Music Industry Sues Technicolor

In a never-ending quest to control what it believes is an epidemic of piracy, the music industry in recent years has gone after Internet file-sharing startups, fly-by-night CD duplicators, foreign pirates operating on an industrial scale, college kids with too much time on their hands, and street-corner vendors hawking badly-duped cassettes. At times the anti-piracy campaign has reached the fervor of a witch hunt, with blame laid on the innocent as well as the guilty.

Almost all of the industry's enemies have been outsiders. That's what's so unusual about a lawsuit filed in early April in US District Court in Los Angeles by members of the Recording Industry Association of America (RIAA)—the plaintiff is Technicolor, one of the oldest and most trusted companies in the entertainment industry, whose primary business is replicating feature films, video cassettes, and DVDs for the movie industry. Music CD production accounts for less than 1% of Technicolor's business, according to information posted on its Website.

In March of last year, Thomson Multimedia acquired Technicolor from UK broadcasting giant Carlton Communications PLC. During the change in ownership, there may have been some glitches in CD duplication orders for RIAA members Sony Music, Universal Music Group, Warner Music Group, EMI, BMG, and Walt Disney Company. During its tenure, Carlton had allowed RIAA representatives to inspect disc manufacturing operations at Technicolor's duplication plant in Camarillo, CA, north of Los Angeles. For a brief period, as Thomson managers were assuming their duties, the inspectors may not have had full access to all stages of the manufacturing process. During this period the RIAA claims that an unspecified number of CDs were made without proper authorization, according to people familiar with the situation.

Because some discs were made without RIAA oversight, the organization claims that "large-scale infringement of plaintiffs' copyrighted recordings" took place at Technicolor, and continues to take place. RIAA attorneys have specified 164 pirated songs, and are seeking damages of $150,000 per infringement, or $24.5 million. Other recordings could be added to the list, forcing the number upward. "It's unfortunate that we found piracy at Technicolor," said Matt Oppenheim, general counsel for the RIAA. "Just because it's Technicolor doesn't mean they get a free pass," he added. His group had sought and failed to secure an out-of-court settlement with Technicolor since the irregularities were discovered.

Thomson Multimedia has admitted no wrongdoing. On April 4, the Paris-based technology conglomerate issued a statement on the case denying the charges brought by the RIAA: "Thomson Multimedia considers the RIAA allegations concerning a very small number of replication orders completed by Technicolor prior to its acquisition by Thomson to have no merit. Technicolor denies the allegations of piracy and will vigorously contest the claims asserted by the RIAA litigation . . . In this case, the RIAA is not addressing the root cause of piracy and instead is targeting a legitimate replicator with longstanding relationships of trust with major content owners."

Spokesmen for the Motion Picture Association of America, the RIAA's frequent ally in its war on piracy, stated that they have never had any copyright problems with Technicolor in its 87-year history. Any copyright-infringement damages awarded the RIAA would be covered under an indemnity clause in the Thomson/Carlton deal, a Thomson press release stated. Reading between the lines, it appears that the RIAA's sometimes overzealous anti-piracy campaign may have veered into the realm of paranoia against one of its most reliable partners. Sales of recorded music were down by more than 10% in 2001, the second year in a row in which sales were down significantly.