MUSIC ON THE INTERNET, THE UNITED STATES PERSPECTIVE
Paul D. Supnik
October 29 - November 2, 2000
9595 Wilshire Boulevard, Suite 201
Beverly Hills, California 90212-2502
Telephone: (310) 859-0100
Facsimile: (310) 859-0177
web site: www.supnik.com
MUSIC ON THE INTERNET, THE UNITED STATES PERSPECTIVE
Paul D. Supnik
The application of law in the United States to music on the Internet is currently based on various sources of jurisprudence. Statutory federal copyright law as it has traditionally existed and recently enacted amendments to the copyright law specifically dealing with certain limited aspects of the new technology are both applicable. State statutory law, unfair competition protection and other statutory and common law cases may also apply. A handful of federal cases specifically dealing with the current issues have now been decided.
The statutory basis for copyright will be examined first, along with the exclusive rights provided under the copyright statute, the nature of the violations of those rights and the impact of new legislation on music and the Internet. A review of recent pending and decided case law in the United States will be discussed.
In general, the older law has in some ways, been broad enough to incorporate the issues arising under when applied to music on the Internet, yet the newer legislation intended to deal with the digital age has tended to be cumbersome and not address the issues in a timely or satisfactory manner as applied to music on the Internet.
The applicable copyright law includes the most thorough revision of the Copyright Law in the United States was the Copyright Act of 1976 which became effective January 1, 1978. Since then, two amendments are of particular interest, the Digital Performance Rights in Sound Recordings Act of 1995 (DPRSRA) and the Digital Millennium Copyright Act (DMCA).
U.S. Copyright Basics–Statutory Definitions
The Copyright Act begins with a definition Section 101 containing key definitions applicable to music on the Internet.
''Copies'' are material objects, other than phonorecords, in which a work is fixed by any method now known or later developed, and from which the work can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. The term ''copies'' includes the material object, other than a phonorecord, in which the work is first fixed.
Thus, phonorecords are not considered to be "copies" and have their own definition.
A ''digital transmission'' is a transmission in whole or in part in a digital or other non‑analog format.
An ''establishment'' is a store, shop, or any similar place of business open to the general public for the primary purpose of selling goods or services in which the majority of the gross square feet of space that is nonresidential is used for that purpose, and in which nondramatic musical works are performed publicly.
''Phonorecords'' are material objects in which sounds, other than those accompanying a motion picture or other audiovisual work, are fixed by any method now known or later developed, and from which the sounds can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. The term ''phonorecords'' includes the material object in which the sounds are first fixed.
To perform or display a work ''publicly'' means ‑
(1) to perform or display it at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered; or
(2) to transmit or otherwise communicate a performance or display of the work to a place specified by clause (1) or to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times.
''Sound recordings'' are works that result from the fixation of a series of musical, spoken, or other sounds, but not including the sounds accompanying a motion picture or other audiovisual work, regardless of the nature of the material objects, such as disks, tapes, or other phonorecords, in which they are embodied.
A ''transmission program'' is a body of material that, as an aggregate, has been produced for the sole purpose of transmission to the public in sequence and as a unit.
To ''transmit'' a performance or display is to communicate it by any device or process whereby images or sounds are received beyond the place from which they are sent.
Copyright exists both in the musical composition and in sound recordings by way of Section 102:
Sec. 102. Subject matter of copyright: In general
(a) Copyright protection subsists, in accordance with this title, in original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. Works of authorship include the following categories:
(2) musical works, including any accompanying words;
(3) dramatic works, including any accompanying music;
(7) sound recordings; ...
Section 104 of the Copyright Act identifies eligibility for protection to works under Section 102. Musical works may be protectable without regard to the nationality or domicile of the author for unpublished works and similarly for Berne works and works originating in WTO countries.
The exclusive rights in copyright as they pertain to music are set out in Section 106 of the Copyright Act:
Sec. 106. Exclusive rights in copyrighted works
Subject to sections 107 through 120, the owner of copyright under this title has the exclusive rights to do and to authorize any of the following:
(1) to reproduce the copyrighted work in copies or phonorecords;
(2) to prepare derivative works based upon the copyrighted work;
(3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending;
(4) in the case of ... musical [works], ... to perform the copyrighted work publicly;
(5) in the case of ... musical, ... works, ... to display the copyrighted work publicly; and
(6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.
In the course of distribution of music on the Internet, the following potentially infringing events occur. Reproduction of copies and of phonorecords may occur at various stages of distribution of music. Derivative works may or may not be made. Distribution occurs. And the work may or may not be performed publicly by a digital audio transmission.
