"This case is about the three biggest Record Companies in the world conspiring to break promises they made to Amway, to ambush Amway, and to entrap people who uploaded videos with the Record Companies' copyrighted sound recordings on to YouTube."
So opens the formal -- and dramatic, with sections titled "The Ambush," "Unclean Hands" and "Entrapment" -- complaint by the well-known direct-selling business Amway against the big three record labels. Amway has accused the labels of stockpiling copyright infringement claims in order to "ambush" the company, making "a mountain out of what would have been a molehill," as Amway writes in the complaint, filed late last week in Florida by Lowndes, Drosdick, Doster, Kantor & Reed on behalf of Amway and and Alticor, the parent company.
Amway says that it had signed an agreement with Sony and Universal in 1998 on how to deal with claims of infringement (Warner later agreed to abide by the agreement's provisions), with the labels agreeing to give Amway reasonable opportunity to respond to their infringement claims before bringing further action against the company or its individual distributors. The agreement was initiated after a 1996 case, Arista Records, Inc. et al. v. Amway Corporation, et al., which accused high-level Amway distributors of infringement on commercials they had produced. The later agreement was part of Amway's settlement of that suit.
Contrary to that agreement, however -- which Amway says wasn't used for 14 years -- Amway claims the majors withheld their complaints before taking action against the company. Amway filed its complaint in Florida the day after an attempt to resolve the dispute through mediation failed.
A source close to the situation told Billboard that the labels had expected the mediation efforts, last held on April 3rd, to continue. Amway filed its complaint in Florida on April 4th.
The complaint also alleges that the labels were attempting to double-dip behind Amway's back, allowing videos they knew to contain infringing material to stay on YouTube with advertisements, some for a period of several years, before raising their concerns. No financial details were included in the complaint.
Amway asserts in the complaint that they had no way to control their members' infringing video uploads (if they occurred), played no part in their production, and that they did not benefit from the infringement if it did occur. They also claim that, by choosing not to block videos they were aware were infringing (via YouTube's ContentID system), that the majors granted an "implied license."
Sony Music and Warner Music Group declined to comment. Universal Music Group did not immediately respond to a request for comment.