legal challenges to napster

http://en.wikipedia.org/wiki/Napster

Metallica discovered that a demo of one of their songs had been circulating across the Napster network, even before it was released. This eventually led to the song being played on several radio stations across America and brought to Metallica’s attention that their entire back catalogue of studio material was also available. The band responded in 2000 by filing a lawsuit against the service offered by Napster.

In 2001, A&M records was granted a preliminary injunction against Napster for engaging in, or facilitating others in copying, downloading, uploading, transmitting, or distributing plaintiffs' copyrighted musical compositions and sound recordings. Napster appealed this ruling by the district court on the grounds of fair use.

After a failed appeal, an injunction was issued on March 5, 2001 ordering Napster to prevent the trading of copyrighted music on its network.
In July 2001, Napster shut down its entire network in order to comply with the injunction.
On September 24, 2001, the case was partially settled. Napster agreed to pay music creators and copyright owners a $26 million settlement for past, unauthorized uses of music, as well as an advance against future licensing royalties of $10 million. In order to pay those fees, Napster attempted to convert their free service to a subscription system.