Britain's High Court has ordered that the operators of CD Wow pay a "substantial" damages sum to the U.K. recording industry after finding the Internet retailer guilty of illegally importing CDs and music DVDs from Asia.

As a result of the court decision last week, CD Wow's Hong Kong-based firm's parent company Music Trading Online must pay £41 million ($81 million).

Of that amount, £35 million ($69 million) represents the damages total. The remaining £6 million ($11 million) is interest, calculated since January 2004, when the retailer gave undertakings to the court that it would not illegally source low-priced product from outside the European Economic Area.

The total sum, which follows six years of legal dispute, is described by the BPI as the largest damages award ever made in its favor.

Britain's record and retail industries welcomed the compensation.

BPI chief executive Geoff Taylor says the action sets an important legal precedent as the industry seeks to curtail parallel importing of entertainment product from outside Europe.

"The vibrancy of British music depends on a fair return on the investments that allow British talent to shine," Taylor says in a statement issued today. "This decision is an important step in ensuring that British music has a bright future."

The BPI's outgoing general counsel Roz Groome spearheaded the industry's legal battle.

"Clearly the courts have lost patience with this rogue retailer and the message is clear; any company seeking to engage in this type of illegal trade will face the toughest sanctions," she says.

"The BPI will use this landmark ruling to take firm action against any other retailers that import illegally."

Britain's entertainment retailers association ERA also supported the court's decision.

"Britain has the most diverse and sophisticated entertainment retailing market in the world, something which is in the interests of both artists and music fans," comments ERA director general Kim Bayley.

"In order to maintain that retail base it is vital that all retailers compete on a level playing field. Illegal imports threaten that level playing field and threaten British jobs. We therefore welcome the judgment against CD Wow," she adds.

Judge Evans-Lombe had ordered a damages inquiry following a four-day trial in March 2007. CD Wow's failure to co-operate with the court's orders for disclosure and payment of security resulted in the judge moving the assessment of damages forward from July.

Representatives from CD Wow could not be reached for comment.

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