Napster's attempt to protect copyrighted material by imposing a filtering system was branded 'disgraceful' by the District Judge overseeing the case.
Judge Marilyn Hall Patel said she might have to close the site if it could not meet the conditions imposed by the temporary injunction, which demanded it remove protected music from its site.
"Maybe the system needs to be closed down," said Patel in Tuesday's hearing.
A court-appointed technology expert will try to find a better filtering system than Napster has managed to put in place.
But Judge Patel made it clear that the burden lies with Napster.
"You created this monster, you fix it," she said to the firm.
Napster announced today that it had appointed Gigabeat, a music search and indexing company, to help it develop a more effective filtering system.
Although Napster's current system is partially effective, visitors are getting round it easily by typing in misspellings and name variations.
"We are working hard to sort this out," said a spokesperson at Napster. "That is really all I can say at this time."
A date for a new hearing has not yet been set.