Napster In Federal Court For Copyright Infringement example essay topic

At a glance, the conflict between Napster. com and the Recording Industry Association of America appears to be very cut and dry, however, analysis of the many factors involved uncover moral and legal issues which prove otherwise. Like any other dispute, this specific case is composed of two opposing arguments. From the perspective of the Recording Industry Association of America (RIAA), Napster infringed on copyright laws. Napster defends that copyright law does not unequivocally place them in the wrong. After a yearlong battle, a verdict has been reached and litigation has ended. Through this analysis, it will be evident that the outcome attained between the RIAA and Napster satisfies utilitarian moral law as cogently possible.

On December 6th, 1999, the RIAA sued Napster in Federal Court for copyright infringement, and petitioned that the court shut Napster down. Although Napster continued to run, the litigation and efforts towards shutting it down continued for what would be nearly one year. This lawsuit may seem simple because it involves an organization who distributed a form of copyrighted software called MP 3 to over "20 million people with out permission of the rightful owner". This seems to indicate how Napster is clearly guilty of the charges brought against them. However, as copyright laws were analyzed, the relation of its terminology to the actions of Napster made it difficult to prove Napster guilty. The legal arguments presented by the plaintiffs pertaining to the specifics of copyright law are in their opinion "substantial enough in evidence to prove Napster of wrong doing".

The RIAA charged Napster as being liable for contributory copyright infringement and vicarious copyright infringement. Violations of these two copyright law concepts were the premise of the RIAA's case. Contributory copyright infringement, unlike direct copyright infringement, is not written in the Copyright Act. Instead, it is a concept based on the relationship between the contributing infringer and the direct infringing activity. Contributory infringement can arise from providing the "services or equipment", and "the knowledge of the infringing activity [which] induces, causes, or materially contributes to the infringing conduct of another" to aid the direct infringer. To prove contributory infringement, it must be shown that a company knew of the actual direct copyright infringement.

It must also be shown that the contributory infringer substantially participated in the actual, direct infringement. In regard to this case, the capability of Napster's software leaves them subject to this charge. Napster 2.0 is the "service or equipment" which enables users, or "direct infringers" to search the community's database for MP 3's. Napster has been prosecuted because they are the party responsible for the impact of their software, not its users. The second charge brought against Napster was that it was to blame for vicarious copyright infringement. Vicarious copyright infringement, like contributory infringement is a common concept that is not codified by the Copyright Act.

Liability for vicarious infringement can be imposed even when "the third party lacks knowledge of the infringing activity because of the supervisory nature of the relationship between the third party and the direct copyright infringer". Napster was brought up on charges of vicarious copyright infringement on the grounds that, regardless if the "software developers actually committed copy right piracy themselves; it is enough that they could have influenced the act or benefited from it in some way". Even if Napster was unaware of what its users were doing, their software is capable to perform copyright infringing activities. The design of the Napster software enables users to act illegally, and a claim to Napster's innocent myopia is not a justifiable defense. Because there is such significant and substantial evidence that accuses Napster of being at fault, they were in desperate need of a strong defense. Napster hired David Boies, the lead litigator from the Justice Department's infamous case against Microsoft.

"Napster has hired Boies in the hopes that the courtroom Houdini can work the same magic for the online-music startup". The gist of Boies' argument is that there are enough exemptions in copyright law to permit Napster's existence. One is that Section 107, Title 17 of the Copyright Act allows for "fair use" of copyrighted work. Which in more relative terms is reiterated by the Audio Home Recording Act (AHRA) of 1992. And finally, Boies will use the 1984 Sony Betamax Supreme Court decision to compare its similarities to those of Napster.

Napster argues that the indeterminate terminology of Title 17, Section 107 SS 501 of the Copyright Act does not deem their action illegal". The fair use of a copyrighted work, including such use by reproduction in copies or phono records or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright". In a more basic interpretation of the "fair-use" section, a person is allowed to use some one else's work, without their permission, so long as there is no profit gain and the frequency of use is not abusive. Napster ascertains that copyright law does not definitively place them in unequivocal blame. Since the subject of "fair-use" is very inarticulate, Napster defended its use of the MP 3 software as fair. The argument that the AHRA allows Napster to act as it did is justified through its allowance of copyrighted material for non-commercial reproduction.

"The 1992 Audio Home Recording Act (AHRA) allows anyone to copy music for 'noncommercial use'". Because this law makes no distinction in the number of copies of this material that are allowed its disparity between commercial and non-commercial use does not place Napster in clear blame. Boies used the 1984 Sony Betamax Supreme Court Decision as the foundation to Napster's argument. This 1984 case brought by Universal Studios Inc. and Walt Disney Co., was in fear that Sony's Betamax VCR posed a threat of widespread copying of movies and TV shows. However, "the court ruled for Sony, by a closely fought 5-4 vote, determining that the VCR offers 'substantial non-infringing' uses, such as being able to watch programs at the viewers convenience". Boies uses this case because the similarities between the VCR and Napster enforce the similarities between the Betamax case and Napster's own.

