Seagram’s U Music seeks $450 mil from MP3

Lawyers say copyright violation award should 'sting'

Seagram Co.’s Universal Music Group asked a federal judge Tuesday for $450 million in damages from Inc. for violating the company’s copyrights.

At a hearing in Manhattan before U.S. District Judge Jed Rakoff, Universal’s attorney Hadrian Katz asked the judge to set damages based on a fine of $45,000 for each CD infringed. He said there are 10,000 Universal CDs among the 80,000 in’s database. “An award should sting,” Katz told the court.

Rakoff already has found that violated Universal’s copyrights. He is expected to rule today on whether the violations were willful. A finding of willful infringement would allow Rakoff to set statutory damages as high as $150,000 for each copyright infringed. Still to be determined by Rakoff is how many works were infringed.

Asks for minimum attorney Michael Rhodes asked Rakoff to set damages at the statutory minimum. “It’s important to send the right message,” Rhodes told the court, pointing that a “draconian” award would send the company into bankruptcy and that the company already has complied with a court order to suspend the service. Without a finding of willful infringement, the statute provides for damages in the range of $750 to $30,000 per infringement.

But Universal’s legal team argued that would pay only $7.5 million in damages for infringing 10,000 works if the judge were to impose only the minimum penalty. “The lesson the world would draw would be ‘go forth and infringe,’ ” said Katz.

But Rhodes argued that the sharp drop in the company’s stock price, largely because of its legal woes, was a sufficient deterrent to other infringers.

Settled with four already has settled with four of the Big Five record companies – Sony Music, EMI Group, Warner Music and Bertelsmann unit BMG – for $20 million per company. It also has agreed to pay a fee each time one of the label’s albums is registered by a user and another fee each time a user accesses one of its songs.

The service allowed users to store music digitally and than access it from any computer. The record labels sued, claiming that the database created for the service violated copyright law.

(Reuters contributed to this report.)

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