Labels dodge scrutiny in Napster case

NEWS

A day before the major record labels asked for a one-month halt in their lawsuit against file-swapping start-up Napster, a federal judge told them she would turn close scrutiny on their online practices. According to transcripts of a 16 January meeting, released on Wednesday, Judge Marilyn Hall Patel was about to open a process examining whether the big record labels had "misused" their copyrights in their dealings with online rivals. One day later, the labels asked for a 30-day halt to the case to pursue settlement talks more vigorously. "I decided there are some significant issues with respect to (copyright) misuse that (Napster) ought to be able to pursue," Patel told lawyers from both sides, according to the transcript. "The case law is a bit murky. But...if we can see it, maybe we'll know it." The issue of copyright misuse -- a kind of little brother to antitrust law that could theoretically see the labels lose the right to sue people over copyright issues -- has quietly been a part of Napster's defence for more than a year. But last October, the company brought up specifics about the way that the labels' online joint ventures, MusicNet and Pressplay, had acted. For the first time, Patel took serious notice of the issue. MusicNet, which is jointly owned by AOL Time Warner, Bertelsmann and the EMI Group, had struck a deal with Napster that barred the start-up from making a similar deal with Pressplay. That, in addition to the big labels' decision to work together in joint ventures, deserved scrutiny, Patel said. "I'm really confused as to why the plaintiffs came upon this way of getting together in a joint venture," Patel said in October. "Even if it passes antitrust analysis, it looks bad, sounds bad, smells bad." The labels are already under potentially more serious scrutiny from the US Department of Justice, which has been conducting an antitrust inquiry into their online businesses since the middle of 2000. In Patel's 16 January transcript, the judge also said she would open up some scrutiny as to whether labels can prove they own the songs they say Napster users have been stealing. The Recording Industry Association of America says its request for a temporary cessation of hostilities stemmed from more immediate concerns, however. It wants to make sure a settlement is made before Napster's wallet runs dry, the group says. "Our companies are not worried about these claims," RIAA general counsel Cary Sherman said in a statement. "They are worried that time is running out on Napster's ability to pay damages." Napster is unlikely to pay for any damages -- which could climb into the hundreds of millions of dollars -- out of its own thinning pockets. For the last year, most of its large expenditures of funds, including a $36m payment to music publishers to settle another part of its ongoing lawsuit, have come from German giant Bertelsmann. In an interview late last year, Napster chief executive Konrad Hilbers said Bertelsmann chief executive Thomas Middelhoff was willing to support the start-up through settlement with the major music labels, although there would be a limit to the money. "There is an end to (Bertelsmann's) money," Hilbers said. "It's not like they're going to spend billions." In return for its loans, which total well over $100m, Bertelsmann has obtained warrants to acquire a majority equity interest in Napster once it launches a legal music subscription service. The temporary stay in the labels' suit will expire in mid-February. Hilbers has said he expects to have a final settlement before the end of the first quarter.

See the MP3 News Section for the latest on everything from MP3 players to Napster and the other music swapping services. Have your say instantly, and see what others have said. Go to the Napster Debate. Let the editors know what you think in the Mailroom.

Post your comment

In order to post a comment you need to be registered and logged in.

You can also log in with Facebook. Log in or create your ZDNet UK account below

By signing up for this service, you indicate that you agree to our Terms and Conditions and have read and understood our Privacy Policy. Questions about membership? Find the answers in the Community FAQ

ZDNet UK Live

ike fuelband is great for every healthminded person ! to work out! theres this website called textme4free.com that you can use to text anywhere in...

3 hours ago by bordero on Nike's FuelBand wristband gamifies exercise

> I'm told it's somewhat annoying when people have their Macs stolen > and Apple stores treat the thief as the owner, but there you go. Ouch,...

6 hours ago by BrownieBoy on AMD Ultrathins to challenge Intel Ultrabooks

@kevinmchapman. OK, I acknowledge that 'most' was a gratuitous throwaway comment as an afterthought and too presumptuous. As to proof, as you...

10 hours ago by Moley on A tale of two distros: Ubuntu and Linux Mint

@BrownieBoy > Works really well for thieves.... >> Nice attempt to deflect the argument by tossing in a point that's totally >> irrelevant, even...

11 hours ago by Jack Schofield on AMD Ultrathins to challenge Intel Ultrabooks

fantastic that the so called piracy bills have been withdrawn. however, these anti-democracy supporters are still in the shadows so lets be alert...

12 hours ago by raskolnikof on SOPA, Protect IP support wavers in face of online protest

Please God no; teach them anything you like - thinking rationally, the uses and misuses of data, what data is and what it's not - but leave the...

14 hours ago by Tony Douglas via Facebook on Kids are the future. Teach ’em to code.

@Jack, > Works really well for thieves.... Nice attempt to deflect the argument by tossing in a point that's totally irrelevant, even it were...

1 day ago by BrownieBoy on AMD Ultrathins to challenge Intel Ultrabooks

Make that 13 people now - I got refused today at Manchester airport. I thought I was up to date on this legislation - I knew of the EU ruling from...

1 day ago by bootlegger on UK airport body scans will not be opt out

Don't forget to check out apps like GoodReader or SlideShark either, they're indispensible for people on the go in presentation situations. Best...

1 day ago by tinycg on Four top iPad apps for people on the move

Well it seems there is something a number of us agree on. Why is the Ubuntu Unity launcher so ugly? I thought perhaps it was something to do with...

2 days ago by TerryRK on A tale of two distros: Ubuntu and Linux Mint

Duplicate comments are not made intentionally. Its very good to know that now you are keeping check on this problem because sometimes a commenter...

2 days ago by Freebies202 on Microsoft fixes blog comments, speeds up blogs with open source

"the very significant number of users" and "many (most) of us" - you have no evidence for these statements. It is a fact that most users are saying...

2 days ago by kevinmchapman on A tale of two distros: Ubuntu and Linux Mint