Yesterday, Judge Patel issued her order regarding a motion for summary judgement in the Napster investors case. The defendants are being sued for investing in and controlling the original Napster, and thus are claimed to be liable for secondary (some would say tertiary) copyright infringement.

The motion essentially argued that the plaintiff record companies had failed to make a case of direct infringement, which would mean they could not make a case for secondary liability. The court dismissed one argument for direct infringement, that the index hosted by Napster was, itself, directly infringing as an offer to distribute.

The other arguments, that uploading and downloading by Napster users violated federal copyright law as well as various common law state copyright claims with regard to pre-1972 sound recordings, were not dismissed. However, the court did not rule that there was direct infringement, only that there were material facts in dispute as to whether plaintiffs had demonstrated direct infringement by Napster users, which is enough to beat a motion for summary judgement.

Read the 16-page decision: Capitol Records v. Bertelsmann, Memorandum & Order, Re: Defendant's Motion for Summary Judgement [PDF].

Defendants’ summary judgment motion focuses primarily on plaintiffs’ third theory of direct infringement. As noted above, this theory posits that Napster itself directly infringed plaintiffs’ distribution rights by maintaining a centralized indexing system listing the file names of all MP3-formatted music files available on the Napster network.

This is the theory the court shoots down. The case the plaintiffs most relied upon was Hotaling v. Church of Jesus Christ of Latter-Day Saints, which found that libraries which had infringing copies of a work in their collection violated the distribution right when there was evidence of indexing (the infringing copy was listed in the card catalog), but there was no evidence that anyone had actually checked out the particular work. The court found a pertinent distinction:

The instant plaintiffs seize upon the cataloging or indexing system in Hotaling and argue that Napster’s “indexing” system is akin to that in Hotaling. There is, however, more to Hotaling than that. In that case the library had a copy of the copyrighted work in its “collection”. Napster did not have works in its “collection”; it did not have a “collection” of recordings. The infringing works never resided on the Napster system. Instead, plaintiffs here seek to establish copyright infringement based on the mere fact that the names of their copyrighted musical compositions and sound recordings appeared in Napster’s index of available files. This might constitute evidence that the listed works were available to Napster users, but it is certainly not conclusive proof that the songs identified in the index were actually uploaded onto the network in a manner that would be equivalent to the way in which the genealogical materials at issue in Hotaling were copied and distributed to the church’s branch libraries.

The court also notes that the suggestion in Hotaling "that a mere offer to distribute a copyrighted work gives rise to liability under section 106(3) ... is contrary to the weight of [the] above-cited authorities" (see the case for the various cites) and is also inconsistent with the text and history of the Copyright Act of 1976. Judge Patel also dismisses reliance upon the Artists’ Rights and Theft Prevention Act of 2005, similar to her dismissal of a similar argument in an earlier ruling (Judge Patel Shoots Down Notion That the Right of Distribution Includes "Making Available"). The court's conclusion on this count:

Applying this standard to the case at bar, it is apparent that plaintiffs’ “indexing” theory falls well short of meeting the requirements for establishing direct copyright infringement. Rather than requiring proof of the actual dissemination of a copyrighted work or an offer to distribute that work for the purpose of its further distribution or public performance, plaintiffs’ theory is premised on the assumption that any offer to distribute a copyrighted work violates section 106(3). This is not sufficient to satisfy plaintiffs’ burden of proving that Napster or its users directly infringed their copyrighted musical compositions and sound recordings, as they must do if they are to hold defendants secondarily liable for that infringement. Accordingly, the court holds that defendants are entitled to summary judgment on this issue.

A minor victory for the investors, but the case will go on.

via Silicon Valley Media Law Blog