Napster Inc received a reprieve from a potential final shutdown and millions in damages as a federal judge ordered more review of the copyright issues in a suit brought by the five largest record labels.
US District Judge Marilyn Patel's decision Wednesday to appoint an outside expert to investigate the ownership of disputed copyrights in the case is a setback for AOL Time Warner Inc, Sony Corp, Bertelsmann AG, EMI Group Plc and Vivendi Universal SA, which had hoped for a ruling. The companies sued Napster in 1999 when the free music-swapping service began attracting millions of users.
Patel, a federal judge in San Francisco, wants a neutral party to review whether the industry owns some of the songs at issue in the suit. She gave both parties 10 days to find an outside expert they could agree on.
``I'm not particularly warming to the idea of closing doors right now,'' Patel said, when the lawyers for the record industry pressed her to rule Napster infringed copyrights.
Lawyers for Napster argued they need to find out whether the more than 200 copyrighted works in the lawsuit were actually owned by the labels. At issue are ``work for hire'' contracts that allow the labels to take full possession of a copyright.
Napster contends the judge needs more facts before ruling in the infringement case. The service is dormant as it works to transform itself into a subscription service.
The marketplace for digital music is still in its early stages of development, Jonathan Schwartz, Napster's general counsel, said in a statement. ``It's important that the issues at stake here receive a full airing.'' Patel's ruling may strengthen Napster's attempts to reach a settlement with the record labels by stringing out the case. The Redwood City, California-based company already had a US$1 billion offer rejected by the labels, which are represented by the Recording Industry Association of America.
Lawyers for the record industry had rejected the settlement, saying the agreement didn't address past infringements.
Patel has ruled against Napster repeatedly and had issued an injunction shutting down Napster until it could end all copyright infringement. An appeals court later lifted that ruling.
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