapproved music on its site, since the songs are posted by its millions of users, the industry's request would be tantamount to closing it down. U.S. District Judge Marilyn Hall Patel, in ruling against the company, said that was Napster's problem, and suggested the "smart programmers" at the company could come up with a system if they really wanted to.
The Sony case isn't Napster's only argument, although its legal options seem to be narrowing. The company is also making the rather bold claim that all noncommercial downloading of music on the Internet is legal under the 1992 Audio Home Recording Act, which gives consumers certain rights to make personal copies of music on digital audio tape.
Most copyright experts say that law has no bearing on Napster's situation, a position echoed in a hard-hitting anti-Napster brief filed late last week by the Justice Department and the U.S. Patent and Trademark Office. It poses a potentially fatal legal problem for Napster: If Napster users are guilty of copyright infringement, then Napster itself could easily be found guilty of "contributory" copyright infringement for supplying the means to make the copying possible. Numerous internal Napster memos have been introduced in court in which key officials talk about all the "pirated" music on the site -- something known by virtually all of Napster's users, who are attracted to the downloadable music files for that very reason.
Courts have shown little tolerance recently for what attorney Radcliffe calls the "cool technology" defense against copyright charges. In the case of MP3.com Inc., for example, U.S. District Judge Jed S. Rakoff last week issued fines totaling hundreds of millions of dollars against that Web music site in a copyright case brought on a different set of facts.
Moreover, the judge said that some Internet companies "may have a misconception that because their technology is somewhat novel, they are somehow immune from the ordinary applications of laws of the United States. They need to understand that the law's domain knows no such limits." |