Section 106 of the Copyright Act is limited by a group of sections beginning 107 which impose various degrees of limitations on the exclusive rights given under Section 106. The most important limitation tends to be in many situations a right developed under the common law and later codified by statute under the 1976 Copyright Act which is the doctrine of fair use. Fair use permits what would otherwise be an infringement of copyright be a defense to a claim of copyright infringement. The doctrine of fair use is not an easy one to apply. Places where it is likely to be applicable or asserted in connection with the Internet is where small portions or clips of music are used, where they are used on Internet sites which are not entertainment directed and when the music is not otherwise readily available to the public.
The fair use doctrine provides:
Sec. 107. Limitations on exclusive rights: Fair use
Notwithstanding the provisions of sections 106 ..., the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include ‑
(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
(4) the effect of the use upon the potential market for or value of the copyrighted work.
The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.
The determination as to whether or not something is subject to fair use initially requires an analysis of the nature of the purpose and for example, if that purpose is for such purposes as criticism, comment, news reporting, teaching, scholarship or research. Those are the types of matters where the doctrine is most readily applicable. An analysis of four factors set out in Section 107 of the statute must be considered in determining whether or not fair use exists. First to be considered is the purpose and character of the use including whether the use is of a commercial nature or for nonprofit educational purposes.
Second, the nature of the copyrighted work is considered. Entertainment copyrighted works tend to be protectable more than fact based works. The musical work is likely to have entertainment value, though there may be factors that mitigate against that approach. The amount of the work is then considered and the portion used in relationship to the copyrighted work as a whole is considered.
Finally, what is often to be considered to be the most important factor, though not necessarily, is the effect of fair use upon the potential market for or the value of the copyrighted work.
In addition to fair use, the Copyright Act provides other specific exemption from Copyright.
Limited provisions for use of ephemeral recordings are provided, thus, works which have been fixed in tangible medium of expression to obtain copyright.
Provisions regarding sound recordings are made available in Section 114.
The Digital Performance Rights in Sound Recordings Act of 1995 is probably one of the most narrow, yet most complex pieces of copyright legislation in the United States. It attempted at an early stage of development of the World Wide Web to set forth structure and requirements for performance rights of digitally transmitted sound recordings. The act actually affects cable services and online services providers but did not provide eligibility for webcasting as originally enacted. This was enacted long before MP3 emerged on the radar of Congress.
The DPRSRA amends Section 106 of the Copyright Act identifying the exclusive rights of copyright owners by adding a public performance right in digital audio transmissions of sound recordings in sound recordings. Section 114 of the Copyright Act then proceeds to place limitations on the exclusive right granted under Section 106. It specifies that under certain circumstances, public performance of a digital sound recording is not an infringement for (1) non-subscription broadcast transmissions. The terms "non-subscription", "broadcast" and "transmission" are defined terms at the end of Section 114. A "retransmission" under certain conditions is also not considered to be an infringement of the exclusive right under Section 106(6).
A ''broadcast'' transmission is a transmission made by a terrestrial broadcast station licensed as such by the Federal Communications Commission, such as an ordinary radio transmission. A ''nonsubscription'' transmission is any transmission that is not a subscription transmission. A ''subscription'' transmission is a transmission that is controlled and limited to particular recipients, and for which consideration is required to be paid or otherwise given by or on behalf of the recipient to receive the transmission or a package of transmissions including the transmission. Thus, the concept is similar to subscription television or cable television, but for music.
Finally, there are certain other very limited categories under which public performance of a sound recording is not considered to be an infringement of Section 106(6), such as if the transmission is incidental to an exempt transmission, or if it is entirely within a business establishment, if it is a retransmission by a retransmitter, or if its transmission to a business establishment is for use in the ordinary course of business, again subject to various conditions.
If the public performance is not exempt under Section 114, it is possible that the performance may be subject to a statutory license if certain criteria are met. The performance must be part of a non-subscription performance. The obvious objective here was either to not give extra benefits or minimal license fees where either payments are made or the person receiving the digital download is in a position to re-record the musical compositions.
The first of five basic criteria for a statutory license is that the performance be non-interactive, thus, for example, the song cannot be performed on demand. The public performance cannot exceed the sound recording performance "complement", another defined term. A complex statutory structure is set out defining specific types of programs, the order of programs, the time of programs, whether the programs are archived, the number of times programs are transmitted, and whether any announcement is given in advance concerning programs which answer other requirements. One of the requirements is that the schedule of programming cannot actually be published. Additional requirements are set forth concerning encoding display information with the programs. Limitations are provided in permitting exclusive licenses of interactive services except for certain licensors holding copyrights to one thousand or fewer sound recordings.
