XM Satellite Seeks to Block Copyright Suit by Record Labels

July 19, 2006

XM Satellite Radio has asked a federal judge to throw out a copyright lawsuit by the recording industry over the company’s new iPod-like device that can store up to 50 hours of music.

XM Satellite said the 1992 Home Recording Audio act protects it from being sued over its $400 handheld “Inno” device. The law bans some copyright claims against equipment makers and consumers who make digital music recordings for private use.

In a court filing, XM Satellite said the 1992 protections represent “Congress’ efforts to insure that the powerful recording industry would not be able to restrict the right of consumers to record songs that are broadcast over the radio or stifle innovation by chilling the development and use of the latest recording technologies.”

The lawsuit, filed in May in New York by the largest record labels, accuses XM Satellite of “massive wholesale infringement” because the new gadget can record hours of music and automatically organize recordings by song and artist. The device is sold under the slogan, “Hear it, click it, save it.”

XM Satellite noted that the trade group for the largest labels, the Washington-based Recording Industry Association of America, supported passage of the 1992 law.

A spokesman for the recording association, Jonathan Lamy, said XM Satellite’s legal arguments were “arcane.”

“If XM wants to compete with iTunes, Rhapsody and similar music distribution services, it needs to obtain the appropriate authorization,” Lamy said.

The music industry’s lawsuit sought $150,000 in damages for every song copied by XM Satellite customers using the devices, which went on sale in April. The company said it plays 160,000 different songs every month.

XM subscribers pay $12.95 per month to listen to more than 170 channels of entertainment, sports and news programs. Music recorded on XM’s Inno sometimes includes disc-jockey chatter at the start and end of some songs and includes static if reception fades while a song is recording.

The lawsuit does not directly seek any payments from or sanctions against XM subscribers who record songs. But it accuses XM Satellite of contributing to copyright violations by its subscribers and inducing customers to break the law, so it’s unclear whether consumers could eventually be sued, too.

In a related court filing Monday, the Consumer Electronics Association, a leading trade association for equipment makers, sided with XM Satellite. It also said the company was protected against such lawsuits by the 1992 law.

The Home Recording Rights Coalition, a consumer advocacy group, also joined in CEA’s court filing.

XM Satellite has balked at the industry’s efforts to sell expensive distribution licenses similar to those required for Internet downloading services, such as Apple Inc.’s iTunes. Its chief rival, Sirius Satellite Radio Inc., has already agreed to pay for such licenses to cover similar gadgets for its service.

XM Satellite has compared its new device to a high-tech videocassette recorder, which consumers can legally use to record programs for their personal use. It also noted that songs stored on the device from its broadcasts can’t be copied and can only be played for as long as a customer subscribes to its service.

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