SAN FRANCISCO – Napster Inc.’s bankruptcy filing Monday won’t alter rulings by a judge and a federal appeals court that the Internet song-swapping service unlawfully violated the music industry’s copyrights.
In the closely watched copyright infringement case, the music recording industry convinced U.S. District Judge Marilyn Hall Patel and the 9th U.S. Circuit Court of Appeals that Napster’s business model was illegal.
Because it allowed millions of music fans to download and swap copyright music for free, Patel last year ordered the online service shuttered until it could guarantee none of the music it allowed to be shared was copyright.
While the bankruptcy immediately halts that case, which has been in the pretrial stage for three years, Monday’s bankruptcy developments let stand the nation’s first precedential rulings outlawing Napster-like businesses.
“Certainly, the rulings from the 9th Circuit and the court remain in effect,” said Harvey Dunn, a Dallas-based technology lawyer. “Any third party seeking to emulate Napster is going to face that same case law trying to do something comparable to what Napster was doing.”
The Recording Industry Association of America, a legal trade group representing the big recording labels in the copyright case, has launched new suits at other firms with Napster-like models. In doing so, they are invoking precedents born in the Napster case.
Still, the bankruptcy shields Napster from perhaps paying hundreds of millions of dollars in damages to the industry for violating its copyrights.
But while the recording industry may not recoup all or any of its losses from copyright violations, experts said the recording industry was victorious nevertheless. By flexing its legal muscle, it trampled a business allowing 60 million Napster users to violate the industry’s copyrights with the click of a computer mouse.
Indeed, Conrad Hilbers, Napster’s chief executive, said in a statement Monday that the bankruptcy filing was a legal maneuver to assist it in becoming a legitimate online music service.