The technology in question decodes digital audio files compressed in MP3 format and has been used in numerous applications, including Napster, to play digital audio files on personal computers. AOL subsidiary Nullsoft holds a software licence from Playmedia for use in its Winamp MP3 player. However, the court found that, by including the Playmedia code in a different media player - namely AOL 6.0 - it may have exceeded the rights in its licence.
Judge Howard Matz said: “Playmedia has established probable success in proving that AOL exceeded the grant of the licence” and, as well as ordering an injunction against further distribution of the software, ordered AOL to notify all licensees of the position.
AOL intends to appeal the decision but fears that it may face a loss of $39 million in promotional materials for AOL 6.0 and costs amounting to tens of millions more if previously distributed copies are to be retrieved.
The ruling does not affect the new version of the software, AOL 7.0, which was released just two weeks ago.