U.K. labels body the British Phonographic Industry is once again embroiled in legal action against e-tailer CD Wow.

The trade group has taken action on behalf of its members against CD Wow and its Hong Kong-based parent company Music Trading Online in London's High Court, alleging contempt of Court following a 2004 undertaking that CD Wow/MTO cease importing CDs and music DVDs into the United Kingdom from south-east Asia.

The BPI is seeking a fine (payable to the state) and an order that CD Wow/MTO pays labels damages for breach of copyright plus legal costs. According to BPI General Counsel Roz Groome, "CD Wow is guilty of flagrant and systematic breaches of a High Court order. The penalties for such breaches can be significant."

On the opening day of the case on Feb. 19, the counsel for CD Wow co-founder/MTO shareholder Philip Robinson admitted that CD Wow had breached a January 2004 High Court undertaking to cease importing CDs and music DVDs into the United Kingdom from outside the European Economic Area, specifically south-east Asia. The BPI had claimed then that CD Wow was selling discounted CDs in the form of illegal parallel imports at a cheaper price than the trademark holder intended.

In the 2004 settlement, the online company agreed to sell only European-originated product in the United Kingdom and Ireland.

Through his counsel (Mr. Jeffrey Onions QC and Mr. Stephen Houseman) Robinson apologized to the court and agreed to pay £50,000 ($97,600) in costs to the BPI. However, CD Wow/MTO itself argues that it should not have to pay a fine, damages or costs; the case is therefore ongoing.

The BPI claims that CD Wow is Britain's third biggest online music retailer with 23% market share. MTO owns and operates the CD Wow brand internationally. Its physical product is generally shipped from Hong Kong.

The BPI says recent test purchases had revealed that CDs bought via CD Wow were imported from the company's central warehouse in Hong Kong to the United Kingdom. A BPI spokesman says the case centres on copyright rather than pricing, as the sale of parallel imports in a market for which they were not intended contravenes U.K. and European copyright laws.

CD Wow insists that it has not "intentionally" breached U.K. law and that any problems had been caused by human error. In a Feb. 20 statement, CD Wow said it dispatched 100,000 CDs a day, and suggested that volume means that mistakes occasionally happen. The BPI has cited 39 cases where copyright law had been breached, accounting for roughly 30% of their test purchases.