Commercial Litigation Involving the Recording Industry May Proceed

A business lawsuit in which record companies claimed that XM Satellite Radio Holdings, Inc. was depriving them of revenue by allowing consumers to store songs can proceed to trial, a New York judge ruled last week. The case is another in recent highly publicized actions relating to the recording industry.

The case was brought by Atlantic Recording Corporation, BMG Music, Capitol Records, Inc., and other music distribution companies against the satellite radio broadcaster. The plaintiffs claim that XM infringed upon their exclusive distribution rights by allowing consumers to record songs on to special receivers marketed as “XM Plus MP3” players. The judge denied protection to XM under the Audio Home Recording Act of 1992. The case will now proceed to trial based upon a variety of claims including unfair competition and theft of the plaintiffs’ proprietary rights to the music. Commercial litigation of this nature has proliferated in the recording industry as record companies attempt to curtail the allegedly improper use and distribution of their rights to music and creative work product.