Intellectual Property

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 (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 of finding and chatting 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 nonprofit on-line music-trading program which became especially popular among college students who typically have access to high-speed Internet connections.

In April 2000 the heavy metal rock group Metallica sued the on-line music-trading Website 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 illegally trade songs using university servers. A number of universities had banned Napster prior to April 2000 because of concerns about potential copyright infringement and/or because traffic on the Internet was slowing down university servers. 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 the group alleged was a violation of the Racketeering Influenced and Corrupt Organizations (RICO) act, 18 U.S.C. § 1961. Napster responded that the Fair Use Act allows owners of compact discs to use them as they wish. Therefore if an owner of the disc decides to copy it into a computer file, he or she should be allowed to do so. If this file happens to be accessible on the Internet, then others can also access or download it without being guilty of a crime. Napster further claimed that since it made no profit off the trades, it owed no money in ROYALTIES. The Ninth Circuit held that Napster's operation constituted copyright infringement.