Judge will not dismiss 'Napster investor' suit

A lawsuit brought against erstwhile Napster investors Bertelsmann and venture capitalist Hummer Winblad will not be dismissed, the action's judge has ruled.

US District Court Judge Marilyn Patel said that the music industry had a case that Napster's one-time backers had to answer.

Essentially, major labels EMI and Universal believe that Bertelesmann's $90m investment in Napster, made in 2000, kept it afloat and as such makes the media giant partly responsible for the copyright infringement that Napster contributed to during period from that investment to its 2002 bankruptcy.

Both labels have made the same claim against Hummer Winblad, which pumped $15m into Napster. Both lawsuits, being judged together, centre on whether the investors took charge of Napster during its time as a contributory copyright violator - "to financially benefit themselves at the expense of... artists", as Universal puts it. The two companies want $17bn in damages to cover the financial loss they suffered at, they claim, Napster's hand.

The irony is that Bertelsmann owns Bertelsmann Music Group (BMG), one of the world's biggest recording companies and, through the RIAA, a party to the action. BMG is expected to merge with Sony Music Entertainment later this month.

"Plaintiffs' allegations that defendants exercised full operational control over Napster during periods in which Napster remained a conduit for infringing activity may be wholly unfounded... Regardless, such questions must be left for resolution upon motions for summary judgment or at trial," Patel wrote.

Both sides claim their case is strong and that the discovery process will show as much. Bertelesmann suggested that it will again demand that the judge dismiss the action against it when discovery is complete.

The Napster name is currently owned and run by Roxio, which is not involved in the legal action. ®

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