Wednesday, July 26, 2000
U.S. Federal District Court for the Northern District
of Califonia
Matter: RIAA v. Napster
Issue: RIAA's Motion for Preliminary Injunction
Against Napster
Before: Federal District Court Judge Marilyn Hall Patel
The court: Well, counsel. A lot of paper has been
filed in this case and I suppose we
could hear a lot more argument, and we could take a lot
more time with this. And
ultimately I will reduce the court's decision to writing,
but I think it's time for there to be a
decision on the preliminary injunction motion because
you have been waiting for this
and you have been through a round of motions earlier under
the Digital Millennium
Copyright Act. I think that plenty of time has been expended
in preparing for the motion.
Certainly plenty of paper has been expended as well, that
the court is able to render a
decision on the motion for preliminary injunction.
To prevail on a motion for preliminary injunction--and
this is going to take a while
because I'm going to go through the elements and the claims
and defenses--but to
prevail on a motion for a preliminary injunction, plaintiffs
must demonstrate a
combination of probable success on the merits--and possibility
of irreparable harm or on
the continuum scale of serious legal questions that are
raised--and a balance of
hardships tipping in the plaintiffs' favor. I think it's
safer to stay with the first of those; in
other words, the higher end of the continuum.
In copyright cases the reasonable likelihood of success
on the merits does create a
presumption or irreparable harm. And don't everybody go
bolting for the door, but I will
tell you right now what my conclusion is on that and then
go through the reasons for it.
I find that plaintiffs have shown not just a reasonable
likelihood of success but a strong
likelihood of success on the merits. First of all with
respect to direct
infringement, because in order to establish either contributory
or
vicarious liability, they must establish direct infringement
by a third
party, in this case the users of Napster.
And here the evidence establishes that a majority of Napster
users use the service to
download and upload copyrighted music. This, in fact,
should come as no surprise to
Napster, since that really--it's clear from the evidence
in this case and the early records
that were divulged in discovery--was the purpose of it.
And by doing that, it constitutes--the uses constitute--direct
infringement of plaintiffs'
musical compositions--recordings that are copyrighted.
And it is pretty much
acknowledged also by Napster that this is infringement
unless they can fall back on an
affirmative defense because of the warnings that are given
to the users of the system
that they may be infringing and by statements made in
their own documents when this
business was getting off the ground.
Also, according to the evidence before the court, as much
as 87 percent of the
music--and I think that's a fairly reasonable figure and
fairly well supported in the
evidence--87 percent of the music available on Napster
may be copyrighted. Certainly a
substantial amount of it is.
Now, defendants have raised the fair use defense. That
is an affirmative defense.
Defendants have the burden on that defense, and to rebut
allegations of infringement,
they have raised this based upon Sony and its progeny,
but particularly Sony, where
the Supreme Court stated that any individual may reproduce
a copyrighted work for a
fair use.
Sony also stands for the rule that a manufacturer is not
liable for selling a staple article
of commerce, and that's in quotes from the case, that
is, quote, "capable of
commercially significant noninfringing uses."
Fair use and substantial noninfringing use arguments are
in fact affirmative defenses,
and defendant, as I said, has the burden of showing that
a given use constitutes a fair
use.
The court finds that--and then I'll go through the elements
of this--but the finding is that
any of the potential noninfringing uses of the Napster
service are minimal. Some of
them seem to be thought of them afterward and after this
litigation started; but the
substantial or commercially significant use of the service
was and continues to be
copying popular music, most of which is copyrighted and
for which no authorization
has been obtained. While it may be capable of some of
these other things, that seems
to--those uses seem to--pale by comparison to what Napster
is used for, what it was
promoted for, and what it continues to be used for.
Now, the court must consider, and the factors the court
must consider, among others, is,
the four that are specifically enumerated in Sony are:
The purpose and characteristic of
use, including whether it's of a commercial nature; the
nature of the copyrighted work;
the amount and substantiality of the portion used in relation
to the copyrighted work as
a whole; and the effect of the use upon the potential
market for value of the copyrighted
work.
