Jonathan Schiller, a lawyer for Napster, the internet song-swapping service, said: “We believe it is clear from a reading of Judge Rakoff’s decision that the MP3.com case is both factually and legally distinct from the Napster case.”
The Recording Industry Association of America (the RIAA), representing the world’s biggest record labels, is suing Napster for contributory copyright infringement. The Napster.com web site acts as a directory of MP3 files which its 20 million registered users can access from each others’ hard drives, although Napster’s servers do not actually story any of the files. The next instalment of the case will begin on 2nd October, following a federal Appeals Court’s decision to overturn a preliminary injunction against Napster that would have forced it to close its service.
Shares of MP3.com fell significantly following the court’s ruling against it on Wednesday. CEO Michael Robertson is quoted by Reuters as saying: “In the worst case scenario, we’d have to write a cheque for $115 million… While its painful and nobody wants that, it’s not going to wipe out the company.” The company had $315 million in cash at the end of June and took a $150 million charge against its second-quarter earnings for estimated legal costs. In settling claims by four other record companies, it has already agreed to pay around $80 million.