Entertainment Law

A new format known as MP3 (Motion Picture Experts Group-1 Audio Layer 3), which can compress and store high-quality, digital music in one-tenth of the space in which a CD can store it, has recently caused considerable legal ramifications in the entertainment industry. Access to this digitized music is widespread and growing rapidly. Electronic distribution and the digitization of music has the potential to radically reduce royalties to artists.

Napster In early 1999, Shawn Fanning, who was only 18 at the time, began to develop an idea as he talked with friends about the difficulties of finding the kind of MP3 files they were interested in. He thought that there should be a way to create a program that combined three key functions into one. These functions included a search engine, file sharing, (i.e., the ability to trade MP3 files directly, without having to use a centralized server for storage) and an INTERNET Relay Chat (IRC), which was a means to find and chat with other MP3 users while online. Fanning spent several months writing the code that would become the utility later known world-wide as Napster. Napster became a non-profit on-line music-trading program that became especially popular among college students, who typically had access to high-speed Internet connections.

In April 2000, the heavy metal rock group Metallica sued Napster for copyright infringement. Several universities were also named in this suit. Metallica claimed that these universities violated Metallica's music copyrights by permitting their students to access Napster and to illegally trade songs using university servers. A number of universities already had banned Napster prior to April 2000 because of concerns about potential copyright infringement and/or because traffic on the Internet was slowing university servers down. Yale University, which was named in the suit, immediately blocked student access to Napster.

Metallica argued that Napster facilitated illegal use of digital audio devices, which they alleged was a violation of the RACKETEERING Influenced and Corrupt Organizations (RICO) act. Napster responded that copying a song from a CD to a personal computer—when that CD was lawfully purchased—is a reasonable use of the copyrighted material according to the fair use doctrine. They argued further that if this file happens to be accessible on the Internet, then others can access or download it without being guilty of a crime, or civilly liable for copyright infringement. Napster further claimed that since it made no profit from the trades, it owed no money in royalties. Among other things, when courts determine whether fair use has occurred, they assess how much of the copyrighted material was used and the economic effect this use has on the copyright owner. The U.S. Court of Appeals for the Ninth Circuit held that Napster's operation constituted copyright infringement.