NYT: Court Ruling Could Hurt Cloud-Based Music Services

Problems Ahead?

UNITED STATES DISTRICT COURT Judge WILLIAM H. PAULEY III may have opened the door for future issues with cloud-based music services when he ruled MONDAY, AUGUST 22nd for EMI MUSIC in a suit against MP3TUNES.COM.

THE NEW YORK TIMES reports the judge "ruled that MP3TUNES could be held liable for contributory infringement of about 500 tracks that EMI identified as being traded without authorization, and that [CEO MICHAEL] ROBERTSON was liable for infringing tracks he stored on his own account. The case will now go to a trial to determine damages, which could run to tens of millions of dollars. Judge PAULEY also sided with MP3TUNES in some aspects of the case that will probably have the most effect on other online music services. The judge found that MP3TUNES's main business is protected by the 'safe harbor' provision of the Digital Copyright Millennium Act, which shields online companies from copyright violations committed by their customers. But that provision, the judge decided, does not apply to unauthorized tracks that users added to their collections through MP3TUNES's search feature, called 'sideload'."

"While a reasonable person might conclude after some investigation that the websites used by MP3TUNES executives were not authorized to distribute EMI’s copyrighted works, the D.M.C.A. does not place the burden of investigation on the Internet service provider," PAULEY wrote in a 29-page ruling.

The report notes that ROBERTSON took that part of the ruling and felt it was a win for MP3TUNES -- and other companies which operate in the cloud -- without licensing agreements with labels in place.

"We're pleased that the court upheld our fundamental business model and, more broadly, unlicensed cloud music," ROBERTSON wrote in a statement. "This is great news for those that are emulating our personal music service like AMAZON and GOOGLE and those involved in lawsuits like GROOVESHARK."

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