A federal appeals court has determined that Napster must continue to block the swapping of copyrighted music, marking the latest legal setback for the fading online service. In a terse, two-page order released Friday, the 9th US Circuit Court of Appeals denied two separate requests from Napster. In one, a three-judge panel said it would not rehear issues it ruled on last February. Responding to another petition, a larger group of judges also declined to review the matter in a so-called en banc appeal. "The full court has been advised of the petition for rehearing en banc, and no judge in active service has requested a vote to rehear the matter," the order read. The en banc petition was Napster's last legal hope of removing the filters, short of taking the preliminary injunction to the Supreme Court. Record companies sued Napster in federal court in late 1999, when the file-trading service saw only a fraction of today's broad audience. The resulting publicity -- along with headlines sparked by rock band Metallica's public crusade against the service -- helped bring millions of people into the file-swapping fold. The legal gates started to swing closed in July 2000, when federal Judge Marilyn Hall Patel issued a sweeping preliminary injunction against the company, ordering it to stop trading of all copyright works through the service. Arguing that the order would force it to shut down almost overnight, Napster appealed to a higher court. In February of this year, a panel of three appellate judges ruled that Patel's order had been "overbroad" but that some song blocking was necessary. To comply, Napster installed filters that have slashed the number of songs available through the service. As a result, traffic on the site has fallen precipitously and steadily. According to industry consulting firm Webnoize, the average number of files shared by a person on the Napster network fell from 220 in February to just 21 by the end of May. Webnoize also estimated that just 360 million files were traded through the service in May, compared with 2.79 billion in February. Friday's decision applies only to a preliminary injunction that requires Napster to block songs. A full trial, in which the company could be held liable for hundreds of millions of dollars or exonerated, is still ahead. Still, the Recording Industry Association of America welcomed the news as a "victory for copyright holders." "This decision puts to rest any questions that Napster has raised regarding the earlier decision and affirms the rights of copyright holders on the Internet," RIAA General Counsel Cary Sherman said in a statement. Napster representatives, who have argued that their members aren't doing anything illegal by swapping songs, were not immediately available for comment. The ruling comes as Napster releases new software that it said would help accurately identify songs using a unique digital "fingerprint" derived from the sound recordings. That would allow it to focus more tightly on the songs that are supposed to be blocked and let other songs through that had been accidentally caught in the filters, the company said. Earlier versions of the software will be disabled, the company's Web site said, although it gave no specific date indicating when this would take place. In addition, Napster has said it will shut down its free song-swapping service this summer when it launches a paid subscription service. The Internet is changing the face of the music industry forever. Find out more in ZDNet UK's MP3 News Section. Have your say instantly, and see what others have said. Click on the TalkBack button and go to the Napster Debate. Let the editors know what you think in the Mailroom. And read other letters.