A&M RECORDS, INC. V NAPSTER, INC.

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

A&M RECORDS, INC., a

corporation; GEFFEN RECORDS, INC.,

a corporation; INTERSCOPE RECORDS,

a general partnership; SONY MUSIC

ENTERTAINMENT, INC., a

corporation; MCA RECORDS, INC.,

a corporation; ATLANTIC RECORDING

CORPORATION; ISLAND RECORDS, INC.,

a corporation; MOTOWN RECORD

COMPANY, LP, a limited

partnership; CAPITOL RECORDS,

INC., a corporation; LA FACE No. 01-15998

RECORDS, a joint venture; BMG

MUSIC d/b/a THE RCA RECORDS D.C. No.

LABEL, a general partnership; CV-99-5183-MHP

UNIVERSAL RECORDS, INC., a

corporation; ELEKTRA

ENTERTAINMENT GROUP, INC., a

corporation; ARISTA RECORDS, INC.,

a corporation; SIRE RECORDS

GROUP, INC., a corporation;

POLYGRAM RECORDS, INC., a

corporation; VIRGIN RECORDS

AMERICA, INC., a corporation;

WARNER BROS. RECORDS, INC., a

corporation,

Plaintiffs-Appellants,

v.

4793

NAPSTER, INC., a corporation,

Defendant-Appellee.

JERRY LEIBER, individually and

doing business as JERRY LEIBER

MUSIC; MIKE STOLLER, individually

and doing business as MIKE

STOLLER MUSIC; FRANK MUSIC No. 01-16003

CORPORATION, on behalf of

D.C. No. themselves and all others similarly CV-00-0074-MHP situated,

Plaintiffs-Appellants,

v.

NAPSTER, INC.,

Defendant-Appellee.

In re: NAPSTER, INC.,

A&M RECORDS, INC., a

corporation; GEFFEN RECORDS, INC., No. 01-16011

a corporation; INTERSCOPE RECORDS,

a general partnership; SONY MUSIC D.C. No.

ENTERTAINMENT, INC., a CV-00-1369-MHP

corporation; MCA RECORDS, INC.,

a corporation; ATLANTIC RECORDING

CORPORATION, a corporation;

ISLAND RECORDS, INC., a

corporation; MOTOWN RECORD

COMPANY, L.P., a limited

4794

partnership; CAPITOL RECORDS,

INC., a corporation; LA FACE

RECORDS, a joint venture; BMG

MUSIC d/b/a THE RCA RECORDS

LABEL, a general partnership;

UNIVERSAL RECORDS, INC., a

corporation; ELEKTRA

ENTERTAINMENT GROUP, INC., a

corporation; ARISTA RECORDS, INC.,

a corporation; SIRE RECORDS

GROUP, INC., a corporation;

POLYGRAM RECORDS, INC., a

corporation; VIRGIN RECORDS

AMERICA, INC., a corporation;

WARNER BROS. RECORDS, INC., a

corporation; ANDRE YOUNG;

METALLICA; CASANOVA RECORDS;

JERRY LEIBER; MIKE STOLLER;

FRANK MUSIC CORPORATION,

Plaintiffs-Appellees,

and

TEE VEE TOONS; MATTHEW KATZ;

E/M VENTURES; CREEPING DEATH

MUSIC; AFTERMATH ENTERTAINMENT;

EMUSIC.COM, INC.; THE NATIONAL

ACADEMY OF RECORDING ARTS &

SCIENCES,

Plaintiffs,

v.

NAPSTER, INC.,

Defendant-Appellant,

and

FRED DRUST; JOHN FANNING;

HUMMER WINBLAD; HANK BARRY;

BOB BOZEMAN; YOSI AMRAM;

SHAWN FANNING,

Defendants.

In re: NAPSTER, INC.,

A&M RECORDS, INC., a

corporation; GEFFEN RECORDS, INC.,

a corporation; INTERSCOPE RECORDS,

a general partnership; SONY MUSIC

ENTERTAINMENT, INC., a

corporation; MCA RECORDS, INC.,

a corporation; ATLANTIC RECORDING

CORPORATION, a corporation; No. 01-16308

ISLAND RECORDS, INC., a

D.C. No.

corporation; MOTOWN RECORD CV-00-1369-MHP

COMPANY, L.P., a limited

partnership; CAPITOL RECORDS, OPINION

INC., a corporation; LA FACE

RECORDS, a joint venture; BMG

MUSIC d/b/a THE RCA RECORDS

LABEL, a general partnership;

UNIVERSAL RECORDS, INC., a

corporation; ELEKTRA

ENTERTAINMENT GROUP, INC., a

corporation; ARISTA RECORDS, INC.,

a corporation; SIRE RECORDS

GROUP, INC., a corporation;

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POLYGRAM RECORDS, INC., a

corporation; VIRGIN RECORDS

AMERICA, INC., a corporation;

WARNER BROS. RECORDS, INC., a

corporation; ANDRE YOUNG;

METALLICA; CASANOVA RECORDS;

JERRY LEIBER; MIKE STOLLER;

FRANK MUSIC CORPORATION,

Plaintiffs-Appellees,

and

TEE VEE TOONS; MATTHEW KATZ;

E/M VENTURES; CREEPING DEATH

MUSIC; AFTERMATH ENTERTAINMENT;

EMUSIC.COM, INC.; THE NATIONAL

ACADEMY OF RECORDING ARTS &

SCIENCES,

Plaintiffs,

v.

