Many people have sent in the breaking news from C|Net that the Appeals Court handling the Napster case wants to have the Napster injunction modified. The court website is throughly bogged, but the quick and dirty analysis is that Napster can continue to operate. Update by J : I've listed a couple of mirrors below if you can't get through to the court's site. I have some more comments below; the court's flat-out statement that "Napster users do not engage in fair use" is of special interest.
As Michael Sims points out, these 22 words are probably the most important portion of the ruling; everything else is technical details and window-dressing:
"...the record supports the district court's conclusion that Napster users do not engage in fair use of the copyrighted materials. We agree."
That doesn't look good for those who want to swap copyrighted music peer-to-peer. That same comment could probably apply to Gnutella users, for example. Brace for impact.
Moving on to the case of Napster specifically and what will happen in the immediate future...
The court found that the injunction is simply too broad in its current form, but bounced the case back to the district court with instructions, essentially, on how to do an injunction properly.
They were quite clear that an injunction should be issued to stop Napster:
The district court correctly recognized that a preliminary injunction against Napster's participation in copyright infringement is not only warranted but required.
But then went on to explain why the current injunction must be limited to the extent that Napster fails to comply with Metallica-style "here is the list of bad files" warnings. Only in such a situation can an injunction stand:
We believe, however, that the scope of the injunction needs modification in light of our opinion. Specifically, we reiterate that contributory liability may potentially be imposed only to the extent that Napster: (1) receives reasonable knowledge of specific infringing files with copyrighted musical compositions and sound recordings; (2) knows or should know that such files are available on the Napster system; and (3) fails to act to prevent viral distribution of the works. ... The mere existence of the Napster system, absent actual notice and Napster's demonstrated failure to remove the offending material, is insufficient to impose contributory liability.
I'm not quite sure how this could be enforced. Obviously, anyone can rename any MP3 "metallica-master-of-puppets.mp3" and Napster is not capable of acting to prevent distribution of same. What Napster can do is kick users off the system who have been shown to be pirates. And since they have shown their willingness to comply in the past, I'm not sure whether the court will ever find that Napster will "fail to act."
Finally, there was this simple comment:
Napster may be vicariously liable when it fails to affirmatively use its ability to patrol its system and preclude access to potentially infringing files listed in its search index.