I think there's not much dispute with respect to the second
and third factors. The
copyrighted musical compositions and recordings certainly
are the paradigmatic kinds of
things for which copyrights are obtained. They're creative
in nature. They constitute
entertainment and also the third factor. They are, in
fact, uploaded or downloaded, or at
least can be and generally are, in their entirety. Certainly
they're generally made
available in their entirety.
As to the first factor, the court finds that although downloading
and uploading MP3
music is not a paradigmatic commercial activity, it is
not also typical of the personal
use--that is, in the traditional sense. It may be what
makes this case difficult--or any of
the cases involving new technology--is that it is hard
sometimes to make a neat fit.
The mere fact that, that fit is not an easy one does not
mean that plaintiffs have to
forego enforcing their rights under the copyright laws.
Plaintiffs have not shown that the majority of Napster
users download the music for sale
or for profit, and it would appear that they probably
do not. However, there is evidence
that Napster anticipates proudly that more than 70 million
users by the end of the year
2000 will be on Napster in some fashion or another.
Given the vast scale which Napster and the Internet can
in fact access--numbers and
numbers of users--and that the uses among anonymous individuals,
not just a sharing
among friends and typical of the more private use, that
cases have seen at the very
least a host user sending a file cannot be said to engage
merely in the typical personal
use when distributing the file to, in this case, many
anonymous requesters.
Moreover, the fact that Napster users get for free something
they ordinarily would have
to pay for suggests that they reap--the users reap--an
economic advantage from
Napster use.
As to the fourth factor, plaintiffs have produced evidence
that Napster use harms
the market for the copyrighted work in at least two ways,
and we've had a number
of studies, and I will spell out in the order the problems
with some of those studies.
I don't think any of them are, you know, what you would
call without flaw.
But selecting out college students, I don't think was inappropriate
and, therefore,
does not negate the entire study. What it makes clear
to the court, however, is that
it is only looking at college students and, therefore,
we know that it's only looking
at a segment of the market. Nonetheless, a segment that
Napster itself has said it has
targeted. And it gives us a snapshot, particularly for
preliminary injunction purposes,
of what is happening in a particular market.
I find that the Fader report is far less persuasive. First
of all, he relies upon a number of
studies that were printed in The Wall Street Journal and
Wired and New York Times,
and so forth, which may be fine for marketing purposes
and strategizing, but it doesn't
do very much for a reliable survey for court purposes.
I commend to you Judge
Schwarzer's book in that respect.
But, in any event, even as to the evaluation of the Greenfield
survey, I think there are a
number of problems with the Greenfield survey. But we
don't really have a breakdown
other than that one sheet at the end, and it doesn't tell
us very much at all about what
the answers really were. At least in the Jay report we
have the answers that were given
to the questions in the questionnaire. So it's far greater
use and more probative to the
court than the Fader report.
The other element or factor with respect to this fourth
element is the harm by reason of
raising barriers to plaintiff's entry into the market
for digital downloading of music. The
potential fair uses of Napster that have been proffered
by defendant are, for example,
sampling, space shifting and the authorized distribution
of the work of new artists. For
the following reasons, I don't find that these constitute
the kind of fair uses that are
substantial and noninfringing within the meaning of Sony.
First of all, with respect to sampling, sampling does not
constitute a noncommercial
personal use in the traditional sense because it involves
the distribution of music among
millions of users.
Plaintiffs have shown a meaningful likelihood that if sampling
became widespread, it
would reduce the market for copyrighted works. The defendants
argue, and I think
unpursuasively, that the use of Napster for sampling stimulates
CD sales. I don't
think in fact the reliable evidence in this case supports
that.
