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Ex-MP3tunes chief held liable in music copyright case

Michael Robertson (R), CEO of MP3.com, testifies before a Senate Judiciary committee on Capital Hill on the future of digital music, July 11
Michael Robertson (R), CEO of MP3.com, testifies before a Senate Judiciary committee on Capital Hill on the future of digital music, July 11

By Nate Raymond

NEW YORK (Reuters) - The former chief executive of bankrupt online music storage firm MP3tunes was found liable Wednesday for infringing copyrights for sound recordings, compositions and cover art owned by record companies and music publishers once part of EMI Group Ltd.

A federal jury in Manhattan found Michael Robertson, the former MP3tunes chief executive, and the defunct San Diego-based company liable on various claims that they infringed on copyrights associated with artists including The Beatles, Coldplay and David Bowie.

The jurors also found MP3tunes was willfully blind to copyright infringement on its website, in what a lawyer for the recording companies suggested before the verdict would be the first ruling by a jury of its kind.

The verdict marked a victory for the music industry in its long-running legal battle against online content providers, which it accuses of illegally selling its works without permission, costing revenue and profit.

Jurors will now decide how much in damages should be awarded after the verdict and an earlier ruling by the judge finding them liable on certain copyright claims. The damages phase is expected to run two to three days.

Both Ira Sacks, a lawyer for Robertson, and Andrew Bart, a lawyer for the EMI recording labels, declined to comment. Frank Scibilia, a lawyer for the EMI publishing companies, did not respond to a request for comment.

Founded in 2005 and once known as a website selling independent musicians' songs, MP3tunes came to be known for its so-called cloud music service that allowed users to store music in online lockers.

EMI, however, contended in its 2007 lawsuit that the San Diego-based company's website and a related one called Sideload.com enabled the infringement of copyrights in sound recordings, musical compositions and cover art.

More than 2,100 copyrights were at issue in the liability phase of the trial, Sacks said before the verdict. At trial, Sacks argued Robertson should not be held liable, and argued that the record companies themselves made free promotional copies of their music available online.

The few times users abused the locker system, MP3tunes found out and shut them down, Sacks told jurors at the trial, which was before U.S. District Judge William Pauley.

While the jury largely sided with the EMI recording and publishing companies, it found for Robertson on some claims, including by deciding not to hold him liable for MP3tunes' failure to remove files from users' online "lockers" the website provided users to store music.

When initially launched, the lawsuit was closely watched as a barometer for how courts might view cloud-based music storage services that came to be offered by companies including Amazon.com Inc, Apple Inc and Google Inc.

Much has changed with the companies since the lawsuit was filed. EMI has been split up, its recording music business acquired by Vivendi SA's Universal Music Group and a consortium led by Sony Corp acquiring its publishing arm in 2012.

MP3tunes meanwhile filed for bankruptcy in May 2012. The MP3tunes litigation moved forward as EMI looked to build on recording industry court victories in cases involving file-sharing services Napster, Grokster, and LimeWire.

Robertson had in 1997 founded another website, MP3.com, that let users play music that the company had copied from thousands of CDs it purchased, so long as users could demonstrate they already owned the music.

That service also prompted litigation, and a federal judge's ruling against MP3.com in 2000 led to a shutdown of the service and more than $160 million in estimated payouts by the company to the five major record labels and music publishers.

MP3.com was a year later sold to Vivendi Universal for about $372 million. The website is today owned by CBS Corp.

The case is Capital Records Inc et al v. MP3tunes LLC et al, U.S. District Court, Southern District of New York, No. 07-09931.

(Reporting by Nate Raymond in New York; editing by Andrew Hay)

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