BPI seeks damages from CD WOW!

'Flagrant and systematic breach'

The British recording industry has taken online retailer CD WOW! to court, claiming that the company is breaking a previous court-ordered undertaking not to sell cheap CDs imported from Asia.

CD WOW! agreed in 2004 to stop selling CDs in the UK which were imported from south east Asia. Though the CDs were genuine, their sale in a market for which they were not intended broke trade mark laws. The practice is known as 'parallel importing'.

CD WOW! shareholder Philip Robinson's lawyers admitted in court that the company had breached the undertakings it made to the High Court in 2004 and said that it would pay £50,000 in costs to BPI but believed that it was not liable for fines or damages.

The BPI said in court that it had made test purchases of albums from CD WOW! and found that discs such as Robbie Williams' Greatest Hits and the Live Aid DVD were being despatched from Hong Kong.

"We believe CD WOW! is guilty of flagrant and systematic breaches of a High Court order," said Roz Groome, BPI's general counsel. "The penalties for such breaches can be significant."

Richard Spearman QC, representing the record companies, said in court that the company had long worried the record companies.

"The CD WOW! business has at all material times been a very substantial concern," he said. "As at 2002 it was supplying some 10,000 units per day to the UK market."

The BPI says that CD WOW! sold £21.7m worth of music in the UK in 2005, and that it is the third biggest online music retailer with 23 per cent market share.

The BPI sought a court order that CD WOW! is in contempt of court and a fine, as well as damages for breach of copyright to record labels and the full cost of the BPI case.

The case rests on the licences involved in the Hong Kong-sourced CDs and DVDs. The licences permit the sale of those discs only in the Hong Kong market. The UK arms of the record labels hold exclusive licences for sale of the material in the UK and claim that the Asian discs breach their copyright.

The judge in the case has reserved judgment to a later date.

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