MP3.com Gets Su-Su-Sued Again

Baldwin Louie — Thu, 23 Aug 2001 15:00:00 -0700

LOS ANGELES, Aug 22 (Reuters) - More than 50 music publishers
and songwriters, including country artist Vince Gill's publishing
companies, on Wednesday said they filed a copyright infringement
suit against Web music firm MP3.com Inc. <MPPP.O>.

The lawsuit was filed last week in the U.S. District Court
for the Southern District of New York against MP3.com, which is
being acquired by Vivendi Universal <EAUG.PA> and is currently
transforming itself from music industry rebel to partner.

Plaintiffs also include the estate of Roy Orbison, a
publishing company owned by the Bellamy Brothers, and songwriter
and artist Paul Overstreet of Scarlet Moon Music.

Vivendi Universal, which is the process of buying MP3.com and
was not named in the lawsuit, declined comment.

MP3.com officials were not available for comment on the
latest lawsuit against MP3.com, which had been forced to pay out
more than $160 million to major labels and publishers to resolve
a different copyright suit.

That landmark suit stemmed from a database of more than
80,000 albums that MP3.com created as part of an "online music
locker" that allowed users to store music digitally and later
access it via any computer connected to the Internet.

The songwriters and publishers involved in the latest suit
announced on Wednesday contend it is the first suit against
MP3.com seeking damages for enabling so-called "viral
infringements" of about 1,000 songs.

Gill is an artist on Vivendi Universal's MCA Nashville label.
Ironically, his publishing companies, Benefit Music and Vinny Mae
Music, are among the plaintiffs suing MP3.com.

The suit seeks actual damages and profits of MP3.com and
alternatively statutory damages of $25,000 per song as well as a
permanent injunction against MP3.com.

In their complaints, they allege that San Diego-based MP3.com
is liable for direct infringement by converting songs to the MP3
format, a compression format that turns music on compact discs
into small digital files.

While MP3.com has the same name as the popular format, the
company had no patents or involvement in the creation of MP3,
which has become wildly popular among Internet users for swapping
and downloading songs.

The format is loathed by the music industry because it
enables fans to download songs without paying royalties on
copyrights, which was also at the center of a suit filed against
Napster.

The suit alleges that once converted to the format, MP3.com
then loaded the songs onto its servers and is liable for
contributory infringement by creating "on demand" access to the
infringed works by subscribers; and vicarious infringement for
"viral distribution" of the infringed works downloaded by
subscribers and then passed on to others.

ANALYST CALLS IT FRIVOLOUS

Ric Dube, analyst with research firm Webnoize, called the
songwriters' and publishers' lawsuit against MP3.com frivolous.

"These plaintiffs are saying that every time people used
other services like Gnutella to download songs, MP3.com
contributed to that," Dube said.

"They're going after MP3.com because Universal has deep
pockets," he added.

MP3.com's technology is what led Vivendi Universal to buy the
company. Once considered a pariah by the industry, MP3 is working
with major labels through a key deal to provide its technology to
the Pressplay subscription service being developed by Universal
and Sony Music Entertainment, a unit of Japan's Sony Corp.
<6758.T>.

Pressplay's service, which is slated to launch this fall,
plans to use MP3.com's media delivery and subscription management
technology.

Pressplay and a competing venture called MusicNet by rivals
AOL Time Warner Inc.'s <AOL.N> Warner Music, EMI Group Plc
<EMI.L>, Bertelsmann AG's <BTGGga.D> BMG and RealNetworks
<RNWK.O> are the industry's efforts to fill the void left by
Napster, which has seen its usage evaporate following a
court-imposed injunction.

Copyright Management Services Inc., which represents the
licensing interests of many of the plaintiffs in the lawsuit
announced on Wednesday, said it initiated contact with MP3.com in
an attempt to negotiate reasonable license terms and avoid
litigation.

After negotiations broke down the independent songwriters and
publishers were forced to file the action to protect their
rights, the company said.

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MP3.com Gets Su-Su-Sued Again