NAPSTER, INC.,

Defendant-Appellant,

and

FRED DRUST; JOHN FANNING;

HUMMER WINBLAD; HANK BARRY;

BOB BOZEMAN; YOSI AMRAM;

SHAWN FANNING,

Defendants.

Appeal from the United States District Court

for the Northern District of California

Marilyn H. Patel, Chief District Judge, Presiding

Argued and Submitted

December 10, 2001--Pasadena, California

4797

Filed March 25, 2002

Before: Mary M. Schroeder, Chief Judge, Robert R. Beezer

and Richard A. Paez, Circuit Judges.

Opinion by Judge Beezer

4798

4799 COUNSEL

Russell J. Frackman, George M. Borowski, Peter B. Gelblum,

Jeffrey D. Goldman, Mitchell Silberberg & Knupp LLP, Los

4800

Angeles, California, for A&M Records, Inc. et al., plaintiffs-

appellants-cross-appellees.

Carey R. Ramos, Aidan Synnott, Michael C. Keats, Lewis E.

Farberman, Paul Weiss Rifkind Wharton & Garrison, New

York, New York, for Jerry Leiber et al., plaintiffs-appellants-

cross-appellees.

Laurence F. Pulgram, David Hayes, Fenwick & West LLP,

San Francisco, California, Steven Holtzman, Boies Schiller &

Flexner LLP, Armonk, New York, for Napster, Inc.,

defendant-appellee-cross-appellant.

Dale M. Cendali, Diana M. Torres, Elyssa M. Getreu,

O'Melveny & Myers LLP, Los Angeles, California, for amici

Motion Picture Association of America, Inc., American Film

Marketing Association, American Society of Composers,

Authors and Publishers, Broadcast Music, Inc., American

Society of Media Photographers, Association of American

Publishers, Business Software Alliance, Office of the Com-

missioner of Baseball, Jazz Journalists Association, Profes-

sional Photographers of America, and Software &

Information Industry Association.

_________________________________________________________________

OPINION

BEEZER, Circuit Judge:

This appeal involves challenges to a modified preliminary

injunction entered by the district court on remand from a prior

appeal, A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004

(9th Cir. 2001). At issue is the district court's order forcing

Napster to disable its file transferring service until certain

conditions are met to achieve full compliance with the modi-

fied preliminary injunction. We entered a temporary stay of

the shut down order pending resolution of this appeal. We

have jurisdiction pursuant to 28 U.S.C. § 1292(a)(1). We

affirm both the district court's modified preliminary injunc-

tion and shut down order.

I

Plaintiffs' action against Napster claims contributory and

vicarious copyright infringement stemming from Napster's

peer-to-peer music file sharing service. 1 In the prior interlocu-

tory appeal, we affirmed the district court's decision to issue

a preliminary injunction and reversed and remanded with

instructions to modify the injunction's scope to reflect the

limits of Napster's potential liability for vicarious and contrib-

utory infringement. Napster, 239 F.3d at 1027.

We now consider the district court's modified preliminary

injunction, which obligates Napster to remove any user file

from the system's music index if Napster has reasonable

knowledge that the file contains plaintiffs' copyrighted works.

Plaintiffs, in turn, must give Napster notice of specific

infringing files. For each work sought to be protected, plain-

tiffs must provide the name of the performing artist, the title

of the work, a certification of ownership, and the name(s) of

one or more files that have been available on the Napster file

index containing the protected copyrighted work. Napster

then must continually search the index and block all files

which contain that particular noticed work. Both parties are

required to adopt reasonable measures to identify variations of

the file name, or of the spelling of the titles or artists' names,

of plaintiffs' identified protected works.

The district court carefully monitored Napster's compliance

with the modified preliminary injunction. It required periodic

reports from the parties and held several compliance hearings.

_________________________________________________________________

1 For a description of Napster's system, see Napster, 239 F.3d at 1011-

12.

The district court also appointed a technical advisor to assist

in evaluating Napster's compliance.

Napster was able to prevent sharing of much of plaintiffs'

noticed copyrighted works. Plaintiffs nonetheless were able to

present evidence that infringement of noticed works still

occurred in violation of the modified preliminary injunction.

