To:
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`Subject:
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`Sent:
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`Sent As:
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`Attachments:
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`Nielsen Business Media, Inc. (tm-pto@ssjr.com)
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`TRADEMARK APPLICATION NO. 77355665 - DIGITAL MUSIC LIVE! - 03669-T0111B
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`2/28/2008 10:59:17 AM
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`ECOM117@USPTO.GOV
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`Attachment - 1
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`UNITED STATES PATENT AND TRADEMARK OFFICE
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`(cid:160) (cid:160)(cid:160)(cid:160) SERIAL NO:(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)
`(cid:160)(cid:160)(cid:160)(cid:160) MARK: DIGITAL MUSIC LIVE!(cid:160)(cid:160)(cid:160)(cid:160) (cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)
`(cid:160) (cid:160)
`GENE S. WINTER(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)
`ST. ONGE STEWARD JOHNSTON & REENS LLC(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)
`STAMFORD, CT 06905-5619(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)
`(cid:160)(cid:160)(cid:160)(cid:160)(cid:160) APPLICANT:(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)
`(cid:160) Nielsen Business Media, Inc.(cid:160)(cid:160)(cid:160) (cid:160)(cid:160)(cid:160)(cid:160)(cid:160) CORRESPONDENT’S REFERENCE/DOCKET NO :(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)
`(cid:160)(cid:160)(cid:160)
`03669-T0111B(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160) CORRESPONDENT E-MAIL ADDRESS:(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)
`
`tm-pto@ssjr.com
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`OFFICE ACTION
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`(cid:160)T
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`O AVOID ABANDONMENT, THE OFFICE MUST RECEIVE A PROPER RESPONSE TO THIS OFFICE ACTION WITHIN 6 MONTHS
`OF THE ISSUE/MAILING DATE.
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`(cid:160)I
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`SSUE/MAILING DATE: 2/28/2008
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`TEAS PLUS APPLICANTS MUST SUBMIT DOCUMENTS ELECTRONICALLY OR SUBMIT FEE:(cid:160) TEAS Plus applicants should submit
`the following documents using the Trademark Electronic Application System (TEAS) at http://www.uspto.gov/teas/index.html:(cid:160) (1) written
`responses to Office actions; (2) preliminary amendments; (3) changes of correspondence address; (4) changes of owner’s address; (5)
`
`*77355665*
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`RESPOND TO THIS ACTION:
`http://www.uspto.gov/teas/eTEASpageD.htm
`
`(cid:160)G
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`ENERAL TRADEMARK INFORMATION:
`http://www.uspto.gov/main/trademarks.htm
`
`77/355665
`
`(cid:160)(cid:160)(cid:160) CORRESPONDENT ADDRESS:
`(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)
`
`986 BEDFORD STREET
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`(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)
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`(cid:160)(cid:160)
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`appointments and revocations of attorney; (6) amendments to allege use; (7) statements of use; (8) requests for extension of time to file a
`statement of use, and (9) requests to delete a §1(b) basis.(cid:160) If any of these documents are filed on paper, they must be accompanied by a $50 per
`class fee.(cid:160) 37 C.F.R. §§2.6(a)(1)(iv) and 2.23(a)(i).(cid:160) Telephone responses will not incur an additional fee.(cid:160) NOTE:(cid:160) In addition to the above,
`applicant must also continue to accept correspondence from the Office via e-mail throughout the examination process in order to avoid the
`additional fee.(cid:160) 37 C.F.R. §2.23(a)(2).
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`(cid:160)T
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`he assigned trademark examining attorney has reviewed the referenced application and has determined the following:
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`(cid:160)T
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`he Office records have been searched and no similar registered or pending mark has been found that would bar registration under Trademark
`Act Section 2(d), 15 U.S.C. §1052(d).(cid:160) TMEP §704.02.
`
`(cid:160)S
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`ubstantive Refusal – Section 2(e)(1) – Descriptive:
`Registration is refused because the proposed mark merely describes the subject matter and intended user of applicant’s services. (cid:160) Trademark Act
`Section 2(e)(1), 15 U.S.C. §1052(e)(1); TMEP §§1209 et seq.
