Court Gongs MP3.com

Music site violated copyright, must repay millions to Universal; appeal promised.

James Evans, IDG News Service

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Representatives of MP3.com say the company will appeal the ruling, made by U.S. District Judge Jed S. Rakoff on Wednesday.

MP3.com had settled copyright infringement cases with the four other major music labels--BMG Entertainment, EMI Group PLC, Sony Music Entertainment, and Warner Brothers Music Group. MP3.com paid $20 million to settle each case, according to analysts and observers. But Universal Music pushed the case to court. (See "MP3.com Slowly Gets Legal.")

The judge says MP3.com may be required to pay damages of at least $118 million, or $25,000 for each of Universal's collection of an estimated 4700 CDs, according to his ruling. That figure could go up or down, depending on the number of "qualifying CDs" that will be determined in the final phase of the trial in November, he adds.

Judge: A Stern Tune

Rakoff clearly stated that MP3.com willfully violated the copyright and did it with financial gain in mind.

"There is no doubt in the court's mind that the potential for huge profits in the rapidly expanding world of the Internet is the lure that tempted an otherwise generally responsible company like MP3.com to break the law, and that will also tempt others to do so if too low a level is set for the statutory damages in this case," Rakoff writes in his ruling. "Some of the evidence in this case strongly suggests that some companies operating in this area of the Internet may have a misconception that, because their technology is somewhat novel, they are somehow immune from the ordinary applications of laws of the United States, including copyright law."

Universal Music has said it will pursue lawsuits against others that it believes also infringe on its copyrights.

The Recording Industry Association of America originally filed each lawsuit on the behalf of the music labels, but each label reached a separate licensing agreement with MP3.com. (See "MP3.com Signs a Musical Truce.")

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