Case Study on Business Ethics: Napster Copyright Infringement Case

Duplicating software for friends, co-workers or even for business has become a widespread practice. All software programs are protected by copyright laws and duplicating them is an offense. How, then, has making illegal copies become such a common and accepted practice in people’s homes and places of work?

Part of the answer revolves around the issue that software isn’t like some other intellectual property. Intellectual property is that which is developed by someone and is attributable directly to the thinking process. Software is different from a book in that anyone can easily copy it-and an exact replication is achievable. Another reason is related to cultural differences. People don’t see copy as stealing. People don’t find anything wrong in making a video copy of a hit feature film and selling it or hiring out.

People defend their behavior by saying: ‘Everybody does it! I won’t get caught! Or no one really loses!’

The same issue of copyright is involved in the famous Napster case in America. Napster is an online service that allows computer users to share high-quality digital copies (MP3s) of music recordings via the internet. The San Mateo-based company doesn’t actually store the recordings on its own computers, but instead provides an index of all the songs available on the computers of members currently logged on to the service. Napster, therefore, functions as a sort of clearing house that members can log on to, search by artist or song title, and identify where songs of their interest are so and download them from another user’s hard drive.

Napster has become one of the most popular sites on the internet, claiming some 15 million users in little more than a year. Indeed, so many students were downloading songs from Napster, that many universities were forced to block the site from their systems in order to regain bandwidth. Napster’s service has been almost as controversial as it has been popular. Barely a year after its launch, it was sued by the Recording Industry Association of America (RIAA), which represents major recording companies such as Universal Music, BMG, Sony Music, Warner Music Group, and EMI. The RIAA claimed by allowing users to swap music recordings for free, Napster’s service violated copyright laws. It also sought an injunction to stop the downloading of copyrighted songs owned by its members as well as damages for lost revenue. It argued that song swapping via Napster and similar firms has cost the music industry more than $300 million in lost sales. A few months after the RIAA lawsuit was filed, Metallica, a heavy metal band, and rap star Dr.Dre filed separate lawsuits accusing Napster of copyright infringement and racketeering. Lars Ulrich, Metallica’s drummer, told a senate committee that Napster users are basically stealing from the band every time they download one of its songs.

The 1998 Digital Millennium Copyright Act (DMCA) grants immunity to Internet Service Providers for the actions of their customers. Napster attorneys argued that the company has broad protection from copyright claims because it functions like a search engine rather than having direct involvement with music swapping. However, according to the legal community, ‘Napster does not take the legal steps required of search engines in dealing with copyright violations.’

Despite its claim, Napster was found guilty of direct infringement of the RIAA’s musical recordings. To date, the service has not been shut down, because doing so could violate the rights of artists who have given Napster permission to trade their music. However, the company was required to block all songs on a list of 5,000 provided by the RIAA.


  1. Do you believe that there is nothing wrong in copying software, music or a video film?
  2. Based on the facts of the Napster case, who do you think should have control over intellectual property- the artists or distributors of their work? How did the legal system answer this question?
  3. Copying of software, music and films is very common in India. Is it due to our socioeconomic factor? Discuss.
  4. As a manager, what guidelines could you establish to direct your employees’ behaviors regarding copying software?

Credit: Business Ethics-MGU KTM

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