Napster will get a close look at major record label documents that reveal the underpinnings of their business agreements in forming the online music ventures MusicNet and Pressplay, a California federal judge ordered yesterday (March 26). The song-swapping network is looking for evidence of copyright misuse to bolster its legal defense and limit damages in the record labels’ copyright-infringement suit against it.
The Big Five major labels — Sony, Warner, Universal, EMI and BMG — will have to forward more than 500,000 pages of documents to Napster that also have been provided to the federal government. The decision comes just days after Napster was ordered to remain offline while the copyright-infringement case proceeds.
The Justice Department has been investigating possible antitrust issues at the labels for their formation of MusicNet and Pressplay. Those ventures, each launched within the last six months, offer subscription music downloads for a monthly fee. Napster has alleged that the labels suing it are not entitled to extensive damages if they misused their recorded music copyrights in attempting to leverage them into greater monopoly rights.
The documents are expected to be turned over to Napster over the next month. Napster also is entitled to look at internal record company documents regarding possible settlement discussions with and about Napster, U.S. District Judge Marilyn Hall Patel ordered at a hearing Tuesday.
Napster also will be able to take depositions from third-party companies that cut deals with MusicNet and Pressplay while settlement talks between Napster and the labels languished.
Celia Barenholtz, a lawyer for Napster, told Patel any settlement documents were crucial to her case. But Russell Frackman, a lawyer representing the record companies, disagreed with Napster’s position that the documents could reveal an anti-competitive atmosphere among the labels to squeeze Napster out of the online music distribution market.
“The refusal to license to [Napster] … does not violate anybody’s rights,” he said.
Napster secured a licensing agreement with MusicNet, the joint venture of RealNetworks, AOL Time Warner, Bertelsmann AG, and EMI Group, but says it still does not have the wide range of content necessary for its planned relaunch as a subscription service. Pressplay is the joint venture of Sony Music Entertainment and Universal Music Group.
In all, Frackman said the labels would provide between 500,000 and 800,000 pages of documents to Napster. Experts from both sides would then need to examine the documents and file subsequent reports with the court.
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