Even if sampling did increase CD sales, it would still infringe
plaintiffs' right to licensing
fees, to control their work to derivative markets, and
so forth. And if users can sample
songs for free on Napster, they're unlikely to purchase individual
songs from the online
sites affiliated with plaintiffs. And particularly if they cannot
only sample them but copy them,
there is certainly less incentive to do what you can do on some
sites, and that is just to sample
the music but not be able to copy it.
The other use that defendants proffer is space shifting.
Now there may be a lot of space
shifting going on, but I think the evidence shows that
that space shifting is going on not
independent of, but in fact in conjunction with, the copying
of or downloading of music
that is being obtained in a way that I just indicated
is infringing. I don't find that the
substantial noninfringing use within the meaning of Sony.
Also, the court rejects the application of the Audio Home
Recording Act to the pacts of
this case. It does not immunize the noncommercial use
of Napster in the space shifting
areas as they have suggested. That act is irrelevant in
fact to this action because
plaintiffs have not brought any claims under it. And also,
under the 9th Circuit law,
neither computers nor hard drives are audio home recording
devices, nor is there
anything else in this case that involves Napster that
is an audio home recording device
within the meaning of the statute.
I think the lie is given to that by the fact the defendants
argue legislative history. But
there's nothing in the act that is so unclear that required
that the court go to the
legislative history to try to interpret the statute.
Second, defendant fails to show that space shifting constitutes
a commercially
significant use of Napster. Indeed, the most credible
explanation for the exponential
growth of traffic on Napster is the vast array of files
offered by other users, not the
ability of each individual to space shift music that he
or she already owns.
Finally, the court declines to apply the staple article
of commerce doctrine to Napster on
the basis of space shifting because defendant is not merely
a manufacturer/seller
whose contact with consumers ceases when the product is
sold. Rather, as I will go into
on the contributory and vicarious infringement, defendant,
despite his contention to the
contrary, exercises a substantial and ongoing control
over its service.
Defendants have also made much of the promotion of new
artists who authorize
distribution of their work. I think this is something
that's sort of come lately to the table. I
don' t find that, that constitutes a substantial noninfringing
use of Napster.
Indeed, the court would certainly not enjoin that kind
of a use, nor would it have the
authority to do so; and if, in fact, that is a use that
is a substantial use of Napster, then I
don't see how they are put out of business, what could
be a critical
aspect of their business by being enjoined from allowing
the copying
of copyrighted material for which there is no authorization.
The evidence shows that, in fact, promoting the new artist
was not the
chief strategy in Napster's business plan. Defendant promoted
the
availability of songs by major stars as, and I quote from
some of their papers, "opposed
to having to go through page after page of unknown artists."
Suddenly, they found those unknown artists and would seek
to use them as a basis for
protection against infringement of the well-known artist
whose music they were making
available or providing access to.
Napster's purported mission of distributing music by artists
unable to obtain record label
representation, as I said, appears to have been developed
later in the game and after
the beginning of this litigation.
So with respect to the affirmative defense of fair use,
I do not find that defendants have
established or met their burden of proving that they're
entitled to the affirmative defense
of fair use, or substantial noninfringing uses are in
fact in place, or that they're capable
of substantial noninfringing uses.
Now with respect to the infringement itself, I said, first
of all, in order to establish either
contributory or vicarious infringement there must be direct
infringement by the users,
and we've gone over that.
With respect to contributory infringement, to use the words
of the statute: "a
contributory infringer is one who with knowledge of the
infringing activity induces,
causes or materially contributes to the infringing conduct
of another. The requirements
are actual or constructive knowledge and material contribution
to direct infringement." I
find that plaintiffs have demonstrated a substantial likelihood
of success on their
contributory copyright infringement claims.
The evidence before the court overwhelmingly establishes
that defendant had actual or
at the very least constructive knowledge, and this applies
as well to the Digital
Millennium Recording Act aspect of this under subsection
(D), that defendant had actual
or constructive knowledge that third parties were engaging
and continue to engage in
direct copyright infringement by downloading/uploading
MP3 files using the Napster
service.
