SAN FRANCISCO (AP) _ A federal court began hearing arguments Monday in the recording industry's copyright infringement case against Napster Inc., the joy of more than 22 million music-trading users but the bane of major record labels who say it cheats companies and artists out of sales.
The company was spared in July from a court order that would have shut down the site until the Recording Industry Association of America's lawsuit against the online service is resolved.
Only hours after a federal judge issued an injunction against Napster, saying it was encouraging "wholesale infringing" against music industry copyrights, the 9th U.S. Circuit Court of Appeals stayed the order.
The two sides headed back to court Monday, each getting 20 minutes to argue their case before a three-judge panel of the federal appeals court.
The three-judge panel has already expressed concerns about the injunction and will try to determine whether it was overly broad, said Marcie Mihaila, an appellate lawyer who has followed the case.
Company lawyer David Boies argued Monday that the lower court's injunction was "unprecedented" against a company "supplying the technology that is capable of a ... noninfringing use."
A decision isn't expected for at least a month.
Both sides say they are fighting for their survival.
"This service is causing serious injury to songwriters," said Carey Ramos, an attorney for the recording industry. "It really needs to be restrained. We urgently need relief."
Napster, started in a Northeastern University dorm room last year, pioneered the concept known as peer-to-peer computing in which people share files from their own computers rather than a central server. In Napster's case, users can download music from each other that is stored in the format known as an MP3 file.
The company claims its 22 million users are violating no law. It bases its defense on the Audio Home Recording Act of 1992, which it says grants immunity when music is shared for noncommercial use.
Another company, MP3.com, allows users to listen to songs stored on its own computers. It has settled lawsuits brought by four record labels and in September lost a copyright-infringement case brought by Universal Music Group. That case is likely to reach the Supreme Court.
In a statement released Friday about Monday's Napster hearing, Hilary Rosen, president and CEO of the recording industry's organization, said she hoped for "increased cooperation between innovation and industry so legitimate business models can make more music available online."
(Copyright 2000 by The Associated Press. All Rights Reserved.)
