Court: MP3.com to Pay TVT Records $300K.

By Robert Menta- 4/08/01

One can argue that TVT Record's award of $300K was less a win for them and more a victory for MP3.com. Both sides certainly claimed victory in what amounts to a mixed message from the courts.

The reason for that may be because this monetary award for this trial was decided by a jury not the judge as in the record industry v. My.MP3.com case.


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The industry won a huge settlement of over $130 million dollars in its trial on what essentially amounted to a technicality. The My.MP3.com service allowed users who could prove they owned a particular set of CD's to access those CD's on the Net via radio stream technology. Since they already paid for the CD's, the theory was that users already owned the rights to listen to their own music online via this storage locker technology.

The theory held up for a company called MyPlay.com who required users to upload the entire CD into the online locker, a slow and laborious task. MY.MP3.com, in an effort to speed things up, simply collected an entire library of CD's and allowed the user to access only those CD's they could prove they owned. That proof came in a software package developed by MP3.com called Beam-it, which read albums loaded in the CD tray of the user's computer and acquired the permissions for them from the My.MP3.com service.

Even though the end result was the same as with MyPlay.com, it was that library of CD's that left the service legally vulnerable. The major labels successfully argued in NY Federal Court that the library itself was infringement, a technicality that sprung the large monetary award.

MP3.com could have fought the technicality in a higher court - and indeed could have won - but as any business soon learns court victories can be financially pyrrhic. They chose to settle and move on, but in doing so left themselves open to lawsuits from any independent labels that found their content on My.MP3.com.

Enter TVT Records who filed suit their own suit in hopes of riding the coat tails of the previous decision.

TVT had been seeking as much as $8.5 million and it would not have been a stretch to assume that the earlier case would have made the trial a cake-walk for the small label. In this trial, the record company had to face a jury who seemed unconvinced by the company's argument. They won, but the award was much lower $300,000.

"We believe this is a clear cut victory for MP3, and we also look forward to having our argument brought before a different judge in the appellate court." Said MP3.com representative Greg Wilfahrt.

With those words, Wilfahrt declared the fight would continue. The big difference here is that it is now against an adversary without the huge monetary resources available to intentionally force legal costs through the roof. In the end, TVT records might actually be providing MP3.com a more level playing field as they try to overturn a precedent their previous court loss set. That precedent will have major implications on the future development of the theory of 'fair-use' if it is allowed to stand.

So who really won this case? Ask us in five years when this case winds its way to the Supreme Court…if it ever makes it that far.

Copyright 2001 MP3 Newswire

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