`A term that describes the subject matter of a publication is merely descriptive under Section 2(e)(1).(cid:160) In re National Recreation Association, Inc.,
`181 F.2d 221, 85 USPQ 281 (C.C.P.A. 1950) (THE PLAYGROUND descriptive of magazine); In re Taylor & Francis [Publishers] Inc., 55
`USPQ2d 1213 (TTAB 2000) (PSYCHOLOGY PRESS merely descriptive of books in field of psychology).
`A mark that describes an intended user of a service is also merely descriptive within the meaning of Section 2(e)(1).(cid:160) Hunter Publishing Co. v.
`Caulfield Publishing Ltd., 1 USPQ2d 1996 (TTAB 1986); In re Camel Mfg. Co., Inc., 222 USPQ 1031 (TTAB 1984); In re Gentex Corp., 151
`USPQ 435 (TTAB 1966).(cid:160) The Trademark Trial and Appeal Board has consistently held marks merely descriptive when they describe the
`audience or the class of purchasers to whom a publication is directed.(cid:160) TMEP §1209.03(i).
`The proposed mark is DIGITAL MUSIC LIVE! for “Workshops and seminars in the field of music; Publishing of electronic publications.”
`DIGITAL MUSIC refers to the nature of music recorded on, or by, digital means and goods.(cid:160) LIVE means “ Broadcast while actually being
`performed; not taped, filmed, or recorded: a live television program.” (cid:160) The mark is descriptive because the wording identifies services such as
`workshops and seminars and publications that will contain live digital music.(cid:160) Please see the attached webpage evidence from Google.com and
`from (cid:160)(cid:160)The American Heritage ® Dictionary of the English Language: Fourth Edition.(cid:160)(cid:160) 2000.
`Because the wording DIGITAL MUSIC LIVE! is descriptive of the subject matter of the workshops, seminars and publication services,
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`registration is refused under §2(e)(1).(cid:160)(cid:160)
`
`Although the trademark examining attorney has refused registration, applicant may respond to the refusal to register by submitting evidence and
`arguments in support of registration.
`
`(cid:160)A
`
`dvisory:(cid:160) Amendment to the Supplemental Register:
`In order to overcome the refusal under Section 2(e)(1), the applicant may choose to amend the application to seek registration on the
`Supplemental Register.(cid:160) However, the applicant should note that a mark in an application under Trademark Act Section 1(b) is not eligible for
`registration on the Supplemental Register until an acceptable amendment to allege use under 37 C.F.R. §2.76 or statement of use under 37
`C.F.R. §2.88 has been filed.(cid:160) 37 C.F.R. §§2.47(d) and 2.75(b); TMEP §1102.03.(cid:160) When a Section 1(b) application is amended to the
`Supplemental Register, the effective filing date of the application is the date of filing of the allegation of use.(cid:160) 37 C.F.R. §2.75(b); TMEP
`§§206.01 and 1102.03.
`
`/Anne Gustason/
`Trademark Examining Attorney
`U.S. Patent and Trademark Office
`Law Office 117
`(571) 272-9722
`
`(cid:160)(cid:160)(cid:160)
`
`RESPOND TO THIS ACTION: If there are any questions about the Office action, please contact the assigned examining attorney. A response
`to this Office action should be filed using the form available at http://www.uspto.gov/teas/eTEASpageD.htm. If notification of this Office action
`was received via e-mail, no response using this form may be filed for 72 hours after receipt of the notification. Do not attempt to respond by e-
`mail as the USPTO does not accept e-mailed responses.
`
`(cid:160)I
`
`f responding by paper mail, please include the following information: the application serial number, the mark, the filing date and the name,
`title/position, telephone number and e-mail address of the person signing the response.(cid:160) Please use the following address: Commissioner for
`Trademarks, P.O. Box 1451, Alexandria, VA 22313-1451.
