Feeds

CD WOW! fined for contempt of court

Grey skies turn black for music retailer

Providing a secure and efficient Helpdesk

A group of record labels has won its High Court case against online music retailer CD WOW!, which was found to have infringed copyright and been in contempt of court over an earlier order.

That offence is called parallel importing and involves a breach of copyright. CD WOW! had previously promised to a court not to engage in parallel importing.

"This judgment confirms that CD WOW have not only consistently flouted the law in their business practices, but have flagrantly ignored the undertakings that they themselves gave to the Court that they would trade legally," said BPI general counsel Roz Groome.

The case, which has been running for six years, centred on CD WOW!'s sale of CDs and DVDs for significantly less than High Street prices. The company sold its CDs from a warehouse in Hong Kong, where CDs are sold for less than they are in Europe.

The recordings were not pirated discs but their sale in the UK broke copyright law. Record labels typically create regional companies to whom they licence the copyright in music for sale in those regions. Those companies can then match their prices to particular market conditions, and through copyright law the parent label can ensure that those markets which can bear a higher price are forced to pay that.

Though CD WOW! maintains that it has never deliberately engaged in parallel importing, it promised a court in 2004 that it would not conduct parallel importing in the future in order to settle its case with the BPI.

The High Court has found that it broke that agreement and breached copyright law. It has ordered it to pay a fine to the Crown and damages for copyright infringement and legal costs to the record labels and the BPI.

CD WOW! had claimed that it was a coincidence that the discs bought by the BPI happened to be parallel imports. It said that this was a result of human error and not a company policy.

Justice Evans-Lombe in the High Court "unhesitatingly rejected" the claims that only human error was at fault. He said there was "strong evidence that CD WOW! was committing widespread breach of the undertakings... when the contempt application was launched" and that "CD WOW! had taken no effective steps to ensure compliance with the undertakings even after an application for contempt had been served".

Evans-Lombe said in his ruling that in "meeting the criminal burden of proof" the BPI had established "beyond reasonable doubt" that CD WOW!'s actions were a "substantial breach of the court order" and that it had "no tenable ground of defence to the claimants' claim for damages for primary infringement of the claimants' copyright".

"The Court has now given a clear message to CDWOW – stop infringing copyright and pay for your past misdemeanours or face serious consequences," said Groome. "The BPI will be using this judgment to ensure that no other company unfairly undermines legitimate retailers in the UK that are trading successfully and respecting the law."

CD WOW! said that the ruling was harder on it than it had expected. "We knew the verdict was always going to be a negative one because we held our hands up to a number of incidents where we could be deemed to have breached our contract, even though it was not intentional," said CD WOW! founder Henrik Wesslen. "However, this is a harsher verdict than we would have hoped for and we will be taking this further to fight this injustice.

"At a time when the record industry is losing vast revenue to piracy, it seems ludicrous that they can set out to destroy a section of the market that is actually making them money," said Wesslen. “This battle has highlighted the failings of certain aspects of the copyright laws and hopefully we can use the attention this hearing has generated to continue our campaign for change."

Copyright © 2007, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

Secure remote control for conventional and virtual desktops

More from The Register

next story
Facebook pays INFINITELY MORE UK corp tax than in 2012
Thanks for the £3k, Zuck. Doh! you're IN CREDIT. Guess not
DOUBLE BONK: Testy fanbois catch Apple Pay picking pockets
Users wail as tapcash transactions are duplicated
Happiness economics is bollocks. Oh, UK.gov just adopted it? Er ...
Opportunity doesn't knock; it costs us instead
Google Glassholes are UNDATEABLE – HP exec
You need an emotional connection, says touchy-feely MD... We can do that
YARR! Pirates walk the plank: DMCA magnets sink in Google results
Spaffing copyrighted stuff over the web? No search ranking for you
In the next four weeks, 100 people will decide the future of the web
While America tucks into Thanksgiving turkey, the world will be taking over the net
prev story

Whitepapers

Choosing cloud Backup services
Demystify how you can address your data protection needs in your small- to medium-sized business and select the best online backup service to meet your needs.
Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.