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MP3.com damages to be set next week

Payout could be massive - or massively massive...

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US District Judge Jed S Rakoff will next week decide whether MP3.com wilfully used 5000-odd CDs owned by record label Universal without permission - and how much the online music company must pay up in damages.

The Judge's ruling is expected on Wednesday, and will come after four days' of testimony from both sides this week.

Judge Rakoff ruled earlier this year that MP3.com had infringed the copyrights of major labels when it compiled a database of over 80,000 CDs on which it based its MyMP3.com service. MyMP3.com allowed CD owners to listen to music they'd already purchased from any Web-connected PC anywhere in the world.

Even though MyMP3.com users were in spirit listening to music they own - just as if they ripped their own CDs to a portable digital music player - the labels contended that in practice they were listening to discs owned by MP3.com, to which they had no right. In short, MP3.com was engaging in copyright violation.

MP3.com will have argued that it believed it was in the right, and ask the Judge to impose a lenient fine. Certainly, Rakoff appears to be leaning that way, having already said that the company will be fined on the basis of the number of CDs it used, not the number of songs, a decision that could cut MP3.com's fine by a factor of ten.

Still, with some 5000 or more CDs in question, MP3.com is not going to walk away lightly, even if the judge imposes the minimum fine. That would still result in a payment to Universal of $3.75 million. At maximum, the fine could easily exceed $150 million. Judge Rakoff will also have to decide just how many copyrights MP3.com violated.

MP3.com is believed to have already paid out around $20 million apiece to EMI, Sony, Warner and BMG - all of whom, along with Universal, brought the copyright violation case in the first place - in private settlements. MP3.com this week blamed the lack of agreement with Universal because the label wants to put it out of business. ®

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