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Internet radio stations that allow listeners to crank up the classic rock while tuning out the teeny bop are banging heads with the recording industry. Dueling suits filed in New York and Northern California ask federal judges to decide whether so-called Webcasters violate copyrights by allowing listeners to customize their Web stations’ play list by selecting certain artists and eliminating others. Like the Napster litigation, the outcome could shape the course of music distribution on the Web. “It could have a significant impact on the rights of content owners,” said Jeffrey Knowles, a San Francisco-based partner with Coblentz, Patch, Duffy & Bass who is representing the trade group Recording Industry Association of America. Lawyers representing the Web trade group Digital Media Association would not comment on the litigation, but in court papers and prepared statements, the DiMA says it wants to participate in talks leading to a system that allows Webcasters to create sustainable, stable businesses and pay “significant” royalties. Under Section 114 of the 1998 Digital Millennium Copyright Act, Webcasters can play copyrighted music over the Internet as long as they pay standard royalties and meet certain criteria — including ensuring that broadcasts are not interactive. In April 2000, DiMA filed a petition for rulemaking with the U.S. Copyright Office asking it to clarify the term “interactive” because several Webcasters allow listeners to tailor broadcasts to their taste. The copyright office said it could not make a general determination on whether Webcasts were interactive. Earlier this year, the recording industry asked the copyright office to disqualify several Webcasters from royalty arbitration proceedings. Individual recording companies then filed suits in May in U.S. district court in New York asking courts to silence Webcasters transmitting what the industry labeled “interactive” broadcasts and asked for $100,000 for each infringed song. The Digital Media Association, along with Webcasters Launch Media and MTVi, fired back with a declaratory relief action in the Northern District of California. The recording industry argues that because interactive services pose the greatest threat to traditional record sales, interactive Webcasters should be required to negotiate special licensing agreements. “The idea that you can order up what you want is a significant issue in terms of how much music people are going to buy off a record rack,” Knowles said. “If you can order it up, you may decide not to buy it.” Knowles said his association’s goal is not to put Webcasters out of business but to ensure copyright holders are properly compensated. “If a service is going to offer that, it will get the appropriate license and will pay the appropriate royalty,” Knowles said. In court papers, DiMA attorneys at Weil, Gotshal & Manges argue it’s unclear what constitutes an “interactive” service. “This request for judicial interpretation of the [copyright act's] compulsory sound recording license provisions — specifically for clarification of whether consumer-influenced Internet radio should be deemed ‘interactive’ — is an effort to determine a narrow legal issue,” according to a statement DiMA released after filing suit. “We are not seeking damages; rather we are seeking to participate in the process that will ensure significant payments to copyright owners and creators, and we are seeking legal certainty that will allow DiMA member companies to develop rational, sustainable business models.” RIAA attorneys dismiss the San Francisco Bay Area suit as “procedural jockeying.” They argue the case should be dismissed because the recording industry trade group is not a real party, and the true litigants are based in New York. The case was initially assigned to a magistrate judge and the motion to dismiss has been scheduled for a hearing in November. But the recording industry has filed a notice of a related case, seeking to have the motion assigned to U.S. District Judge Ronald Whyte in San Jose, Calif. Ruling in March in a similar cross-country venue dispute between the recording industry and the Web site MP3Board.com, Whyte stayed the San Jose case pending the outcome of the litigation in New York.

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