In re Napster, Inc. Copyright Litigation–752
United States District Court for the Northern District of California
191 F. Supp. 2d 1087 (2002)
Napster, Incorporated (Napster) (defendant) developed a peer-to-peer file sharing website that allowed users to exchange music files with one another. Several major music labels, including EMI, BMG, Warner, Sony, and Universal (the plaintiffs), sued Napster for copyright infringement. Napster asserted that the plaintiffs’ copyright-infringement claims could not be enforced by the courts, because the plaintiffs’ licensing practices were anticompetitive and against public policy, and therefore subject to the misuse doctrine. Specifically, Napster alleged that all five plaintiffs refused to individually license their music portfolios to Napster. Subsequently, EMI, BMG, and Warner developed a joint-venture music platform named MusicNet. Sony and Universal developed a joint-venture platform called pressplay and were also in discussions to license their music portfolios to MusicNet. MusicNet negotiated a license agreement to Napster that prohibited Napster from entering any individual license agreements for a period of time and then allowed MusicNet to terminate the license if Napster entered into individual license agreements at a later point. Napster presented expert evidence suggesting that the plaintiffs’ conduct was anticompetitive, because it involved refusals to deal, exclusive dealing, and likely price-coordination. Napster’s misuse-doctrine argument was rejected at the preliminary-injunction stage. However, Napster reasserted the doctrine as a defense when the plaintiffs filed motions for summary judgment.
Rule of Law
Holding and Reasoning (Patel, C.J.)
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