"In that landmark case, the Supreme Court ruled that if a technology has non-infringing uses, the maker cannot be held liable for copyright infringement". Like the VCR, Napster has non-infringing uses as a server, which provides chat rooms, information searches, and instant messaging capabilities. America's economic success in the 20th century can be attributed to our system of capitalism. William H. Shaw defines American capitalism as "an economic system, in which the major portion of production and distribution is in private hands, operating under what is termed a profit market system". Although the American economy has proven its success and strength over time, the dispute between Napster and the RIAA has begged a very important question. Can the very foundation of our market system be challenged by the existence of organizations like Napster?

The economic implications that resulted from Napster's actions have been significant. "RIAA members create, manufacture and / or distribute approximately 90% of all legitimate sound recordings produced and sold in the United States". If Napster would continue to operate without having to pay royalties, the music industry would forfeit enormous profit in the future. According to a Forrester Research Inc. report, "music companies such as Time Warner and Sony Corp. could miss $3.1 billion in potential profits by 2005 through online sharing". Napster's disregard of the owners of the MP 3"s has threatened serious damage to their economic prosperity.

Economic law states that "the greater to profit, the higher the income... hence owners want to maximize profit". Because the driving factor in an industry's actions is to seek profit maximization, it is for just reasons that these owners feel threatened by the rapid growth of Napster. Copyright infringement has caused its victims to experience severe profit losses. In many scenario's similar to Napster's, "rampant infringement drives the patentee's price down to its marginal cost, in which case, lost profits damage based solely on sales would be zero". Essentially, the mass reproduction of this music creates increased competition, in which case, the record company is forced to continually lower its price, which in turn results in decreased profit. Rampant infringement can be disastrous to the effectiveness of a corporation's economic gain.

Napster's actions definitely pose a substantial threat to the economic prosperity of the recording industry. If Napster were allowed to operate under its current guidelines, it would most likely drive the music industry into a state of disarray. Napster's ability to exploit our capitalist society through the loopholes in copyright law indicates that these laws, specifically designed to protect organizations like the RIAA from organizations like Napster are inefficient. Because the courts allowed Napster to operate for a full year without paying royalties, it shows a large area of discrepancy in our economic model. The RIAA feels unprotected by the copyright laws that are clearly designed to protect them.

An important factor necessary when gauging the morality of Napster's actions is that it has not exploited others work for their own profit. Therefore it is not immediately evident that its behavior is immoral. A more challenging rationalization of the moral implications involved in this case study would be to assume the perspective that the RIAA is the immoral party, not Napster. This rationale becomes evident when the cost of a compact disc is taken into account. The ratio of the cost of production, versus the sale price of a compact disc is far more unequal than that of a normal good. Because the RIAA represents 90% of the music industry's producing companies and artists, they are essentially a monopoly.

"A monopolist charges the highest price at which the firm can still make positive sales". This economic principle is relative to the RIAA because they have a stronghold on the market price of a compact disc. Although our capitalist society allows the owner to "charge whatever the traffic will bear", from an ethical perspective, the ratio should be more considerate of the consumer. Many music consumers have extensive compact disc collections, which they purchased, in a store for over fifteen dollars. However, these consumers feel mistreated upon their realization that the RIAA can deliver their product to their homes for a lower price with the Internet. Napster's actions helped the consumer market realize the prospect of an online music industry.

This industry also would prevent the consumer from purchasing unwanted goods. In the traditional method of music consumption, the buyer was forced to pay for what he did not necessarily want. If a consumer only wants two of fifteen tracks on a compact disc, Napster provided a service which allowed them to do so. Although Napster's actions have caused great economic loss to the recording industry, perhaps this is fair compensation for the practice of unfair pricing on the part of the recording industry. "According to the FTC findings, they estimate that music buyer's had been potentially overcharged by $500 million in the past four years". The ethical dilemmas presented by our capitalist society have definitely taken its toll on its consumers.

If revolutionary organizations like Napster did not challenge the principles and morality of our capitalist society, consumers like those of the music industry would continually be mistreated. Although capitalism is allowed to operate reasonably Laissez Faire atmosphere under the freedom of our democracy, our democracy also allows for society to react against what they feel is unjust. This case study has proven to be a revolution in itself, which challenges the ideals of capitalism. Napster has stirred anger amongst a consumer market that has been taken advantage of for a long time. The end result in the case between Napster and the RIAA has proven to be the most utilitarian method. After the yearlong battle, a settlement has been reached where Napster will adopt a pay system.

For a blanket fee of $4.95 a month, Napster users can still download MP 3's, use the search engine, and access the instant messaging capabilities of the server. The resolution solves the dilemma of a consumer being forced to buy a complete album, when in reality all they want is a small portion of it. The utilitarian outcome is a system in which the greatest good is served to the majority of society. Both sides are content, the RIAA is receiving adequate revenue, while the consumers can obtain exactly what they want at a fair price.

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