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Universal Music Group asked a U.S. district judge in New York Tuesday to saddle Web site MP3.com with $450 million in damages as part of a landmark copyright infringement case that has put the future of the pioneering music site in question. Manhattan federal district court judge Jed Rakoff is expected to rule as early as this afternoon on whether the defendant willfully infringed on Universal’s copyrights. In April, Rakoff found MP3.com had violated copyrights by creating a library of CDs offered remotely by the site. While precise compensation figures are not expected to be announced until the next phase of trial, the determination of willfulness will factor heavily into the calculation of awards granted to Universal. In the next phase, which may begin as early as November, the court will determine how many CDs among the 80,000-disc catalog offered by MP3.com through its controversial My.MP3.com service belonged to Universal. In closing arguments, Universal lead attorney Hadrian “Harry” Katz requested MP3.com pay the maximum amount based on assumptions that MP3.com had offered 10,000 CDs out of the catalog. The My.MP3.com service let users listen to remotely stored copies of songs after users proved they had purchased a physical copy of the same CD. The service launched in January but was taken down only four months later amid accusations by the Recording Industry Association of America that the company had infringed on copyrights. A modified version of the service is back up. “The court needs to show people — to show the next board of directors — that the ultimate cost of infringement would be greater than the amount of the awards,” Katz said during the trial. “There are people who may be thinking that it’s a gamble worth taking in the future.” If the judge grants the maximum penalty, it would wipe out MP3.com’s $150 million in litigation reserves, as well as the $188 million in cash the company has on its books. The company also owes the four other major labels — BMG Entertainment, Sony Music, EMI and Warner — an estimated $20 million each in settlements. The settlements were reached earlier this summer. By contrast, MP3.com attorney Michael Rhodes requested the court to institute the minimum statutory damages of approximately $2.4 million instead, based on the company’s internal calculations of about 4,700 CDs it had uploaded from Universal. If the court rules in favor of the plaintiff, the penalty to MP3.com is likely to fall somewhere between $225 million to $450 million. If Rakoff sides with Universal’s demands, this type of “deterrence would be a death sentence” for MP3.com, Rhodes says. MP3.com shares were up 6 cents, or 0.74 percent, to close at $8.56 on Tuesday. Related Articles from The Industry Standard: In Judge Rakoff’s Court, Boys Won’t Be Boys MP3.com Trial: Napster-Bashing and ‘One Guy in a Dress’ Europe’s Four Little MP3s Copyright � 2000 The Industry Standard

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