May 13, 2003
Universal Joins Suit Against Bertelsmann

Universal Music Group, a branch of Vivendi Universal, filed a copyright infringement suit on Monday with the U.S. District Court of in New York against Bertelsmann AG. It is expected that the suit will be combined with a $17 billion lawsuit filed in February by other music publishers, including rhythm & blues pioneers Jerry Leiber & Mike Stoller, that accuses the German media company of investing $100 million on Napster, which helped the service stay alive and succeed longer than it would have otherwise.

Universal released a statement saying: "Bertelsmann did not merely provide a loan to Napster; nor was it merely a passive investor in Napster. Rather, it took control of the Napster system to financially benefit itself at the expense of Universal and its artists". When it first started supporting Napster, Bertelsmann said its intent was to build a legitimate music subscription service. However, Universal alleges in the law suit that "Bertelsmann recognized it did not have the technical capacity or business model to implement such a service for some time."

Derek Caney, from Reuters, writes: "Universal [...] has been one of the more aggressive record companies in pursuing legal remedies to combat piracy. The industry has blamed file-sharing technology for much of the recent slump in record sales". In fact, only last month, Universal, together with EMI Group Plc, sued San Francisco-based venture capitalists, Hummer Winblad Venture Partners, who once supported Napster.

Three among the five biggest record companies, AOL Time Warner Inc.'s Warner Music and Sony Music, declined to comment on whether they would join the suit and EMI was not immediately available for comment. Reuters reports that "one label executive who requested anonymity said they had looked at the suit but decided it was not worth pursuing."

Posted by Valentina Pasquali at May 13, 2003 08:44 PM
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