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Ex-MP3tunes chief liable in copyright case

By Reuters
New York, 20 Mar 2014

The former CE of bankrupt online music storage firm MP3tunes was found liable yesterday for infringing copyrights for sound recordings, compositions and cover art owned by record companies and music publishers once part of EMI.

A federal jury in Manhattan found Michael Robertson, the former MP3tunes CE, and the defunct San Diego-based company liable on various claims they infringed on copyrights associated with artists including The Beatles, Coldplay and David Bowie.

The jurors also found MP3tunes was wilfully blind to copyright infringement on its Web site, in what a lawyer for the recording companies suggested before the verdict would be the first ruling by a jury of its kind.

The verdict marked a victory for the music industry in its long-running legal battle against online content providers, which it accuses of illegally selling its works without permission, costing revenue and profit.

Jurors will now decide how much in damages should be awarded after the verdict and an earlier ruling by the judge finding them liable on certain copyright claims. The damages phase is expected to run two to three days.

Both Ira Sacks, a lawyer for Robertson, and Andrew Bart, a lawyer for the EMI recording labels, declined to comment. Frank Scibilia, a lawyer for the EMI publishing companies, did not respond to a request for comment.

Founded in 2005 and once known as a Web site selling independent musicians' songs, MP3tunes came to be known for its so-called cloud music service that allowed users to store music in online lockers.

EMI, however, contended in its 2007 lawsuit that the San Diego-based company's Web site and a related one called Sideload.com enabled the infringement of copyrights in sound recordings, musical compositions and cover art.

More than 2 100 copyrights were at issue in the liability phase of the trial, Sacks said before the verdict. At trial, Sacks argued Robertson should not be held liable, and argued that the record companies themselves made free promotional copies of their music available online.

The few times users abused the locker system, MP3tunes found out and shut them down, Sacks told jurors at the trial, which was before US district judge William Pauley.

While the jury largely sided with the EMI recording and publishing companies, it found for Robertson on some claims, including by deciding not to hold him liable for MP3tunes' failure to remove files from users' online "lockers" the Web site provided users to store music.

When initially launched, the lawsuit was closely watched as a barometer for how courts might view cloud-based music storage services that came to be offered by companies including Amazon.com, Apple and Google.

Much has changed with the companies since the lawsuit was filed. EMI has been split up, its recording music business acquired by Vivendi's Universal Music Group, and a consortium led by Sony acquiring its publishing arm in 2012.

MP3tunes, meanwhile, filed for bankruptcy in May 2012. The MP3tunes litigation moved forward as EMI looked to build on recording industry court victories in cases involving file-sharing services Napster, Grokster, and LimeWire.

Robertson had in 1997 founded another Web site, MP3.com, that let users play music that the company had copied from thousands of CDs it purchased, so long as users could demonstrate they already owned the music.

That service also prompted litigation, and a federal judge's ruling against MP3.com in 2000 led to a shutdown of the service and more than $160 million in estimated pay-outs by the company to the five major record labels and music publishers.

MP3.com was a year later sold to Vivendi for about $372 million. The Web site is today owned by CBS.

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