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`(cid:160)S
`
`TATUS CHECK: Check the status of the application at least once every six months from the initial filing date using the USPTO Trademark
`Applications and Registrations Retrieval (TARR) online system at http://tarr.uspto.gov.(cid:160) When conducting an online status check, print and
`maintain a copy of the complete TARR screen.(cid:160) If the status of your application has not changed for more than six months, please contact the
`
`(cid:160)(cid:160)
`

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`assigned examining attorney.
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`(cid:160)(cid:160)(cid:160)(cid:160)(cid:160)
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`Digital Music: Problerns and Possibilifies
`Williain Fisher
`
`last revised: October 10, 2000
`
`Note on the ogigggi and pu_rposes ofthis essay
`
`Contents
`
`.
`
`Introduction
`. Benefits and Costs
`. The Inconclusive Legal Campgggs
`V \Rihat to D07
`1 Tie Intemet D1StI‘1b11i21011 to Sales of Containers
`2 Tax and Royalty System
`3 Secured Formats
`4 Subscriptions
`5. Advertisgg
`6. DoggWell by Dogg Good
`
`I. Introduction
`
`Almost all music is distributed today i.n digital, rather than analog, form Until recently, most digital music was sold in containers called compact discs Developed and refined between l965 and l985,
`compact—disc technology swept the consumer market during the late l980s and early 1990s, displacing almost completely long—play vinyl alburns.
`In the past few years, a new method of distributing digital
`music has become increasingly popular
`transmission ofcontainerless files via the Internet, followed by storage on home computers. Music distributed in this manner typically is replayed either through
`stereo systems attached to the home computers or through portable devices analogous to the "wal.lr_man."
`
`The technology that has made this new method convenient and popular is M, an audio compression file format. Musical files compressed using MP3 occupy approximately li'l2 ofthe disk. space
`occupied by uncompressed files, enabling them to be transmitted faster and stored more easily Two groups have embraced MP3 technology especially enthusiastically. First, musicians unable to obtain
`recording contracts with the major record companies have found that, at modest cost, they can record their material in MP3 format and then make it availa le over the Internet. Second, high-school and
`college students have discovered that they can obtain on the Internet MP3 copies ofmost ofthe songs oftheir favorite musicians. A high percentage ofthe MP3 recordings available in this manner were
`prepared without the permission ofthe owners ofthe copyrights in the music.
`
`analyzes the various legal chal.lenges that have
`catalogues its social advantages and disadvantages Section
`This essay attempts to sort out the legal issues presented by this new technology. Section
`been or might be brought against users ofthe new technology. Section IV suggests some ways in which the legal and business landscape might be reconfigured to handle better the combination of
`opportunities and dangers presented by the new technology.
`
`Widespread adoption ofthe technique of distributing digital music via the internet -- either in D.-{P3 format or in some other form -- would give rise to five important social and economic advantages
`
`1 Cost savings associated with "disinterrnediation " Currently, most ofthe retail price paid by a consumer for a compact disks goes to the manufacturer ofthe disc itself, the distributor ofthe disc, the
`retail store where she purchased it, or the record company that produced the recording The composer and the recording artist (often the same person) rarely receive more than l6°/n ofthe purchase
`oriee Tfthe rnusir: were distrihiited over the Tntemet by the artist himself almost all of rtosts assortiated with making and distribiitino disrts eould be eliminated The result musieians could earn more or
`
`]I. Benefits and Costs
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`

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`price J.t the music were distributed over the J_nternet by the artist himseli, almost all ot costs associated with making and distributing discs could be eliminated The result musicians could earn more or
`consumers could pay less or both
`2. Elimination of overproduction and underproduction. Under the current system, the record campanies must guess how many copies ofeach CD consumers will demand. Distribution of containerless
`digital files over the Internet would eliminate this problem.
`3. Convenience and precision. The many annoyances associated with buying music in retail stores (travel ti.me; the disappointments when CDs are out of stock, etc.) would all be eliminated by Internet
`distribution. The less substantial annoyances associated with mail—order purchases of CD5 (waiting for delivery; being forced to purchase an entire CD when one is only interested in a few tracks)
`would also be eliminated. Consumers would get exactly the music they wanted (and none ofthe music they didn‘t want) instantly.
