Napster was an online music file sharing service created by Shawn Fanning while he was attending Northeastern University in Boston and operating between June 1999 and July 2001. Its technology allowed people to easily copy and distribute MP3 files among each other, bypassing the established market for such songs and thus leading to the music industry's accusations of massive copyright violations.
The first peer-to-peer case was A&M Records v. Napster, 239 F.3d 1004 (9th Cir. 2001). In the Napster case, the 9th Circuit considered whether Napster was liable as a secondary infringer. First, the court considered whether Napster was contributorily liable for copyright infringement. To be found contributorily liable, Napster must have engaged in "personal conduct that encourages or assists the infringement."
The court found that Napster was contributorily liable for the copyright infringement of its end-users because it "knowingly encourages and assists the infringement of plaintiffs' copyrights." The court goes on to analyze whether Napster was vicariously liable for copyright infringement. The standard applied by the court is whether Napster "has the right and ability to supervise the infringing activity and also has a direct financial interest in such activities."
The court found that Napster did receive a financial benefit, and had the right and ability to supervise the activity, meaning that the plaintiffs demonstrated a likelihood of success on the merits of their claim of vicarious infringement. The court denied all of Napster's defenses, including its claim of fair use. Although the original service was shut down by court order, it paved the way for decentralized peer-to-peer file-distribution programs, which have been much harder to control.
Main article File sharing and the Music Industry
The next major peer-to-peer case was MGM v. Grokster, 545 U.S. 913 (2005). In this case, the Supreme Court found that even if Grokster was...