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$250 m. verdict could torpedo MP3.com

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CIOL Bureau
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In what may well amount to a death sentence, federal US judge Jed Rakoff

ordered MP3.com to pay the Universal Music Group studio a whopping $25,000 for

 each of some 10,000 copyrighted Universal Music CDs the company had made

available on its Web site. The punishment could amount to a $250 million damage

award. If upheld, MP3.com will have to file for bankruptcy.

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Rakoff was blunt in pronouncing his verdict which he indicated was meant to

send a clear message to other online companies engaging in the distribution of

copyrighted material without the explicit permission from the publisher or

artist. "Internet companies have a misconception that, because their

technology is somewhat novel, they are somehow immune from the ordinary

applications of laws of the United States, including copyright law. They need to

understand that the law's domain knows no such limits."

MP3.com said it will appeal the verdict. Universal was the only major record

label that decided not to settle a lawsuit with MP3.com. Earlier this summer,

four labels settled for $150 million.

Universal had asked for damages of around $450 million. "Music is a

media and the next infringement may be very different,'' said Universal lawyer

Hadrian Katz. "It may be video or it may be film or it may be books or it

may be something very different."

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Universal claims MP3.com copied up to 10,000 of its CDs. MP3.com has put the

number of CDs at 4,700, which would make the damage award nearly $118 million.

Rakoff will hold a hearing later this month to decide the actual number of CDs

involved.

MP3.com officials said they were disappointed but hopeful the company will win

on Appeal. Although they did not have permission to make copyrighted CDs

available online, MP3.com claims its service did not harm recording companies as

users were required to prove that they owned a legal copy of the CD they wanted

to listen to online.

To do so, users have to insert the original CD in their CD-ROM drive. Only

then can they hear the contents of the disk while at work or traveling.

"There's not one iota of evidence that they even lost a penny,"

MP3.com lawyer Michael Rhodes argued saying that Universal did not deserve such

a huge windfall profit.

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