Court Reviewing Napster Experienced

Friday, August 18th 2000, 12:00 am

By: News On 6

SAN FRANCISCO (AP) â€” The federal appeals panel reviewing the recording industry's copyright infringement suit against Napster Inc. has set important precedents defining gray areas of technology law.

In its rulings, the U.S. 9th Circuit Court of Appeals has generally given support for new technology despite concerns of copyright infringement, national security and Internet-access monopolies.

But experts said it is unclear whether the circuit's technology precedents will help or hurt the recording industry's case, and they point out that the U.S. Supreme Court this year reversed nine of the circuit's 10 cases it reviewed.

The decision on Napster could represent the most important of the technology-related rulings from the San Francisco-based circuit and, like its recent groundbreaking decisions on encryption, Internet access and reverse-engineering, has broad implications for a quickly evolving industry.

Napster provides a wildly popular software that allows users to share music files, which they can download from each other's computers.

The central question is whether the nation's largest federal appeals court will legitimize revolutionary technology allowing millions to copy and trade digital files, including illegal copies of music and other copyrighted material, over the Internet.

Shutting down Napster would be impractical because of the enormous popularity of file sharing and the broader implications of such a ruling, some experts said.

``File sharing underlies what Napster is all about, and any file can be anything now, such as my thesis, your newspaper articles, my press releases, Stephen King books, movies, anything,'' said Internet attorney Cindy Cohn, the incoming legal director of the Electronic Frontier Foundation.

On July 28, two of the circuit's judges stopped an injunction by U.S. District Court Judge Marilyn Hall Patel that would have shut Napster down. But that doesn't mean the circuit is leaning in Napster's favor.

Some say it simply suggests the circuit wants to set legal precedent. District court judges' rulings generally don't make the law books.

``Had the injunction not been stayed, Napster would have gone out of business and that would have become that,'' said Eugene Volokh, a University of California, Los Angeles, Internet copyright professor.

The first briefs are due Friday and arguments are expected later. The circuit has 26 active judges. Cases are usually heard by three-judge panels announced a week beforehand.

Recent rulings by the circuit governing nine western states have had a broad impact on technology.

In its case perhaps most closely related to Napster, the court ruled in July 1999 that it was ``fair use'' to play downloaded copyrighted music from a computer to a handheld device.The ruling that the Rio Player did not violate the Audio Home Recording Act of 1992 was a blow to the recording industry.

Napster cited the case to Judge Patel. She said the case was ``irrelevant.''

Experts believe Patel didn't bite because with the Rio, music was shifted from a computer hard drive to a machine that plays music but doesn't duplicate it.

``The Rio was passive. It allowed shifting of information from computers to this device. It didn't provide a mechanism for duplication,'' said Neil A. Smith, a San Francisco Internet law attorney.

The court also has dealt with technology copyrights, ruling in February against Sony Computer Entertainment, which sued a software company alleging it illegally copied its gaming software using a technique called reverse engineering. The court said copying and disassembling Sony PlayStation software was OK if necessary to make competing video-game software that, in the end, isn't infringing Sony's code.

The case, on appeal to the Supreme Court, spelled out the rules for developing competing software.

``The issue is whether new uses of technology can be stopped just because they may result in copyright infringement,'' said G. Gervaise Davis III, a Monterey, Calif., intellectual property attorney.

In June, the circuit blocked Portland, Ore., from forcing AT&T Corp. to open cable lines to competing Internet services. Local governments argued that cable Internet access should be a matter of local governance, just as cable TV franchises are.

The court said AT&T, which is spending billions buying cable companies to create a national telephone and Internet infrastructure, doesn't fit the definition of a cable service. Instead, it is a telecommunications service, only governable by federal law.

While AT&T has begun to open its lines to other Internet services, the ruling means AT&T, not the government, calls the shots on pricing and partnerships.

``They now get to set the terms and conditions,'' said Dylan Brooks, an analyst with New York research firm Jupiter Communications.

In May, the circuit said it was a prior restraint of speech for the government, claiming national security concerns, to prohibit a student from posting on the Internet encryption software designed to keep hackers at bay.

Following the precedent-setting decision, which the circuit has stayed and will rehear, the government has loosened encryption restrictions, clearing Microsoft Corp. to place encryption in its popular Windows 2000.

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On the Net:

http://www.napster.com

Recording Industry Association of America: http://www.riaa.com