A federal judge in San Francisco yesterday (July 14) denied motions to dismiss lawsuits claiming past Napster investors such as Bertelsmann AG and venture capital firm Hummer Winblad kept the illicit
A federal judge in San Francisco yesterday (July 14) denied motions to dismiss lawsuits claiming past Napster investors such as Bertelsmann AG and venture capital firm Hummer Winblad kept the illicit song-swap site going, costing the music industry $17 billion in lost sales.
In her ruling on Wednesday, U.S. District Judge Marilyn Patel, who issued an injunction against the original Napster in 2000, permitted the case to proceed through its discovery phase, saying the plaintiffs, including music publishers, songwriters and record labels, had the right to try to prove their allegations.
Napster went bankrupt in 2002 and was bought by software firm Roxio Inc., which relaunched it as a pay-for-use service last year. Roxio was not named in these latest cases.
But Napster's renegade past is the focus of the suits that claim that German media company Bertelsmann's $90 million investment in Napster in 2000 kept it operating eight months longer than it would have otherwise.
In addition to the Bertelsmann case, Vivendi Universal's Universal Music and EMI Group Plc also sued Hummer Winblad, claiming the venture capital firm's $15 million investment and installation of a chief executive at Napster in 2000 also promoted piracy.
"Plaintiffs' allegations that defendants exercised full operational control over Napster during periods in which Napster remained a conduit for infringing activity may be wholly unfounded. ... Regardless, such questions must be left for resolution upon motions for summary judgment or at trial," Patel wrote in her 14-page ruling.
In response, Bruce Rich, a lawyer for Bertelsmann, said, "Our position remains that those allegations are not factually true and will be disproven through the discovery process.
"And at the end of the process, we anticipate seeking summary dismissal of the lawsuit as this opinion invites us to do at the appropriate time," Rich added.
Record label EMI applauded the decision.
"We are pleased with Judge Patel's decision today. EMI stands firm in its belief that we have a strong case," said a spokeswoman for EMI Group Plc.
"By investing both millions of dollars and management resources in Napster, which was an illegal enterprise built on the unlawful distribution of copyrighted works, Bertelsmann and Hummer Winblad enabled and encouraged the wholesale theft of copyrighted music," she said.
Attorneys for Hummer Winblad were unavailable for comment. A lawyer for music publishers was also not available.