RealTime IT News

Another Napster Lawsuit Hits Bertelsmann

Struggling media giant Bertelsmann's legal woes over its association with Napster escalated this week with Universal Music joining a group of songwriters and music publishers to sue the German company for supporting a rogue P2P service.

Universal Music Group, a division of French media company Vivendi, filed suit in a Manhattan court accusing Bertelsmann of contributing to digital music piracy by funding the operations of Napster at the height of its existence.

The complaint is the second major lawsuit filed against Bertelsmann with basically the same allegations. Back in February, a group of songwriters and two independent music publishers -- Frank Music and Peer International -- filed a $17 billion suit against Bertelsmann, accusing the company of contributing to copyright infringement by financially supporting Napster.

Bertelsmann, itself a former foe of Napster, pumped more than $90 million worth of investments into the peer-to-peer firm as part of the media company's ambitious plans to create a legitimate, membership-based music download service. That partnership is now at the center of the latest legal wrangle.

The latest suit from Universal is seeking damages of up to $150,000 per copyrighted file. It is unclear how many works are being claimed by the music label.

The lawsuit accused Bertelsmann of firmly controlling Napster when it was used by file-traders to pirate copyrighted works. "By the time the Napster system was shut down, Bertelsmann had materially contributed to, aided and facilitated millions upon millions of separate acts of infringement by millions of Napster users," according to the suit, filed late on Monday in New York.

The suit also comes on the heels of anoter legal tussle in Los Angeles where Universal teamed up with EMI Recorded Music to sue VC firm Hummer Winblad Venture Partners.

That suit, which was also slapped on the firm's partners John Hummer and Hank Barry, accused the legendary dot-com VC of encouraging illegal sharing of copyrighted materials by injecting $13 million into Napster.

"Businesses (as well as those individuals or entities who control them) premised on massive copyright infringement of works created by artists, should face the legal consequences for their actions," the labels said in a joint statement.

According to the plaintiffs in all the lawsuits, evidence in Napster's bankruptcy proceedings show Bertelsmann knew the company was breaking the law but decided to keep the service running while it worked on a legitimate version.

"Bertelsmann did not condition its funding on Napster's stopping its infringement of plaintiffs' rights. [Instead, it] made a deliberate and calculated business decision to continue the infringing service in order to preserve Napster's valuable user bases."