Provisions are made for agreements upon royalty rates and license terms and conditions for the performance of sound recordings. 17 U.S.C. 114(d)(4)(e). In the event that license agreements are not negotiated, the Library of Congress is then to convene a Copyright Arbitration Royalty Panel to determine the schedule of rates and terms which is binding on all copyright owners. That has now occurred and Section 260 of the Code of Federal Regulations published in May 8, 1998 sets forth the terms and rates of royalty payments for public performances of sound recordings by nonexempt subscription digital transmission services. The royalty rates are 6.5% of gross revenues resulting from residential services in the United States. A late fee is set out at a rate of 1.5% per month.
Specific provisions including those discussed here are very complex and a thorough review of the law and any current updates to it are certainly required before any attempt to rely either upon this brief summary or even a literal view of a statute.
Compulsory licenses are provided for making and distributing of phonorecords. However, the compulsory license does not exist until such time as the underlying musical work was previously distributed publicly.
In order to take advantage of a compulsory license, an initial notice must be filed. A suggested form of the notice is available on the website of the Copyright Office. The compulsory license permits a different recording artist, for example, to make a "cover" of the original phonorecord. The Act provides for making public those who have filed such notices and they are available on the Copyright Office Website as well.
The sections of Copyright Law dealing with duration also show the interrelationship of the copyright laws with other laws enacted by the state or state court judges. This may have an effect with the music on the Internet in dealing with older musical compositions and sound recordings. Essentially, the exclusive rights in sound recordings under the U.S. Copyright Laws did not come into existence in the United States until 1972. It was at this time during which the Phonogram Convention was adopted by the United States and implementing legislation brought protection for sound recordings under the wing of the U.S. Copyright Laws. Prior to that period of time, copyright and sound recordings were protected in the United States essentially by judge made law of unfair competition. Claims of unfair competition were asserted at various times for distribution of sound recordings without permission of the owner of the master recording.
The Copyright Law of 1978 provided that preemption of the state laws are not affected as they pertain to sound recording statutes for pre-1972 sound recordings for a period until 2047, which period was recently extended until the year 2067 under the Sonny Bono Term Extension Act.
The United States is not a member of the Rome Convention and thus, it does not have the full panoply of rights set out in the Rome Convention for performers. In particular there are no performer rights in sound recordings. Thus, while there is protection for the owner of a phonogram and the producer, there is no protection available for the recording artist.
That is not to say that the recording artist has no protections whatsoever, and in an effort to attempt in some way to provide certain protection for performers to conform to TRIPS in the Uruguay Rounds Agreements Act, the United States enacted the Uruguay Rounds Agreement Act to comply in some manner to the TRIPS agreements. In doing so, it essentially provided vast and sweeping rights against bootlegging. Most likely, those laws in at least some respect significantly apply to music on the Internet. In particular, it is likely that they may apply to distribution of bootleg music on the Internet. Section 1101 of the Copyright Act provides:
Sec. 1101. Unauthorized fixation and trafficking in sound recordings and music videos
(a) Unauthorized Acts. ‑ Anyone who, without the consent of the performer or performers involved ‑
(1) fixes the sounds or sounds and images of a live musical
performance in a copy or phonorecord, or reproduces copies or
phonorecords of such a performance from an unauthorized fixation,
(2) transmits or otherwise communicates to the public the
sounds or sounds and images of a live musical performance, or
(3) distributes or offers to distribute, sells or offers to sell, rents or offers to rent, or traffics in any copy or phonorecord fixed as described in paragraph (1), regardless of whether the fixations occurred in the United States, shall be subject to the remedies provided in sections 502 through 505, to the
same extent as an infringer of copyright.
(b) Definition. ‑ As used in this section, the term ''traffic in'' means transport, transfer, or otherwise dispose of, to another, as consideration for anything of value, or make or obtain control of with intent to transport, transfer, or dispose of.
(c) Applicability. ‑ This section shall apply to any act or acts that occur on or after the date of the enactment of the Uruguay Round Agreements Act.
(d) State Law Not Preempted. ‑ Nothing in this section may be construed to annul or limit any rights or remedies under the common law or statutes of any State.
