Advanced Copyright Issues on the Internet - Fenwick & West LLP

efforts to block infringing material from its system, and only within the limits of the architectureof its system.On July 1, 2001, Napster voluntarily shut down the file sharing operation of its system,after discovering flaws in its fileID fingerprinting technology, and conducted testing on itstechnology between July 2 and 9. The parties’ disputes over Napster’s compliance with the Mar.5 modified injunction came to a head at a status conference before the district court on July 11,2001. At that hearing, Napster told the court that, based on its testing, its newly implementedfileID technology was more than 99% effective and that it was prepared to resume allowing filesharing through its system. 1287The district court rejected Napster’s proposal to resume file sharing, stating from thebench, “I think we’re at a point where it has to stay that way [i.e., file sharing shut down] untilyou satisfy Dr. Nichols and me that when the system goes back up it will be able to block out orscreen out copyrighted works that have been noticed.” 1288 Napster pressed the district court toclarify whether the Mar. 5 modified injunction was meant to require its system to be 100%accurate in screening of allegedly infringing materials. The court ruled orally as follows: “It’snot good enough until every effort has been made to, in fact, get zero tolerance. Now that has tobe the objective. If there’s a little – it gets a little messy around edges, if there are some glitchesand so forth, I can understand that. But this system is not going to go back up in such a manneras to permit copying and downloading other than to test that for the purposes of determining theerror rate until you’ve satisfied Dr. Nichols. And then, he can notify me.” 1289The district court denied Napster’s request to stay her oral modified order and Napsterimmediately requested the Ninth Circuit to issue a stay. On July 18, 2001, the Ninth Circuitordered “that the order issued by the district court on July 11, 2001, in open court, modifying thePreliminary Injunction issued March 5, 2001, is hereby stayed pending a further order of thiscourt.” 1290 Despite the stay of the district court’s oral modified order, Napster chose not toresume file sharing through its system.Both Napster and the plaintiffs pursued further appeals to the Ninth Circuit in view of theJuly 11 oral order. The Ninth Circuit consolidated those appeals with the earlier appeals of theMar. 5 modified injunction. Its opinion in the consolidated appeals is discussed in subsection 17below.16. Napster’s Motions to Dismiss the Complaints of the Independent Artists andAMPAS. While the consolidated appeals were pending, Napster filed a motion to dismiss thecomplaints of various independent artists and labels and of AMPAS for failure to state a claim.Napster based its motion on the Ninth Circuit’s opinion in Napster I, which Napster argued1287 “Napster Asks 9 th Circuit to Modify 1 Order, Vacate Another,” Mealey’s Cyber Tech & E-Commerce LitigationReporter (Aug. 2001) 4-5.1288 Id. at 5.1289 Id.1290 Order, A&M Records, Inc. v. Napster, Inc., No. 01-16308 (9 th Cir. July 18, 2001).- 292 -