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Metallica v. Napster, Inc.
Court	United States District Court for the Northern District of California
Full case name	Metallica v. Napster, Inc.
Court membership
Judge sitting	Marilyn Hall Patel

Metallica vs. Napster, Inc. was a 2000 U.S. District Court for the Northern District of California case that focused on copyright infringement, racketeering, and unlawful use of digital audio interface device. Metallica vs. Napster, Inc. was the first case of an artist suing a P2P software company.

Background

Metallica is a heavy metal band from Los Angeles, California, that was formed in 1981. Napster was a pioneering peer-to-peer file sharing internet service, founded by Shawn Fanning, that emphasized sharing digitally encoded music as MP3 audio files. On April 13, 2000, Metallica filed a lawsuit against the file sharing company Napster. Metallica alleged that Napster was guilty of copyright infringement, racketeering, and Racketeer Influenced and Corrupt Organizations Act. The lawsuit was filed in the U.S. District Court for the Northern District of California. This case was filed soon after another case was filed against Napster, the A&M Records, Inc. v. Napster, Inc., which included 18 large record companies. Metallica v. Napster, Inc. was such a significant case because it was the first instance of an artist suing a P2P software company. This case lead to several other high profile artists following suit by suing Napster.

Case Specifics

On July 11, 2000 Lars Ulrich read a testimony to the Judiciary committee accusing Napster of violating copyright infringement. In the testimony it is explained that in 2000, Metallica discovered that a demo of the song "I Disappear" which was set to be released with the "Mission: Impossible II" soundtrack was being played on the radio. Metallica was able to trace the source of the leak back to a file on Napster peer-to-peer file-sharing network. It was also discovered that the bands entire catalogue was available for free download. Metallica argued that Napster was enabling users to exchange copyrighted MP3 files. By allowing their music to be shared, users were not paying sufficient homage to their grueling artistry. Metallica sought at least $10 million dollars in damages, which is based upon $100,000 per song illegally downloaded. Metallica hired online consulting firm NetPD to monitor the Napster service. A list of 335,435 Napster users were allegedly sharing the band's songs online in violation of copyright laws, and the 60,000 page document was delivered to Napster's office. Metallica demanded that all of their songs be banned from file sharing and the users responsible for sharing their music also be banned from the service. This lead to over 300,000 users being banned from the service. The suit also named several universities to be held accountable for allowing students to illegally download music on their networks. These universities included University of Southern California, Yale University, and Indiana University.

Outcome

The judge ruling over the case, Federal Judge Marilyn Hall Patel,ruled in favor of Metallica. Federal Judge Patel ordered Napster to place a filter on the program within 72 hours or be shutdown. Napster was forced to search through its system and remove all copyrighted songs by Metallica. This court ruling led to Dr. Dre joining the suit and several other lawsuits by music artists, record companies, and the RIAA which lead to an additional 230,142 Napster users to be banned. On July 12, 2001 Napster reached a settlement with Metallica and Dr. Dre after Bertelsmann AG BMG became interested in purchasing the rights for Napster for $94 million. The settlement required that Napster block all of the music being shared from any artist that did not want their music to be shared. This deal was blocked due to Judge Peter Walsh's rule the $94 million deal was tainted because Napster Chief Executive Officer Konrad Hilbers, a former Bertelsmann executive, "had one foot in the Napster camp and one foot in the Bertelsmann camp. Napster was then forced to file for Chapter 7 and liquefy its assets.

Napster

The Napster program was originally a way for nineteen-year-old Shawn Fanning and his close friends throughout the country to trade music in the MP3 format. Fanning and his friends decided to try and increase the number of files available and involve more people by creating a way for users to browse each other’s files and to talk to each other. As a result, Napster went live in September of 1999 and gained instant popularity. Napster’s number of registered users was doubling every 5-6 weeks. From its debut, Napster managed to draw more new users than any other online application in history. In February of 2001, Napster had roughly 80 million monthly users compared to Yahoo’s 54 million monthly users. At its peak Napster facilitated nearly 2 billion file transfers per month and had an estimated net-worth of between 60-80 million dollars. Fanning designed Napster as a searching and indexing program, meaning that files weren’t actually downloaded from Napster’s servers but rather from a peer’s computer. Users had to download a program called MusicShare which would allow them to interact with Napster’s servers. When users would log onto their Napster account, MusicShare would read the names of the MP3 files that the user had made public and would then communicate with Napster’s servers so a complete list of all public files from all users could be compiled. Once logged into Napster a user would simply enter the name of the file they wanted to download and hit the search button to view a list of all the sources that contained the desired file. The user would then click the download button and the Napster server would communicate with the hosts MusicShare browser to facilitate a connection and begin the download. This method of file sharing is referred to as Peer-to-Peer file sharing.

P2P

Peer-to-Peer is a distributed application architecture that partitions tasks or workloads between peers. By joining one of these peer-to-peer network of nodes, the users allow a portion of their resources, such as processing power, disk storage or network bandwidth, directly available to other network participants. By utilizing this type of application structure, any mp3s, videos, or other files located on a users' computer was instantly made available to other Napster users for download. This is one of the major reasons Napster was so popular, it was easy to use and and had a large number of files for download. Napster was one of the major software applications that popularized this type of application structure. Many other software applications followed in Napster's footsteps by using this model including: Gnutella, Freenet, and today's major application of torrents including BitTorrent.

Issues Surrounding P2P Software

One of the largest issues with P2P software is the public assumption that users' use these programs strictly for illegally pirating copyrighted files. There are many other issues associated with P2P software. Some file sharing clients have been known to release confidential personal information , come bundled with spyware or malware, users can download malware, or other viruses from the network, and unsecure and unsigned codes may allow remote access to files on a victim's computer.

Artists Using P2P For Promotion

The relationship between music artists and P2P file sharing software is not always about pirating music. In several studies, it is revealed that users of Napster who download free music actually spend more money on music. By downloading free music, users are able to sample new music, artists, and find new tastes, which leads to increased sales. Several artists also supported Napster and used the service for promotion. In 2000, Limb Bizkit signed a $1.8 million deal to promote 23 free concerts.

Implications

There were many people that were worried that the ruling in the Napster v. Metallica case would affect the future of p2p file sharing and other industries that stemmed from the growing popularity of MP3 music. Avoiding copyright laws might have seemed to be the only use for these technologies at first, but there happens to be many other legal uses for such technologies, and it doesn’t look like they will be disappearing anytime soon. For example, The Recording Industry Ass’n of America v. Diamond Multimedia Systems, Inc. where The Recording Industry Ass’n of America was attempting to sue Diamond Multimedia Systems for producing a portable MP3 player called the Rio. The Industry claimed that the Rio did not comply with the Audio Home Recording Act(AHRA), and thus its production should be halted. The Ninth Circuit Court ruled that the Rio was not covered by the AHRA and that it was designed simply to enable users to easily listen to MP3 files that were already stored on their personal computers or on other personal storage devices. There was a similar outcome in Sony Corp. of America v. Universal City Studios, Inc. It was ruled that Sony’s VCR, which allowed users to record live television onto cassette tapes to be viewed at a later time, was legal and did not violate any copyright laws. Rulings like these helped to solidify the fact that cases like the Napster v. Metallica were not going to effect the invention and use of devices that stemmed from the music and television industries.