August 30, 2000 11:50 AM PDT

MP3.com legal strategy faces skeptical judge

NEW YORK--Lawyers for MP3.com tried and failed to turn the tables on Seagram's Universal Music Group in court today, countering charges of copyright infringement with accusations of anti-competitive tactics by the record label.

MP3.com's legal team drilled Seagram CEO Edgar Bronfman Jr., who took the stand in the third day of a trial aimed at determining how much money the online music company must pay Universal for unauthorized use of its songs.

But the move by attorneys representing MP3.com to portray Seagram's music division as anti-competitive mostly backfired, with the judge criticizing the legal team for promoting a "publicity circus."

"I don't know where you are coming from other than taking this occasion to say...get off our back," said U.S. District Judge Jed Rakoff, adding that the question of whether damages rewarded could include a deterrent aspect were not addressed. "The court continues to see no relevance to those issues or anything that has been asked to the witnesses."

MP3.com's legal team today stuck to its guns, calling the anti-competitive claims central to its defense.

"We believe that the attitude and conduct of the witness is important because what we think we can show is a pattern of evidence that they picked out MP3.com...as its competitor," said Michael Carlinsky, the lead attorney representing MP3.com.

MP3.com is known primarily for creating a place where unknown artists can showcase their music on the Web. MP3.com chief executive Michael Robertson took the stand on Monday to defend his company's practices.

The Internet music company has pushed to try to create business models for selling music online. But in its efforts, the company stumbled into a legal quagmire when it created My.MP3.com, a database of some 80,000 songs that could be tapped into over the Internet by customers who could prove they had purchased the same music on a CD.

see news analysis: MP3.com's practices stir debate Unlike rival "music locker" services, such as Myplay.com, MP3.com did not require customers to copy their own CDs, but provided a ready-made database of songs. It also did not secure licensing deals with record companies before launching the service.

All five of the major labels--Universal, Sony Music Group, Bertelsmann's BMG Entertainment, Warner Music Group and EMI Recorded Music--filed suit when the service was launched, charging massive copyright violations.

The company has already settled its differences with the other four major record labels. But without Universal on board, the company is still in court--and looking down the barrel of a potentially huge damage award.

"The case has already been decided as to whether they are guilty," Bronfman said while leaving the court building today. "Now it's up to the court to decide on damages."

He declined to answer further questions.

If Universal can show that Robertson and other key MP3.com executives and board members knew the My.MP3.com service violated the law, it stands to win a potentially crippling judgment. Fines for copyright infringement run between $750 to $30,000 per violation, but the ceiling jumps to $150,000 per violation in cases of willful infringement.

In addition to determining the mindset of MP3.com executives, the trial must determine for how many violations MP3.com is liable. Last week, Rakoff issued an opinion stating that the company will be liable for each CD or compilation it copied, rather than for each song.

Though that ruling drastically reduced the potential judgment, MP3.com could still face staggering damages if it is found to have willfully violated Universal's copyrights. For example, if it is found liable for only 2,000 counts and is hit with only half the highest judgment possible, the total could still reach $150 million. That's about double what MP3.com is said to have paid to settle the case with all four of the other plaintiffs combined.

 

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