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And there were plenty of older songs available that were no longer protected by copyright. It was just that most people were not actually using Napster that way, and they never would. And unlike Sony, which lost contact with its customers after they bought the VCRs, Napster kept watching exactly what its customers were doing.

The fact that one more case turned up at all is testament to the thoroughness of Grosfeld’s research. Fonovisa Inc. v. Cherry Auction Inc. had been filed in 1993, when a Latin music company accused a Fresno flea market of improperly renting booths to vendors selling counterfeit recordings. Fonovisa argued that Cherry Auction was aiding and abetting those vendors’ copyright infringement. The flea market claimed it had no responsibility to supervise what the little retailers were doing, and a federal judge agreed, tossing the case out of court. In 1996, however, a panel of the San Francisco–based U.S. Court of Appeals for the Ninth Circuit reversed that decision. Since the police had told the flea market’s owners what was going on, the flea market knew about it. And it was improperly profiting by charging admission and selling concessions, the court found.

The common threads in the DMCA and the court cases were knowledge of wrongdoing and the ability to stop it. And that’s what made Grosfeld nervous. Unlike the DMCA-protected Internet service provider that doesn’t know who is posting what, Napster always knew who had what file and to whom they were transmitting it. And a claim that Napster was just “indexing” who had which songs, which might qualify it for the second DMCA safe harbor, wouldn’t work if Napster got complaints about a given song file. The company would have to remove it, although another version of the same song was sure to pop up in no time.

The more Grosfeld thought about what was actually happening inside Napster, the worse it looked. Not only were the employees aware of “facts and circumstances” suggesting copyright infringement, by itself enough to ruin the second safe harbor, they were aware of the infringement itself. Napster’s few workers “weren’t anything like a service provider,” Grosfeld concluded. “They were not in reality closing their eyes to the copyright infringement going on there—they bragged about it. My lawyer thought it was insane.”

Contrary to Napster’s later depiction of its founders as a couple of bright but naive kids, Shawn and Parker knew early on that they were