Friday, March 16, 2007
In In re Napster Copyright Litigation,the Ninth Circuit Court of Appeals has reversed a lower court ruling that "ordered the disclosure of privileged attorney-client communications under the crime-fraud exception." Said the court, "We hold that in a civil case the district court must allow both the party seeking discovery of the communications and the party asserting the privilege to present evidence relevant to the privilege and the exception, and must weigh that evidence before ordering outright disclosure. We further hold that in a civil case, when the district court is asked to order outright disclosure, the burden of proof on the party seeking to vitiate the privilege is preponderance of the evidence. We conclude the appellees in this case have failed to make the requisite evidentiary showing to support a finding that the crime-fraud exception applies. We reverse and remand for further proceedings consistent with this opinion."
The case arose out of arguments over whether funds loaned to Napster by Bertelsmann were actually used to further copyright infringements by Napster, and if so, whether Bertelsmann was "vicariously and contributorily liable for copyright infringement by Napster and/or Napster's users. Appellees charged that by lending Napster millions of dollars Bertelsmann assumed control over Napster's file-sharing service, or prolonged its allegedly infringing operations, in order to avoid dispersion of Napster's estimated 40 million users before the anticipated new licensed digital music distribution system was functional."
Read the entire ruling here.