Decision In MP3.com Vs. Labels Set For April 28, 2000

18-Apr-00

US District Court judge Jed S. Rakoff will hand down his decision April 28, 2000 on whether to grant major record labels their motion for summary judgment in their suit against MP3.com for massive copyright infringement. Rakoff heard both the plaintiffs' and the defendant's positions at a hearing Friday, April 14, to determine whether there is enough evidence against the defendant that the judge need not hear a trial to reach a decision. Most of the three hours' worth of arguments were dedicated to discussing the four factors that determine fair use, which MP3.com is claiming as the defense for its My.MP3.com online music service. (My.MP3.com transfers a copy of a consumer's CD collection to an online account so that the consumer can enjoy his/her music off any computer.) Fair use is determined by four factors: the purpose and character of the use (including whether such use is of a commercial nature, and to what degree the use changes the original work), the nature of the copyrighted work, the amount and substantiality of the copyrighted work used, and the effect of the use upon the potential market for or value of the copyrighted work. Rakoff, who interrupted the attorneys' arguments to clarify or steer the proceedings, identified the plaintiffs' position following attorney Peter Bleakley's initial argument: ""You're saying that if there's money to be made on copies, then you're the one to make it."" Later, hearing arguments from Warner Music Group attorney Katherine Forrest, Rakoff commented, ""I have the suspicion that both you and they [MP3.com] are in business to make a buck."" Historically, the fourth factor has taken precedence in a majority of copyright disputes - and MP3.com attorney Stephen Neal harped on this fact, confident that if the case indeed goes to trial, his clients would win on the factor ""by a landslide."" Neal quoted from the depositions of several major label executives who stated that they've no knowledge of research exploring whether the My.MP3.com had positive or negative commercial effects for the labels. He also cited a deposition supplied by independent economist Sharon Oster, who concluded that My.MP3.com enhances the value of CDs and that there would be ""no adverse impact"" by the service of CD sales. Finally, Neal added that the plaintiffs had not provided any evidence to the court demonstrating that they were in, or planning to enter, the market for Internet music. Forrest retorted that whether or not there is an increase of CD sales as the result of MyMP3.com ""doesn't matter"" - an infringement still took place. She claimed that MP3.com launched the service because its ""business model (of catering to unsigned bands) did not work. The point here is they cannot [be a major-label music provider] on the backs of our copyright works,"" she stated. Forrest added that WMG is ""heavily involved in the market"" of electronic music distribution, submitting as evidence agreements with third parties for streaming of the WMG catalog, as well as contracts with artists that take Internet distribution into account. Regarding the major labels' en-masse entrance into Internet music, Bleakley asked Rakoff in his rebuttal, ""If they get away with appropriating it (the music), who's going to license it?"" Discussing fair use under the law's first and third factors, Neal first likened My.MP3.com to a piece of storage hardware, that like a car CD player allows consumers to enjoy their CDs in a new environment. But Neal also tried to argue that MP3.com's CD ripping software significantly changed the plaintiffs' works through a series of ""highly sophisticated algorithms"" that use only ten percent of the original work. Bleakley called Neal's contention ""absurd,"" stating that My.MP3.com is ""reproducing every single note to the ear of the listener - and that's what we're talking about."" Rakoff himself called Neal on his contradiction (saying on one hand, My.MP3.com was no different from a device that played (and didn't change) music off CDs, and on the other that the service's software significantly changes the CD's data). Seeking further explanation of the service, Rakoff admitted to Neal, ""It's hard for me to see how you are just providing storage,"" stating that Neal's use of the word ""storage"" sounded to him like ""wordplay."" Source: Pro Sound News

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