Record companies had a minor setback Nov. 3 when the U.S. District Court for the Southern District of New York refused to grant a summary judgment in a case focusing on the interactive nature of Inter


Record companies had a minor setback Nov. 3 when the U.S. District Court for the Southern District of New York refused to grant a summary judgment in a case focusing on the interactive nature of Internet radio site LAUNCHcast.

The following is the court's memorandum and order.

Defendant Launch Media is an Internet music company that provides access to various music services, including an Internet radio webcast called LAUNCHcast. This service allows users to listen to traditional format radio-type broadcasts, artist-specific broadcasts or customized streams of music that are created through a collaborative effort between the user and the computer software that runs the service.

Plaintiffs in the suit filed in 2001 are Arista Records, Bad Boy Records, BMG Music d/b/a the RCA Records Label, Capitol Records, Virgin Records America, Sony Music Entertainment, UMG Recordings, Interscope Records, Motown Record Co. and Zomba Recording.

The suit alleges that from November 1999 through May 2001, Launch's customized services were interactive within the meaning of the Copyright Act. Therefore the company was not entitled to a compulsory license -- covering the performance right in sound recordings -- provided for non-interactive webcasts. Launch's failure to secure negotiated licenses with the labels amounts to copyright infringement, the suit claims.

The labels moved for summary judgment on the issues of interactivity and willful infringement. They offered documentary evidence with respect to the nature of the LAUNCHcast service and "an immodest number of demonstrative exhibits."

The Digital Millennium Copyright Act of 1998 (DMCA) provides: "An 'interactive service' is one that enables a member of the public to receive a transmission of a program specially created for the recipient, or, on request, a transmission of a particular sound recording, whether or not as part of a program, which is selected by or on behalf of the recipient."

The court noted that the term "interactive" has not yet been interpreted by the courts. The parties disputed the meaning of "specially created for the recipient" and, more importantly, "the actual and intended performance characteristics" of LAUNCHcast. Launch argued that some level of interaction between a user and an Internet service is inevitable; that it becomes interactive under the DMCA only when a particular level of interaction has been reached.

"While Launch concedes, as it must, that LAUNCHcast engaged users in a collaborative effort in the creation of music play lists, the semantic and factual disputes on the record before me preclude a finding that as a matter of law that LAUNCHcast was 'interactive' under the statue," the court wrote.

Also, the labels must show that Launch had knowledge that its action constituted infringement before they could establish "willful" infringement. Launch claimed that it acted in good faith, on advice of counsel and in a climate of unsettled law. If proven, the court wrote, this could rebut the allegation of willful infringement.

"In light of the many open questions raised at the hearing and in the parties' submissions," the court wrote, "I find that there are genuine issues of material fact with respect to where the lines is for 'interactivity' and assuming it was crossed, whether Launch willfully infringed" the copyrights.