Although there have not been performer's rights as such under United States Copyright law, that is to be distinguished from "performance rights" which do form a very significant aspect of Copyright Law in the United States and is likely to be significant on the Internet. However, the determination as to what constitutes a performance has not been clearly defined by any means. It is probably a performance of a musical composition when there is streaming audio delivered to a consumer. But is it a performance of the underlying musical composition when there is a digital download of a sound recording?
DIGITAL AUDIO RECORDING ACT
In attempt to sway the concerns of the record companies over the prospect of consumer digital recording was assuaged in part by the Digital Audio Recording Act at the time that digital audio tape and the Sony Mini Disc were on the horizon. That statute, though, was in advance of the explosion of the Internet and the World Wide Web and use of music on the Internet and as worded has very little impact on music on the Internet. That Act provided for tax levies on media acknowledging that there would be a certain amount of home recording that would be simply impractical to police. It also provided that home digital recording of audio sound recordings would not be considered an infringement of copyright if a single copy was made.
It further did something rather unique and different for the United States in that it set up in the statutory frame work essentially a method for collection in the same manner that is provided by collection societies for certain groups of performers. Thus, in a minimal way, it created certain performer's rights for certain types of activity.
Following TRIPS at the Uruguay Rounds, Congress enacted the Uruguay Rounds Agreements Act which very quickly and without the opportunity for extensive debate or input from a significant segment of the copyright community, past legislation which did two primary things.
First, it established a system for restoration of copyright of works essentially originating outside of the United States which had fallen into the public domain in the United States for failure to comply with certain formalities namely that being the formality of using a copyright notice or for failure to file renewal certificates of copyright registrations prior to the 1976 Copyright Act. Copyright lasted for a period of 28 years in an initial term followed by a second term of 28 years which was established by the filing of a renewal certificate for copyright registration. The renewal term of copyright lasted 28 years but was eventually extended 19 years until the actual passage of the 1978 Act (and more recently for an additional 20 years to life plus 70 years)
Restoration of copyright has limited applicability for music on the Internet. Only where works have actually fallen into the public domain by certain of these acts such as by publication without notice would there be a significance to Internet in copyright. The one wrinkle relating to restoration is that for restoration to apply, it only applies to works of foreign (i.e. outside of the U.S. as very specifically defined by statute) origin. The reason that this may apply to music on the Internet is the situations under which music actually fell into the public domain. Generally was held that the distribution of sound recordings was not a basis for music falling into the public domain as it was not a public distribution of the underlying musical composition to the general public.
DIGITAL MILLENNIUM COPYRIGHT ACT
The most significant legislation which falls far short of really providing a clear legal structure for what is to come in connection with music on the Internet is a Digital Millennium Copyright Act, known as the DMCA. That Act was enacted although with the strong support and backing of certain key interests and lobbyists in the music industry, without the opportunity for significant comment and analysis by the copyright community. The DCMA includes a number of areas unrelated to music, and one even appearingly completely unrelated to traditional copyright and falling into the design protection arena.
The Act is divided into five parts, the first four of which may have some relevance to music on the Internet.
The first section provides implementation of the WIPO Copyright and Performances and Phonograms Treaties Implementation Act of 1998. Section 102(b) of the DCMA amends the definitions section of the copyright law (17 USC §101) and the eligibility of works for copyright protection. It also expands Section 104A relation to restoration of works of origin outside of the United States to cover treaty countries. Thus, the effect on Music on the web would be to slightly broaden the scope of musical works subject to copyright protection in the United States which are digitally distributed.
There are certain anticircumvention provisions prohibiting the making or selling of devices for circumventing (1) access and (2) copy protection schemes by adding a Section 1201 et seq. To the Copyright Act. But there is no requirement that any affirmative action be taken in that regard. The significance of this is that any action taken to remove any encapsulated software in a digital transmission might either violate this section, or simply be a violation of one of the exclusive rights of copyright in Section 106 of the Copyright Act.
The second part of the DCMA, Title II deals with safe harbors for online service providers that post copyrighted material which is potential infringing. The basic concept is that passive online service providers should not be liable for content posted by others on their services. Title II is implemented by a new Section 512 of the Copyright Act. This is not to be confused with a still different and recently enacted copyright act, "The Fairness in Musical Licensing Act", which also adds a similarly numbered but entirely different Section 512 to the Copyright Act. A change in sections is anticipated in due course. (Perhaps the United States just can't get used to dealing with codes the way our European counterparts can).
