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Judge limits damages in MP3.com case

Rakoff rules $ collectible on per-album, not song, basis

New York Federal Court Judge Jed Rakoff ruled Monday that any damages in the legal battle between MP3.com and the two music congloms that have yet to reach a settlement agreement with the Netco — Sony Music Entertainment and Universal Music Group — would be calculated on a per-album rather than a per-song basis.

The labels had sought $150,000 for every song that had been infringed, which could have placed damages in the billions of dollars.

The La Jolla-based MP3 came under legal fire from the Recording Industry Assn. of America when it created a database of 80,000 albums without permission from the diskeries that own the copyrights. After this database was declared illegal (Daily Variety, May 1), multimillion-dollar settlements were reached with the Warner Music Group, BMG Entertainment and — just last week — the EMI Group.

Rakoff also ruled that the Netco didn’t have to pay damages on any CDs whose copyright registration wasn’t filed with MP3 by Aug. 7, saying that such documents should have been filed during the discovery phase of the suit.

These are but small victories, considering that MP3 has to settle with a host of music publishers, the Harry Fox Agency and innumerable indie labels.

Furthermore, the presence of “most favored nations” clauses in the existing settlements requires MP3 to pay each diskery at the same rates, regardless of when they cut the deals.

Jury phase of the trial, which will determine whether MP3 was guilty of “willful infringement” when it created the database, is set for Aug. 28.

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