11:44am PT by Eriq Gardner
Record Industry Targets General Motors, Ford Over Music-Copying Vehicles
On Friday, the Alliance of Artists and Recording Companies (AARC) — perhaps the most obscure royalty collection outfit around — filed a lawsuit against General Motors, Ford Motor Company and suppliers over auto vehicles that include music-copying devices. Here's the full complaint.
The AARC was established after Congress passed the Audio Home Recording Act of 1992 (AHRA). At the time, compact discs were penetrating the market. The law was enacted so that manufacturers of personal media devices could sell products without threat of being sued for contributory copyright infringement. In return, they agreed to pay royalties to the Copyright Office ranging from $1 to $12 per device. The money then gets distributed.
The new lawsuit alleges that that the defendants are skirting obligations for devices seen on such vehicle models as the Buick LaCrosse, the Cadillac CTS, the Chevrolet Volt, the GMC Terrain, the Ford Mustang, the Ford Taurus and the Lincoln Navigator.
"Defendants have violated and continue to violate the AHRA by manufacturing or importing and distributing digital audio recording devices without complying with the AHRA," states the lawsuit. "Defendants distribute these devices either pre-installed in vehicles or intended for use in vehicles. Defendants designed these devices for the express purpose of copying music CDs and other digital musical recordings to a hard drive on the devices, and they market these devices emphasizing that copying function."
If the AHRA doesn't get much press, there's a very good reason. According to records kept by the Copyright Office, the total amount of royalties collected last year on digital audio recording technology was just $748,277.72. That's down 62.44 percent from the previous year.
And why so little? Here's one possible reason.
In the late 1990s, in one of the only lawsuits ever about the AHRA, the Recording Industry Association of America took Diamond Multimedia Services to court over its Rio MP3 player. The case went up to the 9th Circuit Court of Appeals, which examined whether the Rio was really a digital audio recording device, known in the business as a DARD, or whether it fell under an exemption given to devices “in which one or more computer programs are fixed."
Over the RIAA's objection, the appeals court ruled that exemption covered computers and their hard drives. The RIAA lost, and as a result collected royalties fell precipitously thereafter. The AHRA seemed destined to soon be forgotten.
Even though GM refers to their music-copying equipment as a "Hard Drive Device," the plaintiff clearly believes that it should not be given the same treatment afforded the Rio MP3 player. The recording function is alleged to be designed and marketed for the "primary purpose" of copying music.
"All other uses of the Hard Drive Device’s recording function are minor or incidental to making digital audio copied recordings," says the complaint filed in DC federal court. "For example, although the device’s recording function might also be capable of saving 'favorites' or updating maps for a navigation feature, such other functions are insignificant relative to its ability to copy music CDs."
Now, the record industry seeks to have GM's "Hard Drive," which copies a CD at the click of a "yes," and Ford's "Jukebox" device, a 10GB device that can store up to 2,400 songs, be declared as DARDs.
As such, the plaintiff demands a permanent injunction to restrain the auto companies from distributing these DARD-loaded vehicles. As for damages, the plaintiff demands $2,500 per DARD manufactured, imported, or distributed in the last three years. Do the math on hundreds of thousands of newer vehicles on the road.