NMPA_International_Survey_12th_Edition

Napster, Roxio did not assume any of the liabilities,
including the damages caused by the massive copyright
infringements that were the subject of the lawsuits
brought by the music publishers and the record labels.
To date, no agreement has been reached as to the
distribution of funds from the Napster estate, and the
various creditors have not yet presented a distribution
plan to the court. NMPA is currently in negotiations with
the Trustee, the Unsecured Creditors’ Committee, and
the RIAA over an appropriate and equitable division of
the proceeds from the sale to Roxio and certain monies
expected from a separate litigation relating to Napster’s
directors’ and officers’ liability insurance policy. NMPA
will continue to support the music publishers’ interests
in the bankruptcy proceedings.
BERTELSMANN LITIGATION
A group of songwriters and music publishers—Jerry
Leiber, Mike Stoller, Frank Music Corporation and Peer
International Corporation—filed a class action lawsuit
in a New York federal court against Bertelsmann A.G.on
February 19,2003.The suit,filed on behalf of themselves
and a proposed class of HFA-represented music publishers,seeks
damages on the order of $17 billion arising
from what the suit terms Bertelsmann A.G.’s “willful participation…in
the widespread infringement of copyrighted
musical works by users of the notorious Napster
service, in violation of the U.S. Copyright Act.”
The suit alleges that, were it not for Bertelsmann’s
attempted acquisition of Napster’s assets in 2000 and its
subsequent support, the online service would have run
out of funding and ceased operations.
UPDATE ON THE MUSICCITY LITIGATION
The NMPA-supported litigation against the
Morpheus, Kazaa, and Grokster unlicensed Internet
peer-to-peer services took an unexpected and disappointing
turn in late April 2003. Last fall, the music publishers,
record labels, and motion picture studios
brought motions for summary judgment against
StreamCast Networks (owner and operator of
Morpheus), Kazaa (the original owner and operator of
the Kazaa service in The Netherlands), and Grokster.
StreamCast and Grokster also filed cross-motions for
summary judgment.Both sides sought a definitive ruling,
instead of a trial,on the issue of whether the conduct of
these services amounts to contributory and vicarious
copyright infringement.
The copyright holders argued that, like the now
defunct Napster service, the defendants were contributorily
liable for copyright infringement because they
knew that their users were infringing copyrights and
facilitated and encouraged that illegal activity.They also
asserted that the defendants were vicariously liable for
copyright infringement because they benefited financially
from the illegal conduct through advertising sales,
and further, had the right and ability to control the
infringing conduct.
In contrast, the defendants contended that they
should not be held responsible for the infringing acts of
their users. The defendants maintained that all they did
was distribute software—and that software, like VCRs
and photocopy machines,could be used for a variety of
purposes,including many legal ones. Put differently,the
defendants claimed that their respective services had
“substantial non-infringing uses.”
On April 25, 2003, the court issued its decision, finding
in favor of the operators of the Morpheus and
Grokster services and against the copyright holders.
On the contributory infringement claim, the court
initially adopted the defendants’assertion that there are
substantial non-infringing uses for their software programs.
Additionally, the court stated that, while the
numerous notices of infringement that the defendants
had received from the publishers, labels, and studios
had given them general knowledge that some of their
users were engaging in copyright infringement, this
knowledge occurred only after the infringement took
place—at a time when it was too late to do anything
about it.That is, according to the court, the services are
required to have the ability to stop direct infringements
at the time they receive notice of each specific infringement;
otherwise, they cannot be held contributorily
liable. Moreover, in terms of the defendants’ own conduct,
the court found not only that the defendants’ only
affirmative act was distributing software, but also that
they had nothing whatsoever to do with providing the
NMPA INTERNATIONAL SURVEY TWELTH EDITION THE YEAR IN REVIEW: NMPA AND THE MUSIC PUBLISHING INDUSTRY
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