After three months of monitoring, the district court deter-

mined that Napster was not in satisfactory compliance with

the modified preliminary injunction. The district court ordered

Napster to disable its file transferring service until certain

conditions were met and steps were taken to ensure maximum

compliance.

The record company plaintiffs and the music producer

plaintiffs appeal the modified preliminary injunction, and

Napster cross-appeals. 2 Napster also appeals the district

court's shut down order.

II

We review de novo the legal premises underlying a prelim-

inary injunction. Does 1-5 v. Chandler, 83 F.3d 1150, 1152

(9th Cir. 1996). Otherwise, we review for abuse of discretion

the terms of a preliminary injunction. Gorbach v. Reno, 219

F.3d 1087, 1091 (9th Cir. 2000) (en banc). "As long as the

district court got the law right, it will not be reversed simply

because [we] would have arrived at a different result if [we]

had applied the law to the facts of the case." Gregorio T. v.

Wilson, 59 F.3d 1002, 1004 (9th Cir. 1995) (internal quotation

marks and citation omitted).

_________________________________________________________________

2 Five separate lawsuits against Napster have been consolidated into a

multidistrict litigation proceeding before the district court. The district

court entered substantially similar modified preliminary injunctions in

each case. See, e.g., A&M Records, Inc. v. Napster, Inc., 2001 WL 227083

(N.D. Cal. Mar. 5, 2001). Variations in the preliminary injunctions are not

relevant to this appeal.

III

Plaintiffs challenge the requirement that they provide file

names found on the Napster index that correspond to their

copyrighted works before those works are entitled to protec-

tion. Plaintiffs argue that Napster should be required to search

for and to block all files containing any protected copyrighted

works, not just those works with which plaintiffs have been

able to provide a corresponding file name. Napster, on the

other hand, argues that the modified preliminary injunction's

articulation of its duty to police is vague and fails to conform

to the fair notice requirement of Federal Rule of Civil Proce-

dure 65(d).

We are unpersuaded that the district court committed

any error of law or abused its discretion. The notice require-

ment abides by our holding that plaintiffs bear the burden "to

provide notice to Napster of copyrighted works and files con-

taining such works available on the Napster system before

Napster has the duty to disable access to the offending con-

tent." Napster, 239 F.3d at 1027. Napster's duty to search

under the modified preliminary injunction is consistent with

our holding that Napster must "affirmatively use its ability to

patrol its system and preclude access to potentially infringing

files listed on its search index." Id. The modified preliminary

injunction correctly reflects the legal principles of contribu-

tory and vicarious copyright infringement that we previously

articulated.

Napster's challenge on grounds of vagueness is without

merit. A preliminary injunction must "be specific in terms"

and "describe in reasonable detail . . . the act or acts sought

to be restrained." Fed. R. Civ. P. 65(d). We do not set aside

injunctions under this rule "unless they are so vague that they

have no reasonably specific meaning." E. & J. Gallo Winery

v. Gallo Cattle Co., 967 F.2d 1280, 1297 (9th Cir. 1992).

Napster has a duty to police its system in order to avoid vicar-

ious infringement. Napster can police the system by searching

its index for files containing a noticed copyrighted work. The

modified preliminary injunction directs Napster, in no vague

terms, to do exactly that.

IV

Napster challenges the district court's use of a technical

advisor. Napster does not contest the appointment of the advi-

sor but rather challenges the manner in which the district

court relied on the advisor. Napster argues that the district

court improperly delegated its judicial authority. We disagree.

At no time did the technical advisor displace the district

court's judicial role. The technical advisor never unilaterally

issued findings of fact or conclusions of law regarding Nap-

ster's compliance. See Kimberly v. Arms , 129 U.S. 512, 524

(1889) (holding a court may not, through appointment of a

master or otherwise, "abdicate its duty to determine by its

own judgment the controversy presented"); Reilly v. United

States, 863 F.2d 149, 157-58 (1st Cir. 1988) (stating a trial

court may not rely on technical advisor to contribute evi-

dence, determine legal issues or undertake independent fac-

tual findings).

The district court's use of the technical advisor was proper.

V

Napster challenges the district court's shut down order. The

district court was dissatisfied with Napster's compliance

despite installation of a new filtering mechanism. The new fil-

ter analyzed the contents of a file using audio fingerprinting

technology and was not vulnerable to textual variations in file

names. Napster had voluntarily disabled its file transferring

service to facilitate installation and debugging of the new fil-

tering mechanism. Users were still able to upload files and

search the Napster index during this period. The district court

ordered Napster to keep the file transferring service disabled

until Napster satisfied the court "that when the[new] system

goes back up it will be able to block out or screen out copy-

righted works that have been noticed . . . . and do it with [a]

sufficient degree of reliability and sufficient percentage [of

success] . . . . It's not good enough until every effort has been

made to, in fact, get zero tolerance . . . . [T]he standard is, to

get it down to zero." The shut down order was issued after the

parties had filed notices to appeal the modified preliminary

injunction.

