A & M RECORDS, INC. v. Napster, Inc., 239 F. 3d 1004 - Court of Appeals, 9th Circuit 2001

Accordingly, we hold that a computer system operator can be held contributorily liable if it "has actual knowledge that specific infringing material is available using its system,"

Our characterization of a download as a reproduction of a musical work is consistent with the holdings of those courts that have addressed copyright infringement suits in the context of the unlicensed downloading of music over the internet using peer-to-peer file transfer programs such as Napster.

"The doctrine of misuse `prevents copyright holders from leveraging their limited monopoly to allow them control of areas outside the monopoly.'"

—"), and the company was eventually held liable for vicarious and contributory copyright infringement

"Plaintiffs must satisfy two requirements to present a prima facie case of direct infringement:(1) they must show ownership of the allegedly infringed material and (2) they must demonstrate that the alleged infringers violate at least one exclusive right granted to copyright holders under 17 USC � 106."

"A defendant is vicariously liable for copyright infringement if he enjoys a direct financial benefit from another's infringing activity and `has the right and ability to supervise'the infringing activity. "

In Napster, the Court of Appeals for the Ninth Circuit observed that the defendant, a file sharing program operator, "ha [d] the ability to locate infringing material listed on its search indices, and the right to terminate users' access to the system."

Contributory liability requires that the secondary infringer `know or have reason to know'of direct infringement

In its first iteration, peer-to-peer sharing programs allowed free access to music by illegally downloading audio files—this undercut record and compact disc sales and threatened traditional revenue streams for record companies and artists

"Thus,...[the account holder] had the capacity to terminate use of his Internet service by any infringing third party if he believed it was being used to violate applicable law