`Increase in the number and variety ofmusicians. The set ofmusicians who would like to make their music available to the public and the set that significant numbers of consumers would like to hear
`are both much larger than the set hired by the recording companies The opportunities available to new artists and to bands that appeal to "niche" markets would increase rapidly through widespread
`adoption ofthe new technology
`5. Semiotic democracy.
`In most modern capitalist countries, the power to make meaning, to shape culture, has been concentrated i.r1 relatively few hands. One ofthe great cultural benefits ofthe
`Internet in general lies in its tendency to decentralize this semiotic power. L1 two respects, Internet distribution of digital music would contribute to that decentalization. The first, already mentioned,
`consists ofthe expansion ofthe set ofmusicians who can reach wide audiences and the associated diminution ofthe cultural power ofthe "big five" record companies The second consists ofthe ease
`with which "consumers" of digital music can manipulate it, recombine pieces ofit, blend it with their own material -- in short, can become producers The next generation ofcompression formats --
`i -- promises to increase radically those opportunities for interaction and ateration
`
`4.
`
`Regrettably, distribution of digital music via the Internet also has one, very substantial drawback: It undermines the ability ofmusic creators to earn money. Two circumstances, in combination, give rise to
`this problem. First, IVLP3 files are unsecured In other words, nothing prevents a person who has acquired (with or without permission) an MP3 file to make an unlimited number ofcopies ofit Second,
`unlike the copies ofmusical works made using analog technology (such as ordinary casette tape recorders), the copies made using digital technology are perfect.
`In other words, each copy is identical to the
`original. The result unauthorized, perfect MP3 copies ofcopyrighted recordings are widely available on the Bitemet for free.
`
`It is commonly said
`The proliferation ofunauthorized free copies has frightened both the recording industry and many musicians. The laments ofthe recording companies leave many observers un.moved.
`that the major recording companies have been engaged i.r1 oligopolistic pricing for years and can stand to forego some profits. Even ifthat 1S true, however, the pleas ofthe musicians merit our attention A
`dramatic reduction in their revenues both may deprive them ofa fair return for their labors and may create precisely the state of afiairs that copyright law (according to the dominant theory thereof) was
`designed to prevent
`socially suboptimal production ofmusical works because oftheir nonexclusivity In short, Internet distribution of digital music may result, not in an increase in the amount and variety of
`music available to the public, but in a decrease
`
`III. The Imsoiiclusive Legal Campaigns
`
`During the past three years, the Recording Industry Association offimerica (RIAA) and its cousins in other countries have tried valiantly to halt the unauthorized distribution or use of digital music. The
`industry has waged this war on four fronts: against individuals engaged in nonpermissive downloading ofcopyrighted LIP3 files; against the manufacturers ofthe machines used to play MP3 files; against the
`operators of "pirate" Web sites; and against the growing group ofintermediaries that assist users in locating and obtaining LEP3 files. To date, none ofthese struggles has been decisively resolved. On the
`first two fronts, the forces embracing the new technology are currently win.ni.r1g, on the third and fourth, the forces seeking to limit uses ofthe new technology are currently winning But the outcomes ofall
`four campaigns remain i.n doubt.
`
`A. Copyisis. The legal case against a person who, without permission, downloads an MP3 copy ofa copyrighted song to her hard drive is very strong. The current version ofthe American copyright
`statute protects both "musical compositions" and "sound recordings " Thus, both the composer ofthe song in question and the artist who recorded it -- or (most likely) the organizations to whom they have
`assiged their copjgght
`-- are in legal positions to challenge the downloading. Have the entitlements ofthe copyright owners been violated? The answer is clearly yes. The sets of entitlements associated
`with copyrights in "musical compositions" and "sound recordings" are somewhat difierent, but both encompass exclusive rights to make verbatim reproductions ofthe entire song. The copyist has plainly
`abridged those rights.
