US Judge Okays Case Against Napster Investors

by Glen Shapiro, LawAndTax-News.com, New York

19 July 2004

Ruling on Wednesday, US District Judge Marilyn Hall Patel announced that a suit against investors in the original peer-to-peer file sharing service, Napster can go ahead.

Last year, Universal Music Group, in conjunction with Capitol Records, suggested that the $85 million sunk into Napster by media firm Bertelsmann had been a 'down payment' expected to lead to the eventual acquisition of the service, and accused the German group of facilitating "millions upon millions of separate acts of infringement by millions of Napster users".

The firm additionally filed suit against Hummer Winblad Venture Partners over the firm's $13 million investment in the file-sharing service, in what many at the time perceived to be a warning to other venture capitalists interested in investing in the other file-swapping services which were then starting to rise from Napster's ashes.

Although Napster was taken offline in 2001, and has since been relaunched by software firm, Roxio as a legal download service, the record companies are still angry about Hummer and Bertelsmann's involvement in the service, and are determined to seek recompense through the courts.

Judge Patel made this possible last week, delivering a ruling which stated that in cases of copyright infringement "courts have long recognized that in certain circumstances, vicarious or contributory liability will be imposed".

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