Judge wants label records in Napster case

Parties on both sides of a copyright infringement suit against Napster investors will have to produce privileged documents, a U.S. District Court judge ruled Friday.

Judge Marilyn Hall Patel of the U.S. District Court of the Northern District of California granted a defense motion for UMG Recordings (Universal Music) and EMI Group (EMI) to turn over "previously withheld communications" regarding the preparation of two white papers for the U.S. Department of Justice (DOJ).

The judge also ordered the labels to hand over materials relating to internal investigations of the companies and two joint ventures in which they participated, MusicNet and Pressplay, according to court documents.

In 2001, Universal Music and EMI, along with other major labels, were investigated by the DOJ for colluding on pricing for digital downloads. The DOJ believed the labels were manipulating download prices in order to maintain CD price levels and sales.

Judge Patel wrote that some of the white papers' "disclosures directly contradict the claims in the MusicNet White Paper that no competitively sensitive information was exchanged through the white paper," and deemed "the statements related to safeguards in the White Paper were deliberately misleading."

The requested documents are part of defendant and Napster investor Hummer Winblad Venture Partners' attempt to prove that the other record labels did not make their catalog available for licensing by Napster for legal distribution to its users.

In a separate ruling, Patel ordered Bertelsmann "to produce communications related to the creation of the loan document and to the submission of that loan document in the bankruptcy proceedings and in this court." The order did not specify a deadline by which these documents must be produced.

Bertelsmann is accused by Universal Music and other plaintiffs of having funded Napster's legal efforts against the other music labels. Bertelsmann refers to the US$50 million investment as a loan; the plaintiffs see it as an equity investment, according to the court document.

The case is part of ongoing lawsuits initiated against Napster in its earliest incarnation, as a file-swapping network that saw the emergence of large-scale peer-to-peer activity that the music industry viewed as wholesale piracy. Its latest incarnation, as a Bertelsmann-owned music service for paid downloads, began in the summer of 2004.

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Steven Schwankert

IDG News Service
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