Napster Inc. can investigate whether the five major labels own the rights to songs they say the music-swapping service infringes, a judge ruled yesterday after settlement talks in the case broke down.
U.S. District Judge Marilyn Patel last month postponed Napster’s pursuit of the issue after the company and the Recording Industry Association of America, which represents AOL Time Warner Inc., Sony Corp., Bertelsmann AG, EMI Group PLC and Vivendi Universal, asked for 30 days of settlement discussions.
“That stay has now ended, and the parties have advised the court that they are unable to resolve their disputes,” Patel wrote in her 32-page ruling issued yesterday.
The labels sued in 1999 claiming that millions of Napster users were illegally trading copyrighted songs.
Napster has barred music trading on its Web site since July and is testing a version of a paid subscription service.
Napster said in a statement that it is pleased that Patel agreed more discovery is necessary on the copyright ownership and misuse arguments.
“We will continue to pursue those issues in litigation as we continue amicable settlement and licensing discussions,” said Jonathan Schwartz, Napster’s general counsel.
Napster contends that it needs to investigate the record industry’s ownership practice and whether the labels conspired to prevent online music-swapping sites from licensing music.
Officials at Washington-based recording association were not available for comment.
At issue is the music labels’ own-ership of copyrights to works by Elvis Presley, Nirvana and about 200 other artists Napster has listed in court papers.
If the record companies commissioned Nirvana to write “Smells Like Teen Spirit,” through a “work-for-hire” relationship, then the record companies are considered the authors and have greater rights to the song.
The designation is significant because if the record companies can’t prove they have an employment relationship with the artists, they can’t claim owner- ship.
“It’s a very important point for the record labels – it might help coerce them into a settlement to stop this from being decided,” said Mark Radcliffe, a partner at Gray Cary Ware & Freidenrich who specializes in copyright and Internet law.