MP3 device makers win key court ruling

Diamond Multimedia today won an important federal appeals court ruling that paves the way for MP3 device makers to continue shipping products despite opposition from the recording industry.

The Ninth Circuit U.S. Court of Appeals ruled that Diamond Multimedia Systems' Rio PMP300 player does not fall within the "digital recording device" definition used in the Audio Home Recording Act. Under the law, manufacturers of digital audio recording devices are required to implement code systems to curb serial re-recordings of copyrighted music.

The Rio allows users to download songs from the Internet in the MP3 (MPEG 1, Audio Layer 3) format and replay them on home stereos. The court ruled that the act applies to recordings made from digital audio tapes or CDs, but not to recordings made from the hard drives of computers, said Andrew Bridges, a Wilson, Sonsini, Goodrich & Rosati attorney who represented Diamond.

"With this ruling, computer peripheral manufacturers are free to make their products and people are free to use them," he said.

Others likely to benefit
Today's ruling could also be a boon to other companies. Lucent Technologies, e.Digital, and Texas Instruments last April announced they are building a competitor to MP3 players.

The Diamond case stemmed from a lawsuit filed by the Recording Industry Association of America last fall. RIAA alleged that Diamond's Rio violated the act and that MP3 technology should be declared illegal and taken off the marketplace.

"The computer industry is now free from the restrictions that the recording industry was trying to impose on it," Bridges said. "Device manufactures stand to gain and recording artists stand to gain."

He noted that the music industry, with their distribution channels firmly established, viewed the Internet as a threat to their business with its cheaper alternative distribution means to consumers.

"The music industry was trying to stop this [distribution mode] by citing piracy violations," Bridges said.

"Unchecked piracy"
Meanwhile, RIAA stated it was disappointed in the court's ruling.

"The court appears to have concluded that, despite congressional intent, the Audio Home Recording Act has limited application in a world of convergent technologies," RIAA said in a statement. "We filed this lawsuit because unchecked piracy on the Internet threatens the development of a legitimate marketplace for online music, a marketplace that consumers want."

The organization noted, however, that despite the ruling, the music and technology industries have come together on some issues already, such as voluntary initiatives like the Secure Digital Music Initiative.

"[That] initiative is designed to create a secure environment in which consumers can access the music they love in new ways," RIAA stated.

Bridges, however, contends the court found the Rio had more antipiracy protections than those devices that currently comply with the act. The Rio allows users to make one copy of music at a time, whereas digital audio players allow users to make multiple copies onto digital audio tapes.

Diamond also struck a deal with Intertrust Technologies, in which that company's copyright protection software will be incorporated into the Rio player. Bridges noted, however, that this deal had no bearing on the court's decision.

The Information Technology Industry Council said it was pleased with the court's ruling.

The organization, which represents U.S. IT providers, said in a statement: "We have always argued that the act was intended to apply to consumer electronic products and not to information technology devices. We feel that technical mandates would only inhibit the rapid growth that has taken place in the IT industry, where products are constantly changing and devices are used for a number of different purposes."