MP3 music sharing company Napster has been successful in its appeal against an injunction that would have forced it to stop MP3 file-swapping on its Web site. The injunction has been stayed, and Napster has until August 18 to file its legal brief.
Friday's decision follows proceedings held on Wednesday, in which US District Judge Marilyn Hall Patel issued an injunction against Napster, ordering the company to halt the use or exchange of MP3 music files via its Web site. Napster was given until midnight Pacific Time on Friday July 27 to comply with the order.
Napster's site lets users download MP3 format music files that are stored in the computers of other users. The Recording Industry Association of America (RIAA) filed a lawsuit against Napster earlier in the year alleging infringement of copyrighted materials.
At the hearing Wednesday, Patel said Napster's site posed a threat to the interests of the RIAA. However, Napster's lawyers contended that its users do not engage in commercial use of the MP3 files and therefore do not participate in direct copyright infringement.
Through a Webcast on the company's site, Napster founder Shawn Fanning and CEO Hank Barry told the company's music community that they intend to use every venue and every court to fight the ruling.
"We will keep fighting for Napster and for your right to share music over the Internet," Fanning said.
Malcolm Maclachlan, media and e-commerce analyst at IDC, in Mountain View, Calif., said the recording industry now has a legal framework within which to go after other peer-to-peer networking companies.
However, Maclachlan said because the market opportunity for legal peer-to-peer networking holds great potential, the RIAA can't rest peacefully.
"The RIAA will need to [address online distribution] because it has too much momentum. They have an opportunity to build a creative system from the ground up for what is a huge market. Napster and other peer-to-peer things can be a very good marketing tool. This is information that people pay millions of dollars for," Maclachlan said.
As part of a settlement of some sort, Maclachlan said, "I hope the recording industry is creative enough to turn Napster into something they can use. It has the potential to push the market."
Ashlee Vance, San Francisco correspondent for IDG New Service, contributed to this article.