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Morning News

Napster Case Returns to Federal Court

Aired March 2, 2001 - 11:09 a.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

DARYN KAGAN, CNN ANCHOR: It could be a matter of life or death for Napster. The free Internet music-swapping service is facing an important federal court hearing today in San Francisco, and that is from where CNN's James Hattori joining us live now from San Francisco.

James, good morning; good to see you.

JAMES HATTORI, CNN CORRESPONDENT: Good morning, Daryn. Kind of a gloomy day here in San Francisco, perhaps apropos of the ominous times that Napster faces today, especially.

We are awaiting a hearing in just about a couple of hours, 10:00 Pacific time before judge -- federal court Judge Marilyn Hall Patel. You'll recall she is the judge who issued the injunction to shut down Napster last summer for violating copyright laws. That injunction, of course, was appealed to a federal appellate court. The court in February more or less upheld most of it, but ordered that part of it be modified, sent back to this court. So it is going to be -- that is the topic of the hearing at 10:00 this morning.

It was a big victory for the recording industry. Essentially it has -- the appellate court is telling the judge now to modify part of the order, the injunction, and specifically to tell Napster which copyrights are being violated. The recording industry, presumably, will provide all that information. The question for Judge Patel is -- or, before Judge Patel is will she issue the injunction again -- reissue injunction again today. The question for Napster is how will it comply, and can it comply.

Napster claims about 50 to 60 million users. Last week it offered, in an attempt to get the record companies off its back, it offered a $1 billion, five-year deal. The recording industry pretty much gave it the cold shoulder; it did not -- was not very impressed with that offer, was not impressed that it was made public. Napster is also going forth with its proposed fee-based system where it would charge anywhere from $5 to $10 for unlimited downloads. It says that system will be in place this summer. Also complicating issues is at least one of the plaintiffs in this case, Sony, has announced that it will go ahead and start its own subscription download service.

So, again, we are awaiting a hearing that starts in just about a couple of hours here in federal court in San Francisco. Of course, no cameras are allowed in federal court; we will bring you the decision as soon as we get word of it -- Daryn. KAGAN: We will rely on you to do just that. James Hattori in San Francisco, thank you so much.

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