This evidence includes internal documents authored by Napster
executives stating that
Napster was making pirated music available, stressing
the need to remain ignorant of
Napster users' identities and IP addresses since they
are exchanging pirated music;
notice from the Recording Industry Association of America
that it identified 12,000
infringing files on Napster; the fact that Napster executives
had recording industry
experience and at least some knowledge of copyright laws;
and the fact that Napster
executives downloaded copyrighted music to their own computers
using the service.
So therefore, I find that plaintiffs have established a
likelihood of success, in fact a
strong likelihood of success, on the knowledge--or actual
or constructive knowledge--of
this component as well as for the safe harbor provisions
under the DMCA.
The next element, the second element after--I should say
the third because we've talked
about direct infringement and knowledge--is that the defendant
terribly contributed to
copyright infringement by parties under 9th Circuit law.
The evidence shows that among other activities, defendant
supplies the proprietary
software, search engine, the means of establishing a connection
between Napster
users' computers, and without those services Napster users
could not find and
download the music they want--at least not via Napster.
In fact, that was the whole
reason for Napster's existence, if you look at their early
business plans, and what they
purported to do, and what they told their consumers or
users they were doing.
With respect to vicarious copyright infringement, not only
must direct infringement be
shown, and we've gone over that, but there also must be
the right and ability to
supervise the infringing activity and a direct financial
interest in such activity.
Again, the court finds that plaintiffs have established
a likelihood of success on
vicarious liability, although I could leave it at contributory
infringement. I'm going to move
to that one as well. That way when you take me up if I'm
wrong on one, maybe I'm right
on the other, whatever else, or I'm wrong on both.
(laughter)
The court: But plaintiffs have argued, and I think persuasively,
that defendant is
capable of exercising supervisory powers over its service.
And I have to add here that
though it may be technologically difficult, when you create
a program that had the very
purpose that Napster espouses that it had, and then you--you
know it's sort of like, you
know, becoming an orphan because--by your own hand and
then throwing yourself on
the mercy of the court because you're an orphan. It's
rather hard to hear that sound of
throwing themselves on the mercy of the court because
this technology just isn't going
to allow them to do or control the infringement.
In fact, I'm sure that anyone as clever as the people who
wrote the software in the case
are clever enough, as there are plenty or those minds
in Silicon Valley to do it, can
come up with a program that will help to identify infringing
items as well. I think the
evidence shows that there's no desire to do that.
Although defendant, as I said, contends that it is technologically
difficult to distinguish
copyrighted and authorized from not copyrighted or copyrighted
and unauthorized,
defendant has taken great paints to inform the court about
methods it uses for blocking
users about whom rights holders complain. The defendant
can in fact police, and will
have to given the nature of its program and the very purposes
of it, police its service.
And the court finds that, in fact, the defendant does
have the right and ability to
supervise.
With regard to the financial interest, it is true that
defendant is not charging a fee,
receiving any money in exchange for this service. However,
it is clear also from the
record that there have been substantial investments in
the service and that part of the
business plan or discussions among the persons who operate
and direct and control
Napster include talks or plans about monetizing its user
base through one of several
revenue-generating models.
The availability of a myriad of popular music files, most
of which are copyrighted,
certainly attracts people to the user base, and the court
rejects defendant's argument
that its noninfringing use lures customers to its service.
I don't think that's what lures
them. What lures them is the infringing use.
And they have, in fact, discussed among themselves ways
to monetize that, that they
intend sometime to make a profit. I recall reading--I
think in Richardson's
deposition--that, in fact, it was not a not-for-profit
organization. They intend someday to
make a profit.
Even if that were not the case, there certainly is, when
one gets to irreparable injury, a
presumption as well that is invoked by reason of having
found a likelihood of success on
the merits of irreparable harm, and that dovetails with
this area that I'm just talking
about.
Because plaintiffs have shown a likelihood of success--and
I think a strong likelihood of
success--on the merits, on both contributory and vicarious
copyright claims,
infringement claims, they're entitled to a presumption
of irreparable harm, and I reject
the defendant's contention that it's de minimis.
