MP3.com liable for song swapping on any on-line service?

The lawsuit is headed by Copyright.net, a US group which represents intellectual property owners. According to its claim, MP3.com is liable for direct infringement in converting around 1,000 identified songs to MP3 format and loading them on MP3.com's servers; contributory infringement, for creating "on demand" access to the infringed works by subscribers; and vicarious infringement for "viral distribution" of the infringed works downloaded by subscribers and then passed on to others through services such as Napster.

It is the first lawsuit against MP3.com seeking damages for enabling viral infringements, and believed among the first ever to make this argument.

The suit seeks actual damages and profits of MP3.com and, alternatively, statutory damages in the amount of $25,000 for each musical composition infringed by MP3.com, as well as a permanent injunction against MP3.com.

The suit is directed against the unlawful viral distribution of songs that, according to Copyright.net, MP3.com facilitates.

MP3.com operates an Instant Listening service, which allows its customers to listen to songs from CDs they supposedly own. MP3.com copied hundreds of thousands of copyrighted songs into the MP3 format and stored them on its servers to facilitate "on-demand" streaming and copying of the songs. Currently, MP3.com customers can easily capture and virally "share" or "trade" these songs with millions of people participating in the internet's peer-to-peer / file sharing communities, such as Napster, Aimster, Gnutella or AudioGalaxy.

The complaint seeks to recover damages suffered by the copyright owners as a result of MP3.com's use of the songs offered to its subscribers using MP3.com's services, as well as the profits and benefits gained by MP3.com from its unlawful actions.

On Tuesday, the Recording Industry Association of America (RIAA) reported that despite recent success against file swapping service Napster in the US courts, US music product shipments fell 4.4% in the first half of 2001.