`
`the contention that the downloading (like the home recording using a VCR ofa copyrighted television program) should be excused as a "fair
`Only one colorable legal argument is available to the copyist:
`use" ofthe copyrighted works. The doctrine upon which this argument rests is notoriously vague and unpredictable, requiring the application, on a case-by-case basis, ofan ambiguous, multi-factored test
`But the unauthorized downloading ofh.-[93 files is a relatively rare instance in which application ofthe doctrine can be predicted with confidence.
`In combination, the facts that (l) the copying involves no
`"transformation" or parody ofthe copyrighted works, (2) the entire copyrighted song (not an excerpt thereof) is being duplicated, (3) the material in question is more creative than "factual," and (4) this
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`behavior, ifit became widespread, would surely erode the "potential market" for theicopyrighted work would doom the copyists' fair-use defense.
`
`To date, however, this powerful set of arguments has been invoked by copyright owners only rarely. Three circumstances explain the relative quiet on this front. First, it is diflicult to locate the persons who
`download 1\-[P3 files. Second, the recording industry is understandably reluctant to antagonize its principal customers. Third, a prohibitively large number ofcopyright suits would be necessary to make any
`rnatcrial inroads into this iricrcasirigly Widcsprcad practicc
`
`There are signs, however, that these circumstances may not shield the copyists indefinitely Many ofthe most enthusiastic downloaders are students in universities, which, relying on logs of students‘ online
`activities, have begun to initiate disciplinagy proceegngs against them So far those sanctions have been relatively mild inclu ' wri
`essa s on co
`'
`tlaw , but more serious penalties may be in the
`ofisng
`
`B. Equipmemt Manufacturers. The second potential target ofthe recording industry consists ofthe manufacturers of devices used to download or playback MP3 files. Ifthe industry were able to
`remove from circulation the machines essential to the traficking in illicit files, they would not need to bring unpopular suits against individual copyists So far, however, this strategy has not succeeded.
`
`The most promising lawsuit oftliis sort was brought by the RIAA against Diamond Mulfirnedia, the manufacturer of a portable MP3 player called the Rio. Similar in form and function to a "walkmar1," a Bio
`enables its owner to download 50 minutes worth ofI\.[P3 files from his hard drive and then listen to them while exercising, commuting, etc. Conceivably, the RIAA might have accused Diamond of engaging
`in "contributory copyright iri.fiirigement" -- on the ground that it mar1ufactL1red and sold a device whose principal use, ir1 practice, was to engage in copyright infringement. However, the defeat ofthe closely
`related argument m the l984 Sony case apparently dissuaded them from making such a claim.
`Instead, they relied upon an obscure provision ofthe Audio Home Recording Act ofl992 (AP {A}, which, as
`part ofa complex compromise between the proponents and opponents of digita audio tape recorders, mandates the inclusion in any "digtal audio recording device" ofa "Serial Copy Management System"
`designed to prevent the device from making multiple copies fi'om a single copyrighted work. The case, though peculiar, was close -- but in the end the manufacturer prevailed. Last year, the Court of
`Appeals for the Ninth Circuit found in favor ofthe defendant, ruling that the A} {A did not apply to the Rio device, because the computer hard drive fiom which the Rio records cannot be considered either
`a digital audio recording device or a digital music recording within the meaning o'the Act Moreover, according to the court, because MP3 files are not coded with generation status or other copyright
`information, and because copies cannot be made ofthe files downloaded to the Qio, the SCMS would serve no useful function.
`
`For the time being, this ruling has halted the efforts ofthe recording industry to bring to heel the manufacturers ofmachines that facilitate nonperniissive copying and performance of digital fi.es. However, the
`doctrine ofcontributory copyright infringement, bypassed in the Rio litigation, remains available ifmachines dedicated more exclusively to in.fiinging behavior ever come on the market.
