Advanced Copyright Issues on the Internet - Fenwick & West LLP

Amendment issue, simply ruled that “First Amendment concerns in copyright are allayed by thepresence of the fair use doctrine. … Uses of copyrighted material that are not fair uses arerightfully enjoined.” 1260(ii) <strong>Copyright</strong> Misuse. Napster argued that the plaintiff record labels wereengaged in copyright misuse by attempting to aggrandize their monopoly beyond the scope oftheir copyrights by restricting the flow of unsigned artists’ music, which competed with theirown, and by controlling the distribution of music over the Internet. The district court rejectedthis argument, concluding that most of the copyright misuse cases involved the attempt toenlarge a copyright monopoly through restricted or exclusive licensing, and the plaintiffs in theinstant case had granted no licenses to Napster, let alone impermissibly restrictive ones. 1261 Onappeal in Napster I, the Ninth Circuit affirmed the ruling of the district court, finding noevidence that the plaintiffs sought to control areas outside their grant of monopoly. “Rather,plaintiffs seek to control reproduction and distribution of their copyrighted works, exclusiverights of copyright holders.” 1262 In a footnote, however, the Ninth Circuit did note that thecopyright misuse doctrine is not limited entirely to situations of restrictive licensing – “aunilateral refusal to license a copyright may constitute wrongful exclusionary conduct giving riseto a claim of misuse, but [we] assume that the ‘desire to exclude others … is a presumptivelyvalid business justification for any immediate harm to consumers.” 1263(iii) Waiver. Napster asserted that the plaintiffs had waived their right to enforcetheir copyrights against Napster. Napster introduced evidence that the plaintiffs had known ofthe existence of “ripping” software for creating MP3 files for years, and had known that makingMP3 files from CDs was the most prevalent means by which sound recordings became availablefor transfer over the Internet in the first place, yet had failed to take any actions to stop or evenslow its widespread proliferation, and indeed had actively formed partnerships with and investedin companies that directed consumers to MP3 encoding software that would enable them totransfer music files over the Internet. 1264 The district court responded as follows:This limited evidence fails to convince the court that the record companies created themonster that is now devouring their intellectual property rights. Although plaintiffs havenot sued their business partners for contributory infringement, they typically have askedthem to discourage unauthorized ripping and have made security part of their agreements.Defendant fails to show that, in hastening the proliferation of MP3 files, plaintiffs didmore than seek partners for their commercial downloading ventures and develop musicplayers for files they planned to sell over the Internet. 12651260 Napster I, 239 F.3d at 1028.1261 Napster, 114 F. Supp. 2d at 923.1262 Napster I, 239 F.3d at 1027.1263 Id. at 1027 n.8 (citing Image Tech. Servs. V. Eastman Kodak Co., 125 F.3d 1195, 1218 (9 th Cir. 1997)).1264 Napster’s PI Opp. Brief, supra note 1173, at 22.1265 Napster, 114 F. Supp. 2d at 924.- 286 -