An Audio Conspiracy?

For any good battle, it helps to have several key ingredients. First, there has to be an underlying conflict that cannot be settled with diplomatic ease---it is especially important that both combatants covet the same property. Second, each side has to set a propaganda machine in motion to create the appearance of a noble struggle for the good of "the people" that transcends the simple fight for turf control. Third, the outcome of such a battle should have implications stretching far into the future. And finally, these days it helps if the press notices.

All four appear to be working to Diamond Multimedia's advantage in the ongoing struggle to legally market their Rio PMP300 portable music player. (See previous report.) Last summer, Diamond announced the device, which stores MP3 audio files downloaded to a computer. This drew fire from the Recording Industry Association of America in the form of an injunction to prevent distribution of the product. Next, the injunction was blocked, and Diamond was given the green light.

But neither side appears to want to give up. Last week, Diamond filed its response to the RIAA complaint charging that the Rio violates the 1992 Audio Home Recording Act (AHRA). According to Diamond, their response, filed with the US Central District Court of California, denies all material allegations stated in the RIAA complaint filed against Diamond two months ago. Diamond Multimedia's response also includes counterclaims for violations of State and Federal antitrust laws and unlawful business practices under California law, asking for treble and punitive damages for intentional misconduct aimed at injuring Diamond.

"Diamond's counterclaims allege that the lawsuit against Diamond is a product of a conspiracy between the RIAA and others to restrain trade and restrict competition among manufacturers in portable MP3 devices and has, in fact, damaged Diamond's profitability and credibility in a new market area," said Andrew Bridges, counsel to Diamond Multimedia. "Diamond Multimedia responded to the RIAA's concerns and incorporated a Serial Copy Management System into the Rio, even though it was not required to do so. The RIAA's continued pursuit of this lawsuit, in light of Diamond's incorporation of SCMS into the Rio, makes clear that RIAA's real goal is stopping the legitimate MP3 market.

"Diamond Multimedia's counterclaims lay bare the RIAA's collusive efforts to delay the commercialization of an exciting new technology," Bridges continues. "In fact, Hilary Rosen, president of the RIAA, was quoted in the October 12 issue of the Wall Street Journal as saying, 'The only reason for the action against Diamond is they are jumping the gun to exploit the pirate market instead of waiting and working toward the legitimate market.' This statement, as well as other reckless statements made by top RIAA officials without regard for the truth, has injured Diamond's reputation. MP3 is an open industry standard for legitimate distribution of music, and the RIAA's efforts to brand everyone associated with this new open technology as pirates is intended to preserve the RIAA members' control over music distribution."

"The claims made by Diamond can only be described as preposterous and irresponsible, and a transparent ploy to gain publicity for the Rio device in time for holiday sales," stated the RIAA shortly after the Diamond announcement. "There is no factual or legal foundation for their claims whatsoever, and we are confident that the court will find accordingly.  The RIAA will respond to each of Diamond's frivolous allegations in court, in due course."

Diamond claims that the freedom of music and free speech are being threatened, while the RIAA feels that devices like the Rio threaten musicians and copyright holders around the world. But according to Diamond, the AHRA is void because it violates the First and Fifth Amendments to the US Constitution. "Music is a form of expression, and its communication is protected by the free speech guarantees in the First Amendment to the United States Constitution," said Bridges. "The First Amendment protects not only the content of such expression, but also the means used to disseminate and receive it. The Rio PMP300 player is a communication device used to disseminate and receive MP3 music and other audio content and has countless lawful and legitimate uses. Many musicians and smaller record companies rely on the Internet for publication of their work, and the public, in turn, must rely on devices such as Rio to access these works."

In its statement, Diamond said it is seeking judgment against the RIAA for "threefold the damages it has suffered under anti-trust laws, an order enjoining the RIAA from continuing its unlawful conduct, and an order awarding Diamond its cost of the lawsuit." Diamond has also requested a jury trial.