NEWS: lawsuit against MP3.com

From: Ziana Astralos (zianastralos@yahoo.com)
Date: Wed Feb 02 2000 - 18:28:55 MST


http://www.mp3.com/news/533.html?cp=link1

Here's the text of the article:

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Text of the RIAA lawsuit filed against MP3.com on
January 21, 2000:

UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK
UMG RECORDINGS, INC., SONY MUSIC ENTERTAINMENT INC.,
WARNER BROS. RECORDS INC., ARISTA RECORDS INC.,
ATLANTIC RECORDING CORPORATION, BMG MUSIC d/b/a THE
RCA RECORDS LABEL, CAPITOL RECORDS, INC., ELEKTRA
ENTERTAINMENT GROUP, INC., INTERSCOPE RECORDS, and
SIRE RECORDS GROUP INC.,
Plaintiffs,
vs.
MP3.COM, INC.,
Defendant.

Case No.: 00 Civ. 0472 (JSR)

COMPLAINT FOR
COPYRIGHT
INFRINGEMENT
 

Plaintiffs, by their counsel, allege as follows:

INTRODUCTION

1. This litigation seeks relief against an
ongoing infringement of the copyrights in the sound
recordings on some 45,000 audio CDs, most of which
copyrights are owned by the plaintiff recording
companies. The defendant made unauthorized copies of
those 45,000 audio CDs, loaded the unauthorized copies
onto file servers, and is permitting users of its
Internet service to listen to and download those
unauthorized copies. Despite the plaintiffs' requests,
the defendant has refused to discontinue this massive
ongoing infringement. The plaintiffs seek declaratory
and injunctive relief, and statutory damages for
willful copyright infringement.

NATURE OF THE CASE

2. Plaintiffs bring this action seeking
declaratory, injunctive and monetary relief against
MP3.com, Inc. ("MP3.com"), a publicly-held company
which operates a commercial Internet site at
http://www.mp3.com. At this site, MP3.com recently
began offering two new "breakthrough products" through
its "upgraded" My.MP3.com service (http://my.mp3.com)
("My.MP3"). In particular, My.MP3 now allows a user to
listen, via the Internet, to the tracks of almost any
commercial audio CD of his or her choosing, and to
download digital copies of those CD tracks.

3. In order to create and offer this "upgraded"
service, MP3.com copied the tracks from some 45,000
commercial CDs onto the computer servers that operate
the MP3.com site and the My.MP3 service. Plaintiffs
are among the leading manufacturers of phonorecords in
the United States and own the copyrights in most of
the hundreds of thousands of copyrighted sound
recordings contained on the CDs that MP3.com copied.
At no time have plaintiffs ever authorized MP3.com to
make any reproductions of their copyrighted works or
to offer the My.MP3 service.

4. To receive access to the tracks from a
commercial CD over the My.MP3 service, a user need
only do one of two things: First, the user can place
an order for the commercial CD from one of several
online CD retailers cooperating with MP3.com ("Instant
Listening Service"). Second, the user can insert a
commercial CD (or a copy, authorized or unauthorized,
of a commercial CD) into his or her computer CD-ROM
drive for a few seconds ("Beam-it"). Once a user has
either placed the order or briefly inserted the CD,
My.MP3 gives him or her permanent access to listen to
or download the infringing reproductions of the CD's
tracks from the defendant's server, on demand, at any
place and through any device that can access the
MP3.com site through the Internet. The My.MP3 service
is further described in pages from the MP3.com Web
site attached hereto as Appendix A.

5. Under Section 106 of the Copyright Act of
1976, 17 U.S.C. 101 et seq. (the "Copyright Act"),
plaintiffs have the exclusive right, among other
things, to make reproductions of their copyrighted
sound recordings in all forms. This is one of the most
sacrosanct rights afforded copyright owners.

6. Plaintiffs seek a declaration that MP3.com's
unauthorized copying of plaintiffs' copyrighted sound
recordings onto MP3.com's computer servers willfully
infringes plaintiffs; copyrights in violation of the
Copyright Act. Plaintiffs further seek injunctive
relief prohibiting MP3.com from operating My.MP3 or
any other service that uses any infringing
reproduction of plaintiffs' copyrighted sound
recordings. Plaintiffs pray also for statutory damages
for willful copyright infringement in the amount
specified in Section 504 of the Copyright Act.

JURISDICTION AND VENUE

7. This is a civil action seeking declaratory,
injunctive and monetary relief for infringement under
the copyright laws of the United States (17 U.S.C.
101 et seq.). The Court has jurisdiction over the
subject matter of this action under 28 U.S.C. 1338
(a).

8. This Court has personal jurisdiction over the
defendant because defendant offers a service to
residents of the State and this District which harms
the copyrights owned by residents of this State and
this District, and defendant is otherwise doing
business in this State and this District.

9. Venue is properly laid in this District
pursuant to 28 U.S.C. 1391 (b) and (c), and 1400
(a).

PARTIES

10. Plaintiff UMG RECORDINGS, INC. is a
corporation duly organized and existing under the laws
of the State of California, with its principal place
of business in Los Angeles County, California, and a
place of business in New York, New York.

