RIAA loses digital case against small tech firm

In a significant court ruling and one that could change the way portable digital music devices are marketed, an appeals court has ruled that Diamond Multimedia’s Rio device is not subject to the restrictions of the Audio Home Recording Act of 1992.

Closely watched lawsuit bowed as a David vs. Goliath battle between the powerful record industry and a tiny home electronics outfit.

Suit was filed by the Recording Industry Assn. of America, the trade group representing the nation’s major record companies.

The 9th Circuit Court of Appeals ruled Tuesday that the Rio does not qualify as a “digital audio recording device” and is not covered by the act, which was passed to address the industry’s concerns about devices such as dual-deck CD players, DAT machines and other technologies that allow music to be copied. The act also called for manufacturers of such hardware to pay fees and royalties to content providers, such as record companies.

Doesn’t copy CDs and tapes

The court recognized that the Rio merely makes portable copies of music tracks available on a user’s computer hard drive — tracks that have probably been unlawfully downloaded from the Internet.

The court said the device’s operation was “entirely consistent with the act’s main purpose: the facilitation of personal use.”

“Because the Rio cannot make copies from transmissions or from digital music media such as CDs and tapes, but instead can make copies only from a computer hard drive, it is not a digital audio recording device,” the court said in its ruling.

‘Incapable of independent recording’

“We are thrilled with the ruling,” said Andrew Bridges, one of the attorneys who argued the appeal for Diamond. “The Rio is incapable of independent recording or serial copying and is simply not covered by the act, something we have argued from the beginning of the case.”

The RIAA said it was “disappointed” it lost its case. It filed the lawsuit late last year against Diamond, claiming the Rio device needed to have certain anti-copying technology built in and that Diamond needed to pony up royalties to the industry.

An L.A. Superior Court judge agreed, but attorneys for Diamond appealed the ruling to the 9th Circuit.

The lawsuit, initially a poster case for copyright protection in the digital era, lost much of its steam in the wake of Diamond execs agreeing last year to incorporate copyright protection in future devices.

Ultimately, Diamond also joined forces with the industry by joining the consortium of music congloms, tech firms and hardware companies to find the best technology for the digital downloading of music.

Overtaken by events and technology

The suit’s issues were also overshadowed by the rush of the major music companies to find a digital downloading technology that would find widespread consumer acceptance.

The Rio initially used controversial MP3 files but has since been upgraded to include the latest downloading technology from all corners and will support the playback of secure downloads.

“The ruling opens a host of new opportunities for us,” said David Watkins, prexy of RioPort, Diamond’s Internet music arm.

He noted that the Rio has always “been marketed as a playback-only device for the thousands of legitimate music and audio tracks on the Internet.”

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