Plaintiffs presented evidence that they're likely to be
injured by reduced CD sales and
impediments into entry into the digital downloading market--I
can't give much weight to
the fact that defendants' content this will put them out
of business.
They have contended that there are other uses that Napster can
be put to and is capable
of, and if that is in fact the case, they're not deprived of
doing that. Nor are they deprived
of assisting the new artists or publishing the music--or assisting,
rather, in the publishing
of music--or copying of music of persons who authorize them
to do so or to present new
artists with an opportunity to be heard over the Internet, and
so forth.
The court has to, of course, tailor an injunction that
is narrow enough to meet only the
needs that are invoked by plaintiff's copyrights. At the
same time, while it may in fact
have a significant--is likely to have a significant--negative
impact upon defendants, I
don't think that the burden shifts--or, rather, the balance
of hardships shifts--in their
favor because to hold otherwise would essentially allow
wholesale infringing, as has
been going on in this case, without the ability of plaintiffs
to stop the hemorrhaging of
that.
So the question is: What should that injunction look like?
And I think, given the language
in the Disney vs.--is it Disney vs. Powell? I'll pull
it up here in a minute--case and a
number of other cases have talked about the problem of
whether all the copyrighted
material has been identified, that the court can in fact
enjoin not only that which is in
suit, such as what was enumerated in the complaint or
the appendix to the complaint in
this case, but also all other copyrighted works owned
by the plaintiff for which
authorization for use has not been permitted.
And the reason that I believe that the court can fashion
an injunction of that nature and
of that breadth, but it does not go beyond plaintiffs,
it does not go to other copyrighted
works of parties who are not--persons who are not--parties
to this litigation, the reason I
believe I can do that is because where the business itself,
the nature of the infringing is
the wholesale magnitude. What is involved here, and where
defendants have
acknowledged that, it's very difficult to identify what
is infringing and what isn't. I cannot
essentially sit by on that, and plaintiffs are entitled
to enforce their copyright rights and
not have them infringed just because the nature of the
technology is such that it's too
hard to identify.
Now, how one ultimately does identify, I suppose
something can be done between now
and the permanent injunction time, and I will invite you
to submit a proposed injunction,
but for the time being, Napster is enjoined from causing
or assisting or enabling or
facilitating or contributing to the copying, duplicating
or otherwise other infringement
upon all copyrighted songs, musical compositions or material
in which plaintiffs hold a
copyright or with respect to plaintiffs' pre-1972 recordings
in which they hold the rights.
And you can explain to me why that injunction either is
not broad enough or is not
narrow enough given what I have said but--and I don't
know how you're going to identify
all of those items--but you don't get the benefit of the
DMCA essentially requiring that
they provide notice to you of each and every complaint.
But for now, Napster is enjoined
from doing the acts that I just described.
Mr. Frackman, is there anything else that should be included
in than injunction at this
point?
RIAA attorney Russell Frackman: I don't think so, your honor. Thank you.
The court: Is there any way it can be narrowed and still--
Frackman: I don't see how, your honor.
The court: --protect your rights?
Frackman: I don't see how, your honor.
The court: Mr. Boies, Mr. Johnson?
Napster attorney David Boies: I don't see how that
is--with respect, your
honor--susceptible of being fairly implemented. We don't
even have a list of what is
claimed to be copyrighted under the court's order.
Even leaving aside the issues that the court has before
it in the record as to how you
would implement that, I frankly don't think that the injunction
is something that gives us
any fair ability to comply with it and still operate simply
because of the way, as we've
tried to explain to the court, peer-to-peer system works.
Now, as I hear the court--
The court: That's the system that has been created.
Boies: Exactly. And as I hear the court--
The court: And I think you're stuck with the consequences of that.
Boies: Right. And as I hear the court, the court is saying
the court understands what
the court has done but believes this is the appropriate
thing to do, and--
The court: That's right.
