The decision by the Seventh Circuit Court of Appeals in Chicago means that the service must stay off-line, as was demanded by the lower court, unless it can triumph at trial.
The service lets its users swap any files stored on their computers with other users. The system was similar to Napster's song-swapping service but, unlike Napster, transfers on Madster are encrypted - making it difficult for copyright owners to know what files are being swapped by users.
Its original name, Aimster, was thought to be a reference to both AIM, AOL's Instant Messenger service, and Napster, the best known file sharing network of the time. It 'piggybacked' on instant messenger services, including AIM, to let users swap their files only with those users included in their own instant messenger "buddy lists," as opposed to swapping files with all other users of the service.
Founder John Deep tried to argue that the Aimster name was a reference to his daughter's nickname, Aimee. AOL disagreed – as did the domain name dispute panel to which it complained, resulting in the service being renamed Madster. Meanwhile, the Recording Industry Association of America (RIAA) was preparing its copyright arguments, and sued Aimster in 2001.
In defence, Deep and his company argued that Aimster had no obligation to block illegal file swaps because the company was unaware of any specific copyright infringement – and added that to identify what was being swapped would necessitate breaking laws that prohibit such interceptions. But the court dismissed these arguments.
"Willful blindness is knowledge, in copyright law," wrote Judge Marvin E. Aspen on Monday. "One who, knowing or strongly suspecting that he is involved in shady dealings, takes steps to make sure that he does not acquire full or exact knowledge of the nature and extent of those dealings is held to have a criminal intent," he added, "because a deliberate effort to avoid guilty knowledge is all that the law requires to establish a guilty state of mind."
Judge Aspen reasoned that Deep cannot use encryption software "to prevent himself from learning what surely he strongly suspects to be the case: that the users of his service — maybe all the users of his service – are copyright infringers."
Judge Aspen reckoned both parties got their arguments wrong about what constitutes unlawful facilitation of copyright infringement:
"To the recording industry, a single known infringing use brands the facilitator as a contributory infringer. To the Aimsters of this world, a single non-infringing use provides complete immunity from liability. Neither is correct."
He went on to explain that the service fell somewhere between these two extremes. But he had more sympathy for the RIAA, pointing to instructions on the original Aimster web site for using the service: "the tutorial gives as its only examples of file sharing the sharing of copyrighted music, including copyrighted music that the recording industry had notified Aimster was being infringed by Aimster's users." This, reasoned Aspen, was an invitation to infringement.
Judge Aspen acknowledged that the evidence does not exclude the possibility of substantial non-infringing uses of the Aimster system; but the evidence was sufficient at this stage to shift the burden of proof to Aimster to demonstrate that its service has substantial non-infringing uses.
"Aimster has failed to produce any evidence that its service has ever been used for a non-infringing use, let alone evidence concerning the frequency of such uses."
He continued, "We have to assume for purposes of deciding this appeal that no such evidence
exists; its absence, in combination with the evidence presented by the recording industry, justified the district judge in concluding that the industry would be likely to prevail in a full trial on the issue of contributory infringement.
Accordingly, Judge Aspen reasoned that John Deep's company – which was put out of business by the original court order – should stay out of business, unless it can argue and win its case at trial.
The ruling was quickly attacked by the Electronic Frontier Foundation, whose lawyer, Jason Schultz, said yesterday:
"Just as the inventors of the photocopier and the VCR [sic], today's innovators should be free to produce useful products without fear of being sued simply because some people may misuse their products to commit copyright infringement."
Cary Sherman, president of the RIAA, countered:
"We're delighted by this decision which makes clear, as did the Napster decision, that companies cannot profit from copyright infringement. A peer-to-peer service is not off the hook simply because it claims there may be legitimate uses of its network. When these types of services exist primarily as a vehicle for copyright infringement, they have an obligation to try and reduce the illegal activity occurring on their networks."
The RIAA believes yesterday's decision also supports a current appeal by the music and movie studios of the Grokster decision from earlier this year in which a district court had rejected a motion for summary judgment by the recording industry.
The RIAA interprets the Grokster decision as indicating that, notwithstanding the infringing nature of a system, the defendants could continue to profit from the infringements.
"The Aimster decision by the Seventh Circuit," said the RIAA in a statement, "would call this into question by requiring the district court to consider the overwhelmingly infringing nature of the system, as well as the ease by which defendants could filter the infringements out of the system."
The ruling can be downloaded as a 23-page PDF