11. Plaintiff SONY MUSIC ENTERTAINMENT INC. is a
cooperation duly organized and existing under the laws
of the State of Delaware, with its principal place of
business in New York, New York.

12. Plaintiff WARNER BROS. RECORDS INC. is a
corporation duly organized and existing under the laws
of the State of Delaware, with its principal place of
business in Los Angeles, California, which is licensed
to do business in New York.

13. Plaintiff ARISTA RECORDS INC. is a
corporation duly organized and existing under the laws
of the State of Delaware, with its principal place of
business in New York, New York.

14. Plaintiff ATLANTIC RECORDING CORPORATION is
corporation duly organized and existing under the laws
of the State of Delaware, with its principal place of
business in New York, New York.

15. Plaintiff BMG MUSIC d/b/a THE RCA RECORDS
LABEL is a New York general partnership with its
principal place of business in New York.

16. Plaintiff CAPITOL RECORDS, INC. is a
corporation duly organized and existing under the laws
of the State of Delaware, with a place of business in
New York, New York.

17. Plaintiff ELEKTRA ENTERTAINMENT GROUP, INC.
is a corporation duly organized and existing under the
laws of the State of Delaware, with its principal
place of business in New York, New York.

18. Plaintiff INTERSCOPE RECORDS is a California
general partnership with its principal place in Los
Angeles County, California, which is licensed to do
business in New York.

19. Plaintiff SIRE RECORDS GROUP INC. is a
corporation duly organized and existing under the laws
of the State of Delaware, with its principal place of
business in New York, New York.

20. Plaintiffs are engaged in the business of
producing sound recordings, and manufacturing,
distributing, selling and/or licensing the
distribution and sale of their sound recordings on
phonorecords (as defined in 17 U.S.C. 101), or
arranging to do so in the United States. The most
common form of phonorecord is an audio CD, but the
term "phonorecord" includes any object that contains a
sound recording, such as a computer audio file, analog
cassette tape, vinyl album, or digital audio tape.
Plaintiffs are among the leading manufacturers of
phonorecords in the United States. The names and
reputations of plaintiffs as manufacturers of
phonorecords of high artistic and technical quality
are widely and favorably known in the State of New
York and throughout the United States and the world.

21. Defendant MP3.com, upon information and
belief, is a corporation organized under the laws of
the State of Delaware, with its principal place of
business in the State of California. Defendant
operates its business through a commercial Web site
(http://www.mp3.com) that provides, among other
things, information about music and the use of the
"mp3" digital audio format, digital downloads of
music, and the My.MP3 interactive service. Defendant's
My.MP3 service is targeted to and used by residents of
this State and this District, and infringes copyrights
owned by residents of this State and this District.

PLAINTIFFS' COPYRIGHTED SOUND RECORDINGS

22. "Sound Recordings" are defined by the
Copyright Act to be "works that result from the
fixation of a series of musical, spoken or other
sounds, but not including the sounds accompanying a
motion picture or other audio visual work...," 17
U.S.C. 101, that is, versions or renditions of
musical compositions. Sound recording are protected by
copyright, separate from the underlying musical
compositions.

23. Plaintiffs are the United States copyright
owners or the owners of exclusive rights under
copyright with respect to certain copyrighted sound
recording embodied in their phonorecords, including
but not limited to those listed in Appendix B and
incorporated by reference herein (hereinafter
"Copyrighted Recording"). Each plaintiff has applied
for and/or received Certificates of Copyright
Registration from the Register of Copyrights for its
Copyrighted Recordings. Under Section 106 of the
Copyright Act, each plaintiff has the exclusive right,
among other things, "to reproduce the [Copyrighted
Recordings] in ... phonorecords."

24. Plaintiffs have invested and continue to
invest substantial sums of money, as well as time,
effort, and creative talent, to discover and develop
recording artists, and to create, manufacture,
advertise, promote, sell, and license phonorecords
embodying the performances of their exclusive
recording artists. In order to create such
phonorecords, plaintiffs make payments to these
recording artists, other musicians, various trust
funds established for musicians' benefit, producers,
technicians, and other staff personnel, as well as
various other payments. Plaintiffs and their recording
artists are compensated for their creative efforts and
monetary investments largely from the sale of
phonorecords to the public and from license fees
received from the reproduction, distribution, digital
performance, or other exploitation of such
phonorecords. Absent such compensation, profits and
motivation are siphoned away from artists and the
record companies that record, manufacture, promote,
and distribute those works. The pool of resources
available for finding and promoting new artists
shrinks, and sound quality and recording integrity are
diluted and corrupted. The ultimate result is that the
public's access to a wide variety of high quality
musical recordings is sharply curtailed.

DEFENDANT'S INFRINGING "MY.MP3" SERVICE

25. On or about January 12, 2000, Defendant
introduced its "upgraded" My.MP3 service to the
public. The press release announcing the revised
My.MP3 explained that: "[t]he new service, currently
free to consumers, contains two breakthrough
products--Instant Listening ServiceTM and
Beam-itTM--that allow consumers to store, customize
and listen to their CDs from anywhere, anytime using
the open portals of web-enabled devices."