Boies: And I --
The court: And I think it's--Napster wrote the software.
It's up to them to try to write
software that will remove from that, you know, from the
users the ability to copy
copyrighted material. And that's their problem, I think.
They've created the, quote,
"monster," for want of a better term, and I guess, you
know, that's the consequence they
face.
Boies: Just to--
The court: I mean, they can have their chat rooms, and
they can solicit those new
artists.
Boies: Your honor, without trying to reargue, because I
know the court has made up its
mind, and I accept that the court has made up its mind,
however erroneous I may think it
is, but the only thing I want the court to focus on is
that when the court says that Napster
wrote the software, what Napster did was to take file-transfer
software and simply adapt
it to exchanging MP3 files.
The court: Whatever it did, it's going to have to figure
out how to undo it or how to
operate in a way so that it is not facilitating the copying
of copyrighted material
period--copyrighted material of plaintiffs admittedly--and
that' s up to them to figure out.
And I say that because it is such a wholesale copying effort
that it's not as if there were
just a handful of things that were being--you know, items
or songs that were
being--infringed upon.
I really am not willing to put the burden on plaintiff.
I certainly believe that they should
work with defendant during the period of time between
now and the next proceeding to
see what can be done to make sure that they're only removing--you're
only removing
their copyrighted work; but in the meantime--or access
to their copyrighted work--in
the even meantime, we can't--you know, I can't--just let
it go on. A strong case has
been made.
Boies: Does the court understand that there are two separate
issues that we're talking
about here in terms of the scope? One issue is how would
you go about changing a
peer-to-peer file-transfer program to accomplish what
the court wants to do even if you knew
what songs were claimed to be copyrighted. That's one
issue. The second issue is we don't
even have a list of the songs that are claimed to be copyrighted.
Do you understand
that there are both of those places?
The court: I understand that. But you're--but what your
client is doing is facilitating
something that involves the infringing upon plaintiffs'
copyrighted works, and they're
going to have to figure out. Since they're doing it on
such a wholesale basis, they're
going to have to figure out a way to make sure they don't
assist or facilitate in that any
longer.
Now, if the users want to share files in some other way,
that's between them, and it's up
to the plaintiffs to try to enforce their rights as against
them, you know, if there is a
system that comes into being. And I guess there are some
others that are in being that
allow people to do pretty much the same thing. That's
up to them to enforce those
rights.
That doesn't mean that I can't restrain Napster, because
they're the only ones before
the court right now, from doing what they're doing.
Boies: Could I raise one other question that doesn't go to this issue?
The court: Yes.
Boies: And that is the issue of the timing when this goes
into effect. And there are really
two aspects of that.
One is whether the court is prepared to grant a stay pending
an application to the Court
of Appeals for a stay; and, second, if the court is not
prepared to do that, how long the
court plans to give us to implement the court's injunction.
The court: Why don't you answer the first question.
Frackman: How long?
The court: I mean the second question first. How long should they be given to--
Frackman: Right now.
The court: And you're looking at the clock.
Frackman: Yes, I am, your honor.
The court: Not the calendar.
Frackman: That's right.
(laughter)
Frackman: Intentionally.
Your honor, we filed this lawsuit on Dec. 7. We told them
at the time we filed the lawsuit
we would be seeking a preliminary injunction. This motion
has been pending for two
months. They've known since that time at least that today
would very well be the day of
reckoning.
If this injunction does not go into effect immediately,
I think your honor knows and I think
we know what's going to happen with those 20 million users
until it does go into effect,
and that's going to be a rush to the computer and enormous
amounts of downloading.
And it's not unfair, your honor. They've had eight months
of notice, and so I would say
immediately would be my request.
Boies: There is obviously no way that we could fairly implement
it immediately. The only
way you could do it immediately is to stop the service;
and if the court is going to order
that--I mean, the court will obviously order what the
court will order--but I would
respectfully suggest to the court that to say to Napster,
"You've
got to figure out a way of preventing the copying of copyrighted
works that are not even identified and you must do so
immediately," is simply saying, "You must shut your business
down."