`
`C. Pirate Sites. The third ofthe four targets consists ofthe operators ofso-called "pirate" Web sites -- sites on which unauthorized LIP3 files have been "posted," thus making them rea ily available for
`downloading The recording industry has had a good deal more success on this front than on the two _]1lSt described The legal arguments that the industry can deploy against the pirates are even stronger
`than the arguments it might deploy against the individual copyists Like the copyists, the pirates are making verbatim copies ofcopyrighted songs, thus infringing both the copyrights in the underlying musical
`compositions and the copyrights in the recordings
`In addition, some (not all) ofthe pirates are making money fi'orn their operations (e g , through advertising), thereby Eirther weakening their already very
`weak fair-use defenses Nem, the pirates may well be deemed to have violated the Digital Perfonnance Right in Sound Recordings Act of 1995 Finally, some will run afoul ofthe 1997
`o Electronic Theft
`(NET) Act
`
`In the United
`Unlike individual copyists, pirate Web sites can be identified with relative ease. Using the doctrinal weapons described above, the recording industry has moved successfully against severa
`States, the RIAA has sent "cease—and—desist" letters to many site operators; almost invariably, the recipients ofthe letters have shut down their operations. In other countries, similar tactics y parallel
`organizations have had similar results.
`
`its fig
`In November of l999, the Justice Department secure
`Ir1 the past year, the recording industry has also been able, at least on occasion, to invoke the aid ofgovernments ir1 pursuing pirates.
`conviction under the NET Act ofa student operating a pirate site on his university"s server. Special criminal statutes and specialized ofiices within the police departments oflapan and Hong Kong have been
`deployed against similar miscreants.
`
`A va.rr'a.i‘.iarr an the flreme: As suggested above, the legal issues presented by the typical "pirate" site are not especially interesting or diflficult By contrast, one website enabling users to gain access to
`
`copyrighted music without the permission ofthe copyright owners presents much more complex questions In January of2C|UU, the pioneering company, IVEP3 com introduced two new services, both of
`allowed a customer to assemble on MIP3.com's servers a personal database ofher favorite music and then to "stream" selections from that database to any MP3 player. The first system -- the "Instant
`Listening Service" -- allowed her to purchase a CD from one ofD<EP3.com's ecommerce partners and at the same time to load digital versions ofthe music contained on those CD5 into her personal online
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`account. The second system -- the "Bearn-It service" -- enabled her to insert a CD from her home music collection into the CD drive on her home computer, which in turn communicated to M?3.com the
`contents ofthe drive. MP3.com then registered the track information and placed a copy ofthe music contained on the CD into her password-protected database. Thus, in order to access any ofthe music
`files stored on the MP3.com server, a customer must either purchase a "hard copy" ofthe CD from one ofM?3.com's partners or prove that she owns the CD (or has access to a copy ofit). The benefit of
`these systems to consumers, argued IV£P3.com, is that they did not need to fill up scarce storage space on their hard rives with M93 files, that their music libaries were not vulnerable to computer crashes,
`and that they could listen to music in their libraries fi'om any computer, not just their home computers.
`
`The record companies took umbrage and brought suit. They pointed out that, to construct the database ofMP3 files from which customers' personal music libraries were assembled, MP3.com had made
`verbatim copies, without permission, ofthe copyrighted songs contained on 40,000 compact discs. }+£P3.com conce ed as much but argued that, because each customer was obliged, in one way or
`another, to pay for a CD be ore she could obtain access to the MP3 versions ofits contents housed on the company‘s website, neither the recording industry nor the musicians it ostensibly represents had
`any legitimate grounds for complaint. The record companies responded that, by using borrowed CDs to activate the " 3eani-It Service," customers could easily gain access to music they had not purchased.
`
`In the end, the judge who heard the case did not reach the tricky question ofwhether the security devices incorporated in the system were EEEEHVE In April of2000, Iudge Rakolfruled that, by copying the
`CD5 without permission, M?3 com had plainly violated section l06 ofthe Copyright Statute Rakolfthen rejected M?3 com's claim that its actions should nevertheless be excused as a "fair use " In his
`view, (a) the company's actions were "commercial" and "nontransformative" in character,
`the material copied was aighly creative and thus deserved strong copyright protection, (c) the entirety ofthe
`copyrighted works in question had been reproduced, and (c) MP3.com had "usurped" an important secondary market for copyrighted songs. All four ofthe factors traditionally used to assess fair-use
`defenses thus disfavored D<EP3.com. Consequently, he granted a preliminary injunction against the continued operation ofthe system. In the wake ofthe decision, D<EP3.com reached settlement agreements
`with all but one ofthe record companies that had brought the suit, agreeing to pay them approximately $80 million in arnages and modest royalties whenever copyrighted songs are copied on and then
`"streamed" from the IVEP3.com site in the future. The remaining company, UMG Recordings, insisted upon proceeding to trial. In September of2000, Judge Rakoffound that IVLP3 com's behavior had
`constituted
`copyright infringement and ordered the defendant to pay UMG $25 000 per copied CD. Total damages under this formula could exceed $250 million. 1\J1.'P3 com has promised to appeal.
