Napster Comeback Hits Judicial Speed Bump

SAN FRANCISCO -- Napster was dealt another serious legal setback Wednesday when a federal judge demanded the song-swap company remain off-line until it can fully comply with an injunction to remove all copyright music. That means Napster will need to delay a comeback after being offline for more than a week. In a closed door meeting with U.S. District Judge Marilyn Hall Patel, Napster said it was about to restart the music trading service after a short hiatus as the company retooled its song screening software. Napster counsel told the judge the company felt it could block more than 99% of all infringing song files, but the judge shot back, telling Napster it needed to block 100% of unauthorized copyright songs or stay off-line indefinitely. A Napster spokesperson said the company would comply with Patel's request. Napster's service has been down since July 2 and there is no date set for its return online. Napster has tried to comply with an injunction ordering it to police its system closely for infringing files, only to produce mild results. The company has been buying time until it can launch its much anticipated paid subscription service, due this summer. The recording industry, which sued Napster in 1999 for copyright infringement, was elated with Patel's words from the bench. Hilary Rosen, president of the Recording Industry Association of America, issued a statement late Wednesday in response to Patel's demands. "While we appreciate that Napster is attempting to migrate to a legitimate business model, its inability to prevent copyright infringement from occurring on its system has only hampered the development of the marketplace in which it now hopes to compete. It is difficult for the legitimate online marketplace to compete with free," Ms. Rosen said. Major labels will attempt to garner their own online following with paid online music services. Labels Sony Music Entertainment and Universal Music Group have formed a joint venture called pressplay. AOL Time Warner Inc., EMI Group PLC, and Bertelsmann AG are set to launch a competing music download service called MusicNet, of which Napster also is a business partner. Both businesses are set to launch later this year. All represent challenges for Napster to survive amid competition and legal pressures. With every new piece of screening technology Napster deploys, more songs and users are lost from the system, research shows. And a launch date for the new subscription service is still unknown. Copyright expert Allen Baden, a partner at Kenyon & Kenyon, said Napster's admission to Patel might have only served to remind the judge the company's song swap system is still short of perfection. "What I think it is is a sort of damning admission that they don't have it yet," Mr. Baden said. Copyright (c) 2001 Dow Jones & Company, Inc.

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Napster Comeback Hits Judicial Speed Bump

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