Title II describes "take down" procedures and eligibility for the safe harbor limiting infringement liability. The section has two definition of services providers. The broader definition is a "provider of online services or network access, or the operator of facilities therefor." The issue as to what constitutes a "service provided" is currently a key issue in the copyright arena.
The question applicable here is to what extent is an online service provider liable for the unauthorized posting of musical compositions or even musical links on the Internet. Even links which are pointed to completely unrelated, but infringing links may in some circumstances be infringing. For example, in a recent case involving religious teachings of the Mormon church, the church successfully sued a website owner critical of the Mormon church which had links directed to a completely unrelated website but which contained copyrighted material posted without authorization.
Two criteria determine eligibility for the provision. It must adopt a policy of terminating accounts of subscribers who are repeat infringers. An publicized example of the use of this policy is in connection with the requests made by the group Metallica, against numerous members of the public who were alleged to have downloaded Metallica MP3 files without authorization. Secondly, it must accommodate and not interfere with "technical measures" which are used to identify or protect copyrighted works.
The four main areas of limitation provided are:
1. Transitory communication, merely acting as a data conduit, for example where an MP3 file is e-mailed from one subscriber to another. 17 USC § 512(a).
In order to qualify for this limitation, the service provider’s activities must meet the following conditions:
• The transmission must be initiated by a person other than the provider.
• The transmission, routing, provision of connections, or copying must be carried out by an automatic technical process without selection of material by the service provider.
• The service provider must not determine the recipients of the material.
• Any intermediate copies must not ordinarily be accessible to anyone other than anticipated recipients, and must not be retained for longer than reasonably necessary.
• The material must be transmitted with no modification to its content.
2. System caching, such as where a copy of an MP3 file is kept for archival purposes. 17 USC §512(b).
• The content of the retained material must not be modified.
• The provider must comply with rules about “refreshing” material—replacing retained copies of material with material from the original location— when specified in accordance with a generally accepted industry standard data communication protocol.
• The provider must not interfere with technology that returns “hit” information to the person who posted the material, where such technology meets certain requirements.
• The provider must limit users’ access to the material in accordance with conditions on access (e.g., password protection) imposed by the person who posted the material.
• Any material that was posted without the copyright owner’s authorization must be removed or blocked promptly once the service provider has been notified that it has been removed, blocked, or ordered to be removed or blocked, at the originating site.
3. Information residing on systems or networks, such as where an MP3 file is maintained on a computer for downloading by subscribers on request. 17 USC §512(c).
• The provider must not have the requisite level of knowledge of the infringing activity, as described below.
• If the provider has the right and ability to control the infringing activity, it must not receive a financial benefit directly attributable to the infringing activity.
• Upon receiving proper notification of claimed infringement, the provider must expeditiously take down or block access to the material.
In addition, a service provider must have filed with the Copyright Office a designation of an agent to receive notifications of claimed infringement. The Office provides a suggested form for the purpose of designating an agent and maintains a list of agents on the Copyright Office website.
4. Location tools, such as search engines, online directories or linking to unauthorized MP3 websites. 17 USC §512(d).
• The provider must not have the requisite level of knowledge that the material is infringing. The knowledge standard is the same as under the limitation for information residing on systems or networks.
• If the provider has the right and ability to control the infringing activity, the provider must not receive a financial benefit directly attributable to the activity.
• Upon receiving a notification of claimed infringement, the provider must expeditiously take down or block access to the material.
The Digital Millennium Copyright Act, in part followed the WIPO Copyright and Phonogram Treaties. One of the things that the Act does is protect on-line providers of services. The determination and key issue now is to determine what a service provider is in the on-line world. Since the term is left undefined, it includes on-line service providers such as AOL but possibly also others. One of the key features is that there is a safe harbor for on-line service providers of certain types of works, particularly relating to infringement if they follow a particular procedure. The procedure involves giving notice and identifying and specifying an agent to receive that notice.
Several provisions were included in Title IV of the Act relating to modifying the DPRSRA. Streaming audio was not previously included in the act, and this was added. Webcasting is a new category of eligible of "eligible nonsubscription transmissions". One of the aspects of the DMCA was the establishment of a new statutory license for the public performance of a sound recording. The DMCA did not set a statutory rate but required that industry on a particular rate.
An arbitration panel is to convene in the event that industry is unable to agree. Until such time as a specific rate is set, the web casters are encouraged to set aside funds for payment of the royalties which would be retroactive once the rates are actually set. However, the statutory royalty rates are not for interactive web casting. Rather, they are for essentially passive web casting such as occurs for web radio and the like. If for example, an individual clicks on a link for a specific individual song, that is not likely to be considered "non interactive" as activity as specified in the DMCA and therefore, does not qualify for a statutory license.