`Wfll this judgment, assuming it stands, put the company out ofbusiness7 Perhaps not -- although its stock price has dropped precipitously. But the
`will surely act as a deterrent to other firms
`considering innovative ways of distributing digital music
`
`D. Intemsediaries. The final target ofthe recording industry‘s efforts consists ofIntemet interrnediaiies that help Web surfers locate free 1\-[P3 files for downloading The importance ofthese
`intermediaries is plain unless the copyists can find copies ofsongs in which they are interested, they will not be able to "steal" them -- and may thus be induced to buy them instead Sensing this, the
`recording industry early brought pressure to bear on the popular search engine Lycos, arguing that, by providing users an indexed list of}.-[.33 files available on the Internet, Lycos had run afoul ofthe Digital
`Miillerniirn Copyright Act Lycos backed down, and its MP3 index has since been reduced to little more than a collection of dead links
`
`‘Pint siirrtess on this fi'ont proved short-lived Far more serious than the threat posed by T.yr:os is the danger to the recording industry presented by the emergenrte ofa new type ofinterrnediary peer-to-peer
`copying systems. By far the most famous ofthese is Napster.com Napster is not a traditional search engine, but a protocol that enables individual computer users to share information concerning the
`contents oftheir hard drives. Specifically, it enables a user interested in obtaining an MP3 copy ofa particular song to search the drives of other Napster participants for the song in question —— and then,
`after locating a copy, to download it to his or her own drive. The service has proven extraordinarily popular, espcially among college students. A high percentage ofthe trafific on many universifl networks
`now consists ofNapster searches and downloads.
`
`it neither stores nor caches any digital
`Aware that its system facilitates the nonpermissive reproduction of copyrighted material, Napster has employed various tactics to minimize its exposure to liability.
`music
`or otherwise) on its servers, it trumpets a "Cop_3ggl_1t Policy" in which it disclaims responsibility for the activities of its subscribers and insists that they promise not to violate the law, and it
`has promises to "respond expeditiously to claims ofcopyright infringement committed using [its] service " Unimpressed, the FIAA filed suit, accusing Napster ofboth contributory and vicarious copyright
`infiingement
`
`In its defense, Napster has made three legal arguments. First, it has invoked the protection ofsections 512 a and 5l2 d ofthe Digital kfillenium Copyright Act (DMCA), which provides to the operators of
`"transitory digital network connections" and "Information Location Tools" "safe harbors" against liability for copyright infringement. Second, Napster argues that peer-to-peer copying of digital files using its
`system constitutes '"'the noncommercial use by a consumer" of "a digital audio recording device," which, pursuant to section 1008 ofthe Audio Home Recording Act, cannot constitute copyright infiingement.
`Because its members are not engaged in copyright irifiingement, Napster argues, it plainly cannot be liable for contiibutory copyright infiingement Finally, Napster insists that a significant percentage ofthe
`uses ofits system involves lawful copying ofmusical files -- either because the owners ofthe copyrights in the songs in question do not object to (indeed, encourage) the duplication oftheir works or because
`the character ofthe copying is such as to make it a "fair use." Consequently, Napster argues, its system is manifestly "capable of substantial nonin.fiing;ing uses," and thus is immunized against liability for
`contiibutory copyright infiingement by the decision ofthe Supreme Court in the % case
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`At the trial-court level, Napter's arguments fared badly. In April of20U0, Judge Marilyn Patel reiected Napster's invocation ofDMCA 5l2(a). On August l0, Judge Patel re'ect