Bertlesmann settle first claim over actions resulting from its financial support of Napster’s file sharing service

February 2005

Record Labels

Bertelsmann has agreed to pay about $50,000 to settle accusations from Bridgeport Music that it had contributed to copyright infringement by lending millions of dollars to Napster in 2000 and 2001. The settlement, which covers the small label’s legal fees, is the first sign of a break in a battle that has taken shape amid the fallout from the collapse of Napster. Napster was forced to file for bankruptcy protection Bridgeport is the smallest of the music companies pursuing copyright-infringement claims, and Bertelsmann may still face a protracted battle with the industry’s bigger and wealthier players including the EMI Group and the Universal Music Group. Bertelsmann owns 50 percent of the newly merged music giant Sony BMG Music Entertainment. The companies contend that Bertelsmann, which lent Napster about $85 million to develop a new service that would compensate labels and songwriters, in essence controlled the online company and should be held responsible for the theft of songs. Bertelsmann’s lawyers say the company did not hold an equity stake or seats on Napster’s board, and lacked the sort of control needed to be found liable. The federal judge overseeing the case recently denied Bertelsmann’s motion to dismiss the case, but Bertelsmann lawyers said they thought the judge’s decision established.


CNET / New York Times

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