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Company Town Infringed Label's Copyrights, Judge Rules

March 07, 2001|From Bloomberg News

NEW YORK — Online music provider Inc. willfully infringed copyrights belonging to record label Tee Vee Toons, a federal judge said on Monday in a ruling that also may limit how much the label can recover in an upcoming trial.

Tee Vee Toons claims in a federal lawsuit that infringed more than 1,000 copyrighted songs belonging to its TVT label. The case is scheduled to go to trial March 26.

U.S. District Judge Jed Rakoff said willfully infringed Tee Vee Toons' copyrights, a ruling that will help the label establish its case at trial, lawyers said. But Rakoff also said, essentially, that could try to limit its damages by arguing that Tee Vee Toons wasn't harmed by the infringement.

Through its service, stores in its computers digitalized copies of compact discs. The company provides access to music from that database, allowing subscribers to listen to CDs from their personal collection on any computer, as long as they can show that they already own that particular disc. Subscribers verify ownership by putting the CD into a computer and allowing to scan it.

Last year, was sued by five major record labels, including the world's largest, Universal Music Group, a unit of Vivendi Universal. The company settled those cases with payments of as much as $53.4 million. But it still faces several suits by independent labels such as Tee Vee Toons.

Artists signed to New York-based Tee Vee Toons include rapper Snoop Dogg and the groups XTC and Sevendust. The company recently released the soundtrack to the film "Traffic."

Shares of San Diego-based fell 47 cents, to close as $2.88, on the Nasdaq Composite Index. The stock traded as high as $29.25 last March.

Rakoff's finding that's violations were "willful" permits the jury to impose a penalty of as much as $150,000 per infringement. Before the Universal case settled, Rakoff ordered to pay $25,000 per infringement after finding willfulness.

The jury will be asked to decide how many songs were infringed and how much should pay for each infringement.

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