U.K. distributor Cargo Records has pulled the plug on an Elvis Presley release after Sony BMG Music Enterainment in the U.K. sent out a letter threatening legal action, Billboard.biz has learned.

In one of the clearest signs to-date of Sony BMG's tough policy of enforcing the copyright of its vintage Presley works -- even though some sound recordings have become part of the public domain -- the music major put pressure on Cargo to withdraw the release, "New York: RCA Studio 1: The Complete Sessions." Sony BMG disputed that a handful of outtakes on the album, which was released by Memphis Recording Service, were public domain.

Cargo now won't touch the Memphis release, and the CD has no support from traditional retail outlets. An executive with the distributor, who declined to be identified, described the Sony BMG letter as a "warning" of further action to come. "To save us the risk of legal action, we decided we wouldn't distribute the item," the Cargo executive adds.

The release is still featured on the Cargo Records Web site, but the purchase function has been disabled.

Memphis Recording Service director Joseph Pirzada tells Billboard.biz that he responded on behalf of Cargo on three occasions since the letter was received five or six weeks ago, but heard nothing in response.

"I've not received a letter, an email, or any telephone calls," he tells Billboard.biz. "I told Sony BMG they were wrong, and that the outtakes on the CD were recorded before June 1, 1957. Which means it is in the public domain."

He adds, "I'm not worried and I haven't been worried," and notes that his company continues to sell the product. But he admits Sony BMG's action had "thrown a spanner in the works."

A Sony BMG spokesman declined to comment in depth on the issue, other than to confirm "that we are in correspondence with them" on the matter. The spokesman adds, "it is our policy to keep close scrutiny on any third parties who are thinking of releasing Elvis recordings assuming them to be in the public domain when they may in fact not be."

Memphis Recording Service became headline news in the summer when its Presley release "My Baby Left Me" entered the Official U.K. U.K. Singles Charts at No. 19, becoming the first out-of-copyright recording to be a U.K. Top 40 hit. The song was originally recorded by Presley in 1956, so entered the public domain on Jan. 1 2007.

Despite furious lobbying from the music industry, the U.K. government recently backed the Gowers Review, which recommended the copyright term for sound recordings should remain at 50 years.

The "My Baby Left Me" single was meant to set-up the launch of the now-disputed "New York" sessions album, says Pirzada, and has since sold 20,000 copies worldwide, about half of which came in the U.K. Cargo distributed "My Baby Left Me," which was sold exclusively through HMV.

The Cargo-Memphis relationship remains in tact. "We still distribute the label and other titles," says the Cargo executive, "and we will distribute the title next year when the 'offending' material is removed from the product." Pirzada says Memphis will relaunch the product in February. "They put a spanner in the works for us before Christmas," he says. "All its done is delay us for few weeks."