Given the statutory law that exists under the copyright scheme, the state law including statutory provisions enacted by certain states and the common law enforcement of unfair competition claims for sound recordings, we now come to the issues as they are developing on music on the Internet.
The key issue appears to relate to contributory infringement, jurisdictional issues in connection with infringement law suits (which is also applicable to other types of claims involving Internet), when, where and if performances occur when music is either played, streamed or downloaded on the Internet and when, where and if reproductions occur if music is uploaded, downloaded or placed on web site.
The issue of contributory infringement is highlighted by the cases of Napster, MP3, Diamond Rio.
The Napster case involves a company which facilitates the distribution of MP3 music files on the Internet. Consumers dial up and download software which allows the Napster servers to index the hard drives of the users of MP3 files. Napster essentially provides a searchable database of all users MP3 files for which computers are at that time connected on the Internet, allowing users to then seek out and download files from other users who are on the Internet at the same time. In effect, Napster creates a temporary link to another computer and stays connected during the downloading process. Napster is being pursued by various record companies.
In a motion for summary judgment, Napster asserted certain Safe Harbor provisions of the Digital Millennium Copyright Act. The Court found that the papers submitted by Napster rendered Napster ineligible to assert those provisions of the DMCA. The reason was that the files did not pass from the server to the user but from one user to another user. Napster claimed eligibility of the safe harbor provisions of section 512(a) of the DCMA. The court found that it did not "transmitting, routing or providing connections for material through a system or network controlled or operated by or for the service provider. A & M Records v. Napster, Inc., 2000 U.S. Dist. LEXIS 6243 (May 5, 2000).
In the MP3 case, UMG Recordings, Inc. v. MP3, 92 F. Supp. 2d 349 (S.D.N.Y. 2000), the MP3 web site provides for remote storage of sound recordings. If a user legitimately goes to a record store and obtains the CD, they can then connect to the MP3 server identifying that user as a legitimate owner of a CD. The user is then permitted to go on any computer anywhere in the world and download or listen to MP3 files. MP3.com allegedly copied the tracks of some 45,000 commercial websites onto web servers that operate the My.MP3.com service. To listen or download digital copies, the user must either order a commercial copy of the CD from the website or insert a commercial CD (or a copy, authorized or not of a commercial CD) into the user's computer for verification. The claim asserted was that since MP3 had to reproduce the CD on its own server, that constituted copyright infringement. The use of infringing reproductions was also considered by plaintiffs to be copyright infringement. There, the right allegedly infringes the reproduction right. As of the time of this writing, a settlement with two of the record companies, Warner Bros. and BMG Bertelsman, have been reached involving the payment of a purported sum of $20M.
In the Diamond Rio case, Recording Indus. Ass'n of America V. Diamond Multimedia Sys., 180 F.3d 1072 (1999) it was held that the Diamond Rio which is essentially a type of digital audio recording device did not violate the Digital Home Recording Act in not providing systems for preventing serial copying because Diamond Rio was not a digital audio recording device of the type as defined by the statute. Section 1001(1) defined a "digital musical recording" as "a material object (i) in which are fixed in a digital recording, only sounds and material, statements or instructions incidental to those fixed sounds, if any..." A hard drive of a computer is a material object in which one or more programs are fixed since it also may include various programs completely unrelated to the sound recordings. Therefore, the Rio does not record "directly" from "digital music recordings"
Under the statute, a "digital audio recording device" is any machine or device of a type commonly distributed to individuals for use by individuals, whether or not included with or as part of some other machine or device, the digital recording function of which is designed or marketed for the primary purpose of, and that is capable of, making a digital audio recording for private use. The RIO did not fit within that definition.
 Paul D. Supnik practices copyright, trademark and entertainment law in Beverly Hills, California. He is a past chair of the Intellectual Property and Entertainment Law Section of the Los Angeles County Bar Association and president-elect of the Los Angeles Copyright Society. Further information and references may be found in his website at www.supnik.com.
 The Copyright Act may be found on the Internet at http://www.loc.gov/copyright/title17.
 Significant portions of this section are adapted from the summary of the Act by the Copyright Office. The summary may be found at http://www.loc.gov/copyright/legislation/dmca.pdf.
 This act provides that certain smaller establishments are able to file a petition in a federal court for if they believe that license fees charged by certain performing rights organizations (e.g. ASCAP or BMI) are not reasonable.