SAN FRANCISCO (Reuters) -- A federal judge handed Napster a smallvictory on Friday, giving the once high-flying song swap service timeto gather evidence before ruling on a recording industry request forsummary judgement in its copyright infringement lawsuit.
U.S. District Court Judge Marilyn Hall Patel agreed with Napsterthat more time was needed to decide who owns the rights to musicalworks involved in the recording industry's lawsuit against Napster.
She also allowed Napster to gather evidence of the record labels'alleged misuse of copyright to monopolize the digital distributionmarket, saying the potential harm to the public could be "massive."
"Plaintiffs' allegedly inequitable conduct is currently ongoing andthe extent of the prospective harm is massive," Patel said in a 32-pageruling. "If Napster is correct, plaintiffs are attempting the nearmonopolization of the digital distribution market."
The ruling follows a hearing Jan. 23 when Patel delayed issuing adecision in the lawsuit for 30 days to give both sides time to reach asettlement. That stay expired last Sunday, however, without anagreement.
Patel on Friday also ordered both sides to submit relevant documentsto a court-appointed Special Master within the next few weeks, and sheset up a status conference hearing on March 27.
Representatives of the Recording Industry Association of America(RIAA), which represents the major labels in their lawsuit againstNapster, could not be reached for immediate comment.
NAPSTER EMBRACES RULING
But Napster officials embraced the ruling, saying they would continueto fight the lawsuit while engaging in settlement discussions.
"We are pleased that the Court granted Napster's request to examinetwo critical issues: the record companies' ownership of artists'copyrights and anti-competitive behavior that amounts to misuse oftheir copyrights," Napster general counsel Jonathan Schwartz said in astatement.
Napster, once the high-flying pioneer of online music swapping, hasbeen sidelined since last July as a result of a preliminary injunctionissued by Judge Patel in March last year, barring the trade of anycopyrighted material on its site.
The injunction came at the behest of major record labels, which suedthe company in 1999, accusing it of facilitating copyright infringementby allowing digital versions of their artists' songs to be shared forfree, in many cases thousands of times each.
Napster last month launched a test version of its newcopyright-compliant service in a bid to get back in business, althoughit will not feature copyrighted music from major labels.
It also remains unclear how many of the some 60 million people thatNapster attracted at the height of its popularity will return to theservice, which now faces online music swapping rivals such as Morpheus,KaZaA and Gnutella.
The big recording labels arrayed against Napster include AOL TimeWarner Music, EMI Group, Bertelsmann, Universal Music and SonyMusic.
Bertelsmann has subsequently become a major investor in Napster andis working to restart the service.