NEW YORK — A federal judge in San Francisco has denied Bertelsmann’s motion to dismiss a lawsuit by music labels and songwriters who claim the German conglom aided, abetted and directed music piracy when it owned a chunk of Napster.
The case, which has been working its way through courts in New York and California, could become a major headache for Bertelsmann, which injected a besieged Napster with about $90 million in fresh cash in 2000. The controversial file-swapping service was shut down in 2001 and filed for bankruptcy in 2002. It was acquired by software group Roxio and relaunched as a pay service.
Universal Music’s UMG Recordings, Capitol Records and songwriter Jerry Lieber allege that Bertelsmann and another Napster investor, venture capital firm Hummer Winblad, “engaged in vicarious and contributory copyright infringement in the course of their involvement with Napster.”
Napster itself had been sued for copyright infringement. These plaintiffs have filed suit against the company’s investors “in an effort to hold those parties responsible for Napster’s actions (indeed for the very existence of Napster) and to recoup some of their damages allegedly occasioned by the formidable amount of file-sharing that took place under Napster’s auspices,” said Judge Marilyn Hall Patel of U.S. District Court for the Northern District of California.