Court Ruling Clears Way for Rio to Ship

Diamond Multimedia
Systems Inc. plans to ship its Rio PMP300 portable music player next
month now that a federal judge has dismissed objections by two leading
industry groups.

The PMP 300 is a portable, digital music player that can store up to 60
minutes of digital audio or eight hours of speech downloaded from the
Internet. The device uses the MP3 format, which results in very
high-quality copies that sound nearly identical to compact discs.

The Recording Industry Association of
America and the Alliance of
Artists and Recording Companies sued to block Rio’s shipment. They
maintained the device violates copyright by allowing music to be stored
without royalties going to the artists. The groups were also concerned it
would result in illegal music distribution.

U.S. District Judge Audrey Collins denied their request for a preliminary
injunction. Collins delayed shipments of Rio on Oct. 17, granting a 10-day
injunction until the matter could be resolved.

Diamond maintained the device was not covered under the Audio Home
Recording Act, which established guidelines under which music can be
copied for personal use.

Andrew Bridges, an attorney with the Silicon Valley law firm Wilson Sonsini
Goodrich & Rosati, which represented Diamond, said the ruling reaffirmed
the company’s position that Rio was not covered by the act.

Ken Wirt, Diamond’s vice president of corporate marketing, said the device
does not allow multiple copies of a recording to be made. He said Rio was
meant to help artists who want to easily distribute their music over the
Internet.

“As a company with a large investment in intellectual property, we
certainly support the RIAA’s concerns over copyright protection and have
offered to support their efforts in promoting only authorized and licensed
music distribution.

“At the same time, Rio is an important technology development and we have
made a substantial investment in developing and marketing Rio because we
believe it enables musicians, other than those with big record company
contracts, to achieve distribution for their music…,” Wirt said in a
statement.

The ruling was also cheered by operators of Web sites that distribute music
in the MP3 format.

“The ruling is a clear victory for music fans around the world,” said Bob
Kohn, chairman of GoodNoise Corp., a
provider of licensed downloadable music.

“Digital music provided by new music companies like GoodNoise will give
consumers access to music the way they want it. Thousands of consumers
discover the tremendous benefits of downloadable music every day and the
shipment of Diamond’s Rio PMP300 will be a significant milestone to fuel
this revolution,” he said.