And if the court believes that, that is the appropriate
thing to do,
the court will order that, but I would simply urge the
court that,
that goes far beyond what even the court has found.
The court: I'm not ordering them to shut their business
down. I
want to make that clear. What about all those substantial
noninfringing uses you were trying to convince me of earlier?
Boies: Right. Well, but the problem is, your honor, is
that those substantial--it's a
problem of separating out the noninfringing uses from
what the court finds to be
infringing uses. And what I'm saying to the court and
what I think the papers quite clearly
demonstrate is that, that is not possible to do today.
It's not possible to do. I'm not sure--
The court: None of this should come as a surprise to anyone, really.
Boies: Well, your honor, all I can--
The court: I mean, this litigation has been going on for
some time now, and it should
not come as a surprise.
Midnight tomorrow night, OK?
Boies: Will the court--
Today is August the 26th--
Frackman: July, your honor.
The court: I really want to be in August. I'm sorry.
July the 26th. Is that right, or 25th? 26th.
Boies: 26th, I think, your honor.
The court: Until Friday midnight, July the 28th, midnight.
No, I will not grant a stay. If you want a stay, you can go to the 9th Circuit. OK?
Boies: And is the court going to grant a bond?
The court: Why not? And if so, how much?
RIAA attorney Carey Ramos: Your honor, if I may address that.
The court: Maybe you should say first. How much? You answer that question.
Boies: Your honor, we think a minimum--we said in our papers
we thought that the
value of the business is between $800 million and a billion-and-a-half
dollars. And we
think it should be a minimum of $800 million.
These are substantial companies, but they're not that substantial
without the posting of
the bond; and we think the law absolutely requires it.
This is not a matter we think is
committed to the court's discretion in terms of posting
an adequate bond. And I think
that particularly given the breadth of the injunction
that the court is issuing--and the time
frame that the court is requiring at the plaintiffs' instance
this be done at--the court is
obligated to impose that bond.
The court: Yes?
Boies: There is no evidence in the record to the contrary
in terms of the amount of the
bond from the plaintiffs. We do not have anything from
the plaintiffs that contradicts the
need for that amount of bond.
Ramos: Your honor, that's not correct.
The court: Yes?
Ramos: I begin by reference to your honor's analogy about
the orphan asking for the
mercy of the court. This is the orphan not only asking
for the mercy of the court but
asking the court for compensation for the loss of the
parents the orphan killed. I think it
turns this case on its head.
Your honor indicated that the court had found a very strong
likelihood of success on the
merits and, frankly, I think to require us to put up a
bond of anything like the amount
that's been requested would be adding insult to injury.
The value of this company, if there is any value in this
company, is the value of the
copyrighted music of my client and Mr. Frackman's client,
and to ask us to pay again for
the creative efforts of our clients by posting a bond
of that size I think is completely
inappropriate.
The court: What are you proposing?
Ramos: Having said that, your honor, and, frankly, under
the circumstances, genuinely
believing that no bond here is required, I believe that
there are cases in the 9th Circuit
that support that conclusion. If your honor so decides,
I believe the maximum, and this is
in the record, the maximum should be the amount that was
invested in this company
prior to the filing of this lawsuit, which I believe was
no more than $2 million.
I believe that any money invested after the lawsuit was
filed was invested at the peril of
investors and that they were on ample notice that there
could be a finding of copyright
liability as there, at least on a preliminary basis has
been in the court.
I'm speaking for, I believe, for both sets of plaintiffs in that regard, your honor.
The court: Well, I will set a bond at $5 million.
Can that be posted by midnight--well, four o'clock on Friday?
Frackman: Most definitely, your honor.
The court: OK. Thank you. And you're excused.
Frackman: Thank you, your honor.
Whereupon proceedings adjourned at 4:53 p.m. PT