Court Finds MP3.com Liable For Copyright Infringement
By COLLEEN DEBAISE Dow Jones Newswires
In a major blow to MP3.com, a federal judge ruled Friday that the online music distributor is liable for copyright infringement.
U.S. District Judge Jed S. Rakoff granted partial summary judgment in favor of the Recording Industry Association of America, which in January accused MP3.com's music database service of violating industry copyrights.
Shares of MP3.com plummeted following news of the judgment. In afternoon trading on the Nasdaq Stock Market, the share were down $6, or 40%, to $6.9375.
MP3.com, based in San Diego, is known for distributing music by unsigned musicians. But its new service, launched in January, allows consumers to access a huge online database of popular, copyrighted songs, from any computer as long as they own the CDs.
The Recording Industry Association argued that MP3.com has no right to copy recordings on behalf of customers, and that MP3.com has made an unauthorized database of about 45,000 popular CDs.
The case now proceeds to the damages phase. The association's suit seeks $150,000 for each instance of "willful infringement" of its members' copyrighted works. As each CD contains several titles, that could make MP3.com vulnerable to potentially billions of dollars in damages.
An MP3.com spokesman couldn't immediately be reached for comment. The company's attorney, Michael Carlinsky, said he was "disappointed" and planned to appeal the judge's decision. "This is round one," he said. "There's a lot of fight left in this."
He also said the ruling might not affect MP3.com's service.