XM fails in bid to kill copyright litigation

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WASHINGTON -- A federal judge in New York on Friday rejected XM Radio's attempt to quash the copyright infringement lawsuit the record labels brought against the company's products that allow customers to digitally record music.

In her order dismissing XM's petition to dismiss the lawsuit, U.S. District Court Judge Deborah A. Batts said the satellite radio company failed to prove that the Audio Home Recording Act gave the company immunity from the nation's copyright laws .

"At the outset, the court finds untenable XM's assertion that (the Audio Home Recording Act) offers a distributor of a (digital audio recording) 'absolute immunity' from copyright litigation," Batts wrote.

Batts went further than simply dismissing XM's claim that the AHRA gave it immunity as she explained that the company was operating outside the license it got under to air the music.

"By broadcasting and storing this copyrighted music on (digital audio recording devices) for later recording by the consumer, XM is both a broadcaster and a distributor, but is only paying to be a broadcaster," she said.

At issue is the legality of the XM2go. The service allows XM customers to download music transmitted digitally by the Washington, D.C.-based company.

In May the major record labels asked the court to force XM Satellite Radio to end its new service that allows subscribers to digitally download broadcasts by the company.

In its request for a permanent injunction and damages filed in New York against the Washington-based company, the record labels contend the XM2go service causes "massive wholesale infringement of the (labels') copyrighted sound recordings."

XM countered, arguing that provisions in the Audio Home Recording Act's protected the company from the suit. XM contends that the XM2go service is the digital equivalent of recording off the radio, a practice that is legal.

Batts action on Friday is a blow to XM as it allows the label's lawsuit to go forward.

"We're pleased that the court has rejected XM's attempt to misuse the Audio Home Recording Act as a legal loophole for distributing sound recordings to its subscribers," said RIAA SVP and general counsel Steven Marks. "The AHRA was never intended to allow a service offering distributions of music to duck paying creators what they are due."

The record labels contend that allowing XM customers to digitally record music without compensation, undermines competitors like iTunes and Rhapsody.

"Parity among digital music services is a key issue in today's marketplace," Marks said. "We hope this decision paves the way for resolving this case in the marketplace."

In a statement, XM said it remains confident that the lawsuit is without merit and it will prevail.

"At this stage of the proceeding, the court's ruling is required to be based on the false characterizations set forth in the plaintiffs' complaint," the company said. "The real facts strongly support our view that the lawsuit is barred by the Audio Home Recording Act. We look forward to making our case in court."
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