26. In order to create and offer this service,
defendant copied every track from 45,000 commercial
audio CDs onto its computer servers. All or virtually
all of these audio CDs are marked as copyrighted and
contain explicit notices prohibiting unauthorized
copying. When users access sound recordings though
My.MP3, it is these infringing reproductions that are
accessed. Included among these infringing
reproductions are copies of thousands of copyrighted
sound recordings owned by plaintiffs, none of whom has
authorized defendant to make any such reproductions.

27. Through My.MP3, a user can get access to any
of the infringing reproductions made by defendant that
he or she chooses, listen to a performance made from
those infringing reproductions through any device,
such as a computer, that can access MP3.com's Web
site, and download copies of those infringing
reproductions. The user obtains permanent access to
the infringing reproductions by placing an order for
or confirming to defendant that he is in the
possession of an audio CD (or a copy, authorized or
unauthorized, of an audio CD) containing those sound
recordings.

28. The user does not and cannot copy his or her
own CD onto the My.MP3 computer servers. The My.MP3
service is built on and only grants access to the
infringing reproductions made by defendant.

29. Upon information and belief, My.MP3 is
currently being offered free of charge to users.
Defendant has indicated that it intends to sell
subscriptions to the service in the future. The My.MP3
service contains advertisements on its Web pages that
a user sees when he or she listens to or downloads
music via My.MP3.

30. Defendant has been advised by representatives
of the plaintiffs that defendant's unauthorized
reproduction of commercial CDs violates the Copyright
Act, and defendant has been urged to discontinue its
infringing activities. Defendant has refused to do so.
Upon information and belief, defendant also has taken
no steps to inform the users of its My.MP3 service or
any other interested persons that music made available
for listening and download through the My.MP3 service
consists of infringing reproductions of copyrighted
sound recordings.

COUNT I
(Copyright Infringement)

31. Plaintiffs repeat and reallege the
allegations of paragraphs 1 through 30, above.

32. This claim is brought pursuant to the
Copyright Act and 28 U.S.C. 2201 (a), seeking
declaratory, injunctive and monetary relief. There is
an actual controversy between the plaintiffs and
defendant.

33. Under Section 106 of the Copyright Act, each
plaintiff has the exclusive right to reproduce its
Copyrighted Recordings in copies or phonorecords, and
the exclusive right to authorize the reproduction of
its Copyrighted Recordings in copies or phonorecords.

34. Unauthorized reproduction of Copyrighted
Recordings constitutes infringement of the exclusive
rights under Section 106 of the Copyright Act.
Defendant has willfully and with full knowledge of
plaintiffs' copyrights made infringing reproductions
of thousands of plaintiffs' copyrighted sound
recordings for the purpose of operating its commercial
My.MP3 interactive service.

35. As a direct and proximate result of the
foregoing acts of infringement by defendant,
plaintiffs have been and will continue to be
irreparably injured.

36. As a direct and proximate result of the
foregoing acts of infringement by defendant,
plaintiffs are entitled to damages and profits under
Section 504 of the Copyright Act, including statutory
damages for willful infringement in an amount to be
established at trial.

RELIEF

WHEREFORE, plaintiffs pray for judgement and relief as
follows:

A. For a declaration that defendant has willfully
infringed the copyrights of plaintiffs in the
Copyrighted Recordings by making unauthorized
reproductions of such works as part of its My.MP3.com
interactive service;

B. For a preliminary and permanent injunction
requiring defendant, its agents, employees, and other
persons acting in concert with, or for, them (i) to
cease and deist operation of My.MP3 or any other
service that uses infringing reproductions of
plaintiffs' Copyrighted Recordings (ii) to cease and
desist from making any infringing copies of the
Copyrighted Recordings; and (iii) to destroy any
infringing copies of the Copyrighted Recordings in the
possession of defendant, including without limitation
any infringing copies on defendant's computer servers;

C. For an award of damages, including, without
limitation, statutory damages for willful infringement
of $150,000 per work infringed;

D. For an award of the costs of this action,
including reasonable attorneys' and expert witness
fees; and

E. For such other and further relief as the Court
may deem just and proper.

Dated: New York, New York
           January 21, 2000 Respectfully submitted,

ARNOLD & PORTER

By: [signature on document]
      Robert A. Goodman (RG 5026)
      399 Park Avenue
      New York, NY 10022
      (212) 715-1000
      -and-
     Hadrian R. Katz
  Jule L. Sigall
  Helene T. Krasnoff
  555 Twelfth Street, N.W.
  Washington, DC 20004
  (202) 942-5000

Counsel for Plaintiffs

Of Counsel:

Steven B. Fabrizio
RECORDING INDUSTRY ASSOCIATION
  OF AMERICA, INC.
1330 Connecticut Avenue, N.W.
Suite 300
Washington, D.C. 20036
(202) 775-0101

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Woah. Do they seriously mean $150,000 per *album*? Or
even worse, $150,000 per *song*? Even per album,
that's... let's see... at 45,000 albums.....
(US)$6,750,000,000.
That's right, six - nearly seven - *billion* dollars.
Woah.

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