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

“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.”

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