A federal judge on Monday narrowed a lawsuit by EMI Group Ltd and 14 record companies and music publishers that accused MP3tunes LLC of letting users copy their songs without permission.
U.S. District Judge William Pauley in Manhattan said MP3tunes and its Chief Executive, Michael Robertson, did not violate the federal Digital Millennium Copyright Act in permitting downloads, except as to songs specifically identified as having been pirated.
In essence, he said it was users rather than MP3tunes that were responsible for any infringements.
"While a reasonable person might conclude after some investigation that the websites used by MP3tunes executives were not authorized to distribute EMI's copyrighted works, the DMCA does not place the burden of investigation on the Internet service provider," Pauley wrote.
MP3tunes is a so-called cloud music service that lets users store music in online "lockers." Amazon.com Inc, Apple Inc and Google Inc have or are developing similar services.
Pauley did find the defendants liable for "contributory" copyright infringement for songs where notices of alleged infringement were provided. He also said Robertson was liable for having personally transferred songs from unauthorized websites.
"This is a huge victory," said Greg Gulia, a partner at Duane Morris who represents MP3tunes and Robertson. "Users can still download songs from publicly available websites, and store them without a separate license fee, so long as MP3tunes complies with takedown notices. The main takeaway is that MP3tunes' fundamental business model has been upheld."
A lawyer for EMI and the other plaintiffs did not immediately respond to a request for comment. Citigroup Inc owns EMI and is trying to sell it.
The four-year-old lawsuit is part of the music industry's effort to stop websites from letting people download and share music online without paying for it.
On May 12, the operators of LimeWire agreed to pay record companies $105 million to end a federal trial over copyright infringement damages owed by the once popular but now defunct file-sharing service.
There were 3,189 recordings, 562 musical compositions and 328 album cover images at issue in the MP3 tunes lawsuit.
The case is Capital Records Inc et al v. MP3tunes LLC et al, U.S. District Court, Southern District of New York, No. 07-09931.