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On July 26, the most important ruling yet in the debate over sharing digital music over the Internet will come down in the San Francisco courtroom of U.S. District Court Judge Marilyn H. Patel. She must decide whether to issue a preliminary injunction -- requested by the Recording Industry Association of America (RIAA) -- that would bar Napster from allowing any more swapping of MP3 files pending the outcome of a full trial, which could take years.
If Patel moves to the music industry's beat, Napster would have to shut down its service immediately. That could prove a crippling, if not fatal, blow to the fastest growing Internet service ever. It has grabbed 20 million users in only nine months of existence -- with no advertising whatsoever. The company would lose customers to the myriad other file-sharing startups, as well as any negotiating clout to strike deals and build new business models around its file-sharing infrastructure. Or Napster might try to settle quickly -- and bloodily -- with the record industry, perhaps ceding much of its cachet in a cutting-edge field.
Let's hope not. A wait-and-see decision from Patel is the way to go on this case. The same goes for the U.S. Senate, which had preliminary hearings on Napster on July 11. Senate Judiciary Chairman Orrin Hatch (R-Utah) suggested that Congress might try to amend copyright laws in favor of the new file-sharing technologies. The Supreme Court, which has yet to hear a Napster case but could well agree to do so next year, should likewise stay on the sidelines.
BROADER QUESTION.
Why should Congress and the courts butt out for now? Because file-sharing technology -- and how society uses it -- is an issue evolving at lightning speed. The actual social or consumer value of file-sharing is far from clear yet. "To me, the 20 million users of Napster shows huge consumer value. What the court has to rule [on] is whether consumer value due to free content is a violation of copyright or is it consumer value that can be based on a new business model?" says Lee Black, a research director at Internet music consultancy WebNoize.
At issue isn't just commercial music -- or software or movies, for that matter. Rather, it's a broader question that touches on basic underpinnings of the Constitution's freedom of speech clause. "First Amendment issues are really, really important here. And that's something that has been underplayed in this case," argues Curtis Karnow, an intellectual-property attorney at the San Francisco law firm of Sonnenschein Nath & Rosenthal.
For example, what if U.S. human-rights organizations started using file-sharing systems to anonymously communicate without using the traditional domain name systems of the Internet? If file-sharing systems such as Napster were outlawed or barred, these groups might be accused of illegal acts. "It would be a straight free-speech issue there. It could be that the technology will be used for a lot of good," says Glenn B. Manishin, a technology attorney with Patton Boggs.
BETA TEST.
That's not to say the legal issues surrounding Napster are unimportant. At stake is the concept of "fair use," a judicial construct that dictates what purchasers can and cannot do with copyrighted material. Napster attorney David Boies argues that sharing an MP3 file with millions of your best friends is fair use, since there's no commercial gain. The RIAA, which has largely opposed expansion of fair use, has claimed that even "burning" one MP3 file from a legally purchased CD is, under some circumstances, illegal.
Ironically, both sides agree on one thing. They fear government action for now. They worry that a broad legal precedent might be set in the lower courts that could be difficult to reshape on appeal. Likewise, Congress' last pass at copyright law, the Digital Millennium Copyright Act, left a jumble that experts in the field still are sifting through.
The fields of digital technology and file-sharing are so new, many experts say, that they're not yet ripe for legislating, especially with lawmakers caught between the powerful music lobby and a populist groundswell of Napster aficionados. "There are some very powerful lobbying efforts going on right now where there's a lot of pressure in the House and the Senate to get fair use statutorily redefined in some way. And I think that would be a terrible mistake," says Karnow.
The Supreme Court fashions itself to be above the lobbying fray. And if the jurists are smart, they'll stay away for a while and let file-sharing technology show its worth in the marketplace before issuing any rulings. Napster fans are already convinced that the high court will take their side. They point to the 1983 Sony Betamax case. At the time, the movie industry wanted to stop people from recording movies with new videotaping devices. But the Supreme Court ruled that viewers can make a limited number of copies of movies and television shows for personal use.
GROWING PAINS.
But Napster lovers best not pop the champagne bottles yet. The court didn't explicitly define "limited number" in the Betamax case, but it has generally been interpreted since than as applying to personal use only. In that sense, the recording industry's challenge to Napster bears little resemblance. With Napster, users make copies for personal use -- and then make them available to 100,000 of their "closest friends."
In one respect, the death of Napster might provide a benefit: With Napster out of the way, file-sharing companies would be forced to come up with commercially viable business models. For example, artists might agree to give their work away on certain file-sharing networks or businesses might set up monthly subscription services where some of the proceeds go to artists and labels.
But discussions such as these are already going on with Napster. And as long as Patel issues no broad rulings against the technology, file-sharing could emerge not only unscathed but healthier in the give and take of ideas. This much is clear: File-sharing technology is in its infancy. The courts and Congress should let that evolution proceed for now with a watchful eye -- but a light touch.
Copyright 2000, Bloomberg L.P.
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