Napster contends that the shut down order improperly

amends the modified preliminary injunction by requiring a

non-text-based filtering mechanism and ordering a shut down

of the system pursuant to a new "zero tolerance " standard for

compliance. Napster additionally argues that the district court

lacked authority to further modify the modified preliminary

injunction while the injunction was pending on appeal.

A.

Napster argues that the new filtering mechanism is unwar-

ranted as it lies beyond the scope of Napster's duty to police

the system. By requiring implementation of the new filtering

mechanism, the argument goes, the shut down order fails to

recognize that Napster's duty to police is "cabined by the sys-

tem's current architecture." Napster, 239 F.3d at 1024. We

are not persuaded by this argument.

"Napster [ ] has the ability to locate infringing material

listed on its search indices, and the right to terminate users'

access to the system." Id. at 1024. To avoid liability for vicar-

ious infringement, Napster must exercise this reserved right to

police the system to its fullest extent. Id. at 1023. The new fil-

tering mechanism does not involve a departure from Napster's

reserved ability to police its system. It still requires Napster

to search files located on the index to locate infringing mate-

rial.

[3] A district court has inherent authority to modify a pre-

liminary injunction in consideration of new facts. See System

Federation No. 91 v. Wright, 364 U.S. 642, 647-48 (1961)

(holding that a district court has "wide discretion" to modify

an injunction based on changed circumstances or new facts);

Tanner Motor Livery, Ltd. v. Avis, Inc., 316 F.2d 804, 810

(9th Cir. 1963) (same). Napster's original filtering mechanism

was unsuccessful in blocking all of plaintiffs' noticed copy-

righted works. The text-based filter proved to be vulnerable

to user-defined variations in file names. The new filtering

mechanism, on the other hand, does not depend on file names

and thus is not similarly susceptible to bypass. It was a proper

exercise of the district court's supervisory authority to require

use of the new filtering mechanism, which may counter Nap-

ster's inability to fully comply with the modified preliminary

injunction.

B.

Napster argues that the shut down order improperly

imposes a new "zero tolerance" standard of compliance. The

district court did not, as Napster argues, premise the shut

down order on a requirement that Napster must prevent

infringement of all of plaintiffs' copyrighted works, without

regard to plaintiffs' duty to provide notice. The tolerance stan-

dard announced applies only to copyrighted works which

plaintiffs have properly noticed as required by the modified

preliminary injunction. That is, Napster must do everything

feasible to block files from its system which contain noticed

copyrighted works.

The district court did not abuse its discretion in ordering a

continued shut down of the file transferring service after it

determined that the new filtering mechanism failed to prevent

infringement of all of plaintiffs' noticed copyrighted works.

Even with the new filtering mechanism, Napster was still not

in full compliance with the modified preliminary injunction.

The district court determined that more could be done to max-

imize the effectiveness of the new filtering mechanism.

Ordering Napster to keep its file transferring service disabled

in these circumstances was not an abuse of discretion.

C.

Napster argues that the district court lacked authority to

modify the injunction pending appeal. The civil procedure

rules permit modifications. While a preliminary injunction is

pending on appeal, a district court lacks jurisdiction to modify

the injunction in such manner as to "finally adjudicate sub-

stantial rights directly involved in the appeal. " Newton v.

Consolidated Gas Co., 258 U.S. 165, 177 (1922) (citations

omitted); Stein v. Wood, 127 F.3d 1187, 1189 (9th Cir. 1997).

Federal Rule of Civil Procedure 62(c), however, authorizes a

district court to continue supervising compliance with the

injunction. See Fed. R. Civ. P. 62(c) ("When an appeal is

taken from an interlocutory or final judgment granting, dis-

solving, or denying an injunction, the [district ] court in its dis-

cretion may suspend, modify, restore, or grant an injunction

during the pendency of the appeal . . . as it considers proper

for the security of the rights of the adverse party.").

The district court properly exercised its power under

Rule 62(c) to continue supervision of Napster's compliance

with the injunction. See Meinhold v. United States Dep't of

Def., 34 F.3d 1469, 1480 n.14 (9th Cir. 1994) (holding modi-

fication of preliminary injunction during pendency of appeal

was proper to clarify injunction and supervise compliance in

light of new facts).

VI

We affirm both the modified preliminary injunction and the

shut down order. The terms of the modified preliminary

injunction are not vague and properly reflect the relevant law

on vicarious and copyright infringement. The shut down order

was a proper exercise of the district court's power to enforce

compliance with the modified preliminary injunction.

AFFIRMED.

4809