What was the Napster case about and what does the outcome mean?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Written by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

UPDATED: Jun 29, 2022

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Today’s Napster is not what it used to be. Prior to 2001, Napster was a free download application where music MP3’s could be downloaded, uploaded, and traded free of charge. The idea behind it was that people had a right to share their music with others and Napster was simply providing a means of doing so.

While Napster may have had good intentions, the website ended up costing the music industry millions in lost royalties because the recording studios and artists were not giving permission for their music to be distributed in this way. In response to the Napster developers’ actions, A&M Records, the nation’s largest recording company, filed a lawsuit to stop Napster from facilitating any further free music transmissions.

 Napster and Copyright Law

The federal copyright code details specific exclusive rights given to musicians for their works. Under Title 17 Section 106, these exclusive rights include the right to reproduce the copyrighted work in copies or phonorecords. It also includes the right to prepare derivative works based upon the copyrighted work and to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending.

In the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, the musician has the right to perform the copyrighted work publicly and in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, the artist has the right to display the copyrighted work publicly. In the case of sound recordings, the artist has the right to perform the copyrighted work publicly by means of a digital audio transmission.  

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What Did Napster Do Wrong?

The problem was that Napster took advantage of right number three under copyright law. Napster did not charge users for their software or to use their system. Napster assumed its actions fell under the fair use safe harbor.

Section 107 of the copyright code outlined the fair use doctrine and its application. According to this law, a use may fall under the fair use exception and not require any copyright permission if it passes a weighing test of four factors including the purpose of the use, the nature of the work being used, the amount of the work used, and the effect of the use on the market for, or value of, the original work.  

These requirements became the crux of the Napster lawsuit and paved the way for the modern construction of copyright protection for musicians.  

Analyzing the Napster Decision

After listening to the arguments, the court analyzed all four factors in their case report. Two of the factors were found to not favor fair use for Napster. Factor number two (the nature of the use) was the first that the court called into question. Under fair use, individuals can freely use music when the purpose is to educate, report, or comment on the music. The court found that Napster’s use did not fall under any of these exceptions. In fact, the court explained that because Napster does not somehow change the works for a specific utilized purpose, their use is not proper.  

The other part of the test that Napster failed was the purpose of the use. According to the court, while Napster did not charge its users for the software or use of their site, the company was still gaining money through ads on their software. This meant that their use was for a profit and, therefore, could not be considered fair use.

Outcome of the Napster Case and What it Means

The court of appeals held that Napster had committed repeated acts of infringement. The result was an order from the court that Napster may not facilitate the free transfer of any more music. Since this decision, Napster has reconstructed their entire system and instead became the first legal song downloading program where songs can be purchased for an amount that includes royalties to the artist. Today, all sites that offer music downloads must charge for this service and artists receive their share.

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