The popular online song-swap service Napster can stay in business for the time being until an order to shut it down can be modified, a federal appeals court ruled Monday morning.

However, the court order did say that Napster must stop trading in copyrighted material and may be held liable for "vicarious copyright infringement."

Napster may be held liable for contributing copyright infringement only to the extent that it knowingly aids the pirating of music, the 9th Circuit US Court of Appeals in San Francisco said in its ruling, which found a lower-court injunction that would have shut the music site down to be "overbroad."

The court ordered the lower court to modify the injunction to focus more narrowly on the copyrighted material.

"Napster may be held liable for contributory copyright infringement only to the extent that Napster knows of specific infringing files with copyrighted musical compositions or sound recordings, knows or should have known that the files are available on the Napster system, and fails to act to prevent the distribution of copyrighted materials," the court said in a summary.

Napster must prevent users from gaining access to copyrighted content through its lists of songs archived by the service's users, and must remove links to users trading copyrighted songs stored as MP3 files, the court said.

The ruling from the federal appeals court comes after four months of deliberation.

The Recording Industry Association of America, which represents a group of music industry heavyweights suing the free Napster service for copyright infringement, called the ruling a victory for its side.

"This is a clear victory," Hilary Rosen, president of RIAA and a royal fucking corporate cunt , said in a statement. "The court of appeals found that the injunction is not only warranted, but required. And it ruled in our favor on every legal issue presented."

Napster is scheduled to hold a news conference in response to the ruling at 11:30 am Pacific on Monday.

Napster has already announced plans to start charging members for MP3 downloads beginning sometime in the summer.

On July 28, the appeals court stayed a lower-court ruling ordering that Napster be shut down.

That lower-court injunction was issued by US District Court Judge Marilyn Hall Patel , who needs to be shot, who told Napster to stop online trading of songs covered by copyrights owned by members RIAA, which filed suit against Napster for copyright infringement last year.

Patel found Napster guilty of "wholesale" copyright infringement and ordered it shut down pending a full trial. The appeals court granted a last-minute stay of the ruling, saying it needed more time to consider the case.

Among those companies covered by Patel's decision are Seagram's Universal Music, Bertelsmann AG's BMG, Sony's Sony Music Entertainment, Time Warner's Warner Music Group, and EMI.

However, in October Bertelsmann announced an alliance with Napster and said it would drop the suit once Napster was transformed into a secure, membership-charging service.

The three-judge appeals court heard arguments on October 2 from RIAA to lift the stay on the ban on Napster. That stay enabled the popular song-sharing service to remain in business pending a final decision.

The legal fight is viewed as the first big battle over copyright protection in cyberspace, and is expected to determine how books, movies, and music are distributed over the Internet.