U.S. lawsuit challenges copy-protected CDs

By Steve Gorman

LOS ANGELES: The five major record companies have been hit with a class-action lawsuit charging that a new breed of CDs designed to thwart Napster-style piracy is defective and should either be barred from sale or carry warning labels.

The suit, was brought this week in Los Angeles Superior Court by class-action specialists at the law firm Milberg, Weiss, Bershad, Hynes & Lerach, on behalf of two Southern California consumers.

It marks the first legal challenge of CD copy-prevention technology to "tackle the issue on an industry-wide basis," Alan Mansfield, an attorney representing the two named plaintiffs in the complaint, told Reuters on Friday.

It also follows criticism from some members of Congress and from Dutch consumer electronics maker Philips, co-creator of the compact disc, that the anti-piracy CDs are technically flawed and could impinge on consumers' rights to copy music for their own use.

The suit names all five of the major record companies -- Vivendi Universal's Universal Music Group, Bertelsmann AG's BMG Entertainment, EMI Group Plc, Sony Corp.'s Sony Music Entertainment and AOL Time Warner Inc.'s Warner Music. Cary Sherman, president of the Recording Industry Association of America, issued a statement calling the lawsuit "frivolous" and defending the labels' recent efforts to deter digital piracy.

"Music creators have the right to protect their property from theft, just like owners of any other property," Sherman said. "Motion picture studios and software and video game publishers have protected their works for years, and no one has even through to claim that doing so was inappropriate, let alone unlawful."

The recording industry has recently introduced CDs with hidden electronic locks to prevent personal computers from copying the disc and in some cases, even playing it. These measures are intended to stem widespread swapping of music over the Internet and the production of unlimited copies, which the industry says has severely dented sales.

But the lawsuit, filed on Wednesday under California's consumer protection statutes, says the copy-protected discs are "defective" products that are sold alongside conventional CDs with no distinction made between the two. "Some versions of the Aerosmith greatest-hits CD have the copy-protection technology and some don't," Mansfield said. "Because it's not in all CDs, it's like Russian roulette."

Besides being deliberately designed to prevent the copying of music on personal computers, the anti-piracy technology often prevents playback altogether on PCs, and even on some CD players, Mansfield said. In Macintosh computers, the discs often jam in the CD trays.

Even when the discs can be played, their sound quality is inferior to standard CDs, and the discs often skip or fail to play all the tracks, he said. These problems, the suit says, "interfere with customers' legal rights to back up, play or transfer their own music for personal, non-commercial use to other playback mediums."

The suit seeks a court order to either force the copy-protected discs off the market or to carry warning labels differentiating them from standard CDs. It also seeks to compensate consumers for the cost of repairing computers allegedly damaged by the discs. Mansfield said the direct release of copy-protected CDs began in the United States about six months ago on a limited basis and is believed to represent a fraction of the overall CD market.

(C) Reuters Ltd.