MP3.com Counter-Sues RIAA

The best defense is sometimes a good offense. MP3.com has taken that old advice to heart by counter-suing the Recording Industries Association of America for what it calls "unfair business practices." On Monday, February 7, MP3.com filed a complaint against the music-industry organization in San Diego Superior Court, alleging that the RIAA and its president, Hilary Rosen, have conspired to undermine the Internet music company's stock price by promulgating information to stock analysts just prior to suing for copyright infringement.

RIAA officials promptly dismissed the suit as "ridiculous." The RIAA's suit against MP3.com accuses the site of amassing thousands of unauthorized copies of recordings for its Instant Listening and Beam-It services. The site reportedly has more than 50,000 recordings archived on its server computers, most of them by artists under contract to RIAA member labels.

MP3.com has argued from the beginning that its services fall under "fair use" exemptions in copyright law, which allow consumers to make copies of works they own for personal use. "Fair use" does not extend to commercial operations such as tape-duplication facilities; a jury could interpret Instant Listening as similar to tape duplication.

MP3.com's chief executive took the victim stance in his public statements about his company's difficulties with the RIAA. "Since inception, MP3.com has faced the increasingly aggressive tactics of the RIAA and its leadership," Michael Robertson said. "After we get to the bottom of all of their actions toward MP3.com, we will vigorously pursue all of our legal remedies." Robertson claims that Rosen and the RIAA "have published a multiplicity of negative and disparaging statements about MP3 technology in print and online media and other publications of wide circulation . . . [and] directly communicated disparaging statements about MP3.com to certain of MP3.com's financial partners."

Rosen dismissed the accusations. "This is a transparent attempt on the part of MP3.com to silence criticism of its infringing tactics," she said. The recordings in question are almost entirely copyrighted intellectual properties subject to licensing agreements, Rosen pointed out. Restaurants that provide background music for their customers sign licensing agreements and pay fees for the use of that music, for example. "The lawsuit against MP3.com has nothing to do with MP3 technology," Rosen stated. "It has to do with MP3.com, the company, taking music they don't own and haven't licensed to offer new services to make money for themselves, and there is nothing illegal in my saying so."

Major record labels have been cutting deals with cooperative Internet startups in recent months, licensing some of their inventory for download and/or sale. The RIAA, however, believes in playing hardball with those who buck the system, and has the financial resources to take the fight with MP3.com as far as possible. Damages to the startup could total billions and drive Robertson's company into bankruptcy.

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