German court blocks $17bn Bertelsmann suit

A Tale of Two Jurisdictions

The German Constitutional Court has intervened in the $17bn lawsuit filed in New York in February against Bertelsmann over the funding of Napster.

In a ruling Friday, July 25, the court said the lawsuit could not be delivered to Bertelsmann because it would violate the company's rights under the German constitution.

"If lawsuits in (foreign) courts are obviously misused to bend a market player to one's will by way of media pressure and the risk of a court order, this could violate the German constitution," the court said in a statement, Reuters reports.

The court said its decision is preliminary, lasting for six months. It will deliver a ruling on the constitutionality or otherwise of the lawsuit after a full hearing.

This is a turn-up for the books. Isn't it American courts that are supposed to extend their jurisdictional sovereignty overseas?

Bertelsmann is seeking to have the lawsuit dismissed in the US. As a media giant, with huge interests in the US, it has a legal corporate identity and getatable assets in the country where the suit was filed. So it is unclear what effect the German court's ruling would have.

Bertelsmann stands accused of supporting music piracy by part-funding Napster, the wildly popular file trading service which collapsed into bankruptcy in 2001, following a blizzard of lawsuits. The plaintiffs in the case against Bertelsmann are two of the four other music majors, Universal and EMI, and music publishers.

The damages demanded - $17bn - look ludicrous, equivalent to nearly half the annual turnover - not the profits - of the world's recorded music industry. In a good year. ®

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