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Legal
Napster back in court, lose
By CMU Editorial | Published on Friday 28 January 2011
Ah, Napster losing in court, it’s like the good old days all over again. Except, of course, this is a totally different Napster to the one that dominated the early file-sharing court battles in America.
Yes, Napster v2.0 may be a legitimate digital music service, but it’s not immune to the occasional legal squabble. This one relates to Napster’s licensing deals with US independent label Rounder Records, and more specifically the publishing royalties due on tracks released by the indie and then sold or distributed by the digital service to its customers.
Napster has had two licensing deals with Rounder. The second, struck in 2006, specifically mentioned the mechanical royalties due to a song’s publishers whenever a Rounder recording was sold, and said it was the label’s job to ensure those were paid, and to indemnify Napster against any related claims. The original deal from 2001, however, did not saying anything so explicit about those royalties, meaning some initially went unpaid.
In 2006, copyright administration company MSC Music America arrived on the scene claiming to represent the owners of some of the songs on which publishing had not been sorted, and promptly sued. An out of court settlement followed two years later, but by that point Napster had run up $1.3 million in legal bills.
Napster promptly sued Rounder Records to recover that money, I think on the basis that under the first contract the label had an implied duty to sort out mechanicals, and under the second they had an stated obligation to cover any legal costs the digital firm incurred related to publishing royalty disputes on their recordings.
But, according to the Hollywood Reporter, a New York judge this week found in favour of Rounder Records, saying that it was the 2006 contract that mattered – it superseding the original agreement – and that in the section of that document that dealt with indemnity it was agreed Napster would get Rounder’s prior “written consent” before running up any costs. It didn’t, so no damages were due.
The original Napster, of course, was sued into bankruptcy. Roxio bought the brand name, eventually spinning it off into a separate company, which is now a subsidiary of Best Buy.
