MP3.com to ask court to invalidate copyrights
By Bloomberg News
November 2, 2000, 4:20 p.m. PT
NEW YORK--Online music distributor MP3.com hopes to escape a potential
$167.5 million judgment by arguing that virtually all of Universal Music
Group's copyright registrations are invalid.
Offering a glimpse of its defense in the next phase of a copyright
infringement suit brought by Universal, lawyers for MP3.com said Thursday
that they will argue that registration forms filed by the Seagram unit with
the U.S. Copyright Office are invalid.
If the argument prevails, the record label won't lose its rights over 6,700
recordings at issue but will be unable to collect damages for infringement,
MP3.com lawyers say.
"Some of the copyrights they don't even own," MP3.com lawyer Jeffrey
Conciatori said at a pretrial hearing in federal court Thursday.
U.S. District Judge Jed Rakoff ruled in September that MP3.com willfully
violated copyrights on CDs sold by Universal and ordered MP3.com to pay
$25,000 for each infringement. A trial to determine the number of CDs that
were infringed is scheduled to begin Nov. 13.
MP3.com said it believes it can reduce its liability by attacking the
validity of Universal's copyright registration forms.
One critical issue is whether the sound recordings are works-for-hire--that
is, works artists created for Universal under employment contracts. MP3.com
says Universal improperly designated the recordings as works-for-hire on
its registration certificates, invalidating them. Universal disagrees.
The issue has significance for musicians and the recording industry. If
Rakoff rules that the recordings are not works-for-hire, the CD copyrights
will revert to the artists who created the discs 35 years from the date they
were recorded. If they are works-for-hire, recording companies retain the
rights indefinitely.
"If all recordings are found to be works-for-hire, it would affect the
recapture rights of all artists," Los Angeles entertainment lawyer Jay
Cooper said.
The fight is being watched closely in the music community. On Wednesday,
eight artists--including Bruce Springsteen, Billy Joel, Sheryl Crow and
Tony Bennett--lent their support to MP3.com's argument that sound
recordings are not works-for-hire and asked for permission to file a legal
brief.
"Recording artists firmly believe that sound recordings are not
works-for-hire," the letter from the Recording Artists Coalition said. "If
you rule that sound recordings claimed by Universal are works-for-hire,
scores of recording artists throughout the industry--in addition to those
signed to Universal--will be directly affected."
Other federal courts have ruled that sound recordings are not
works-for-hire, Cooper said.
But it is unclear whether Rakoff will actually rule on the issue. Cary
Sherman, a lawyer for the Recording Industry Association of America, said
Rakoff could still order MP3.com to pay damages without considering the
point.
Congress in 1999 passed a law designating sound recordings as
works-for-hire, but lawmakers repealed the provision this year after artists
complained vehemently.
With MP3.com's My.MP3.com service, people may play any CD in the company's
database after verifying that they own a copy of the disc. People prove
ownership by putting a CD into a computer for scanning by MP3.com.
The San Diego-based music company has settled infringement cases with four
other major record labels, reportedly for $20 million each. It has also
reached a licensing agreement with the National Music Publishers'
Association.
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