CD PLAINTIFFS WANT LABELS’ COPY-PROTECTION REVENUE

Alleging that copy-protected CDs were “defective” products indistinguishable from conventional CDs sold alongside them, suit asks for removal of protected discs from market, or for identification clearly differentiating them from regular CDs. Suit also seeks damages for repair costs as result of disc malfunctions in home PCs.

Suit was filed June 12 in L.A. Superior Court by 2 Cal. residents under state’s consumer protection laws in complaint drafted by class-action law firm Milberg, Weiss, Bershad, Hynes & Lerach. It named as defendants BMG Entertainment, EMI Group, Sony Music Entertainment, Universal Music Group and Warner Music. It seeks range of monetary, injunctive and declaratory awards for alleged “illegal business practices” in violation of state’s Consumers Legal Remedies Act, and for statutory deceit under Cal. Civil Code. Suit also charges labels with breach of expressed and implied warranties, negligent representation and “unjust enrichment” under 1992 Audio Home Recording Act (AHRA). Complaint said plaintiffs will add claims for actual, punitive and statutory damages if defendants don’t rectify violations within 30 days.

Suit alleged that copy-protected discs were “defective” because, in effort to prevent copying in PCs, they sometimes wouldn’t play in PCs or home CD and DVD players and often, in Apple Macintosh PCs, discs jammed in CD tray, requiring repair that wasn’t covered under warranty. Suit said even when discs did play, their compressed sound didn’t have quality of standard CDs, and discs sometimes skipped or failed to play all tracks. Suit said problems of copy-protected discs “hinder the legal rights of customers to play, backup, space-shift or time-shift their own music to other playback mediums” for personal, noncommercial use to other playback mediums.”

Suit made prominent note of AHRA in claiming defendants were “unjustly enriched” by “ill-gotten” gains because they collected royalties on sales of digital recorders and blank media as mandated by AHRA “while simultaneously depriving customers of their legal rights to record their own music” through sale of copy protected discs. It said that it was unjust for defendants to retain revenue from royalties and sale of defective discs, and that money from those sources should be forfeited to plaintiffs.

Suit also went to great length to repeat Philips’ assertion that copy-protected discs didn’t comply with Red Book standards and, as such, couldn’t carry trademarked CD logo -- as some do. Suit said use of logo was another product misrepresentation by labels.

Besides labels, suit cited 100 unnamed “Does” as conspiring with them in manufacturing, distributing, advertising and selling alleged defective discs. That opened possibility that plaintiffs also would sue disc replicators, retailers or copy-protection providers. Suit mentions claim by Tel Aviv-based Midbar Tech that its Cactus Data Shield copy protection had been used on more than 10 million discs. Plaintiffs’ attorney was on vacation last week and unreachable for comment.

RIAA has discounted suit as “frivolous” and defended labels’ right to protect content against unauthorized copying. In past, RIAA has said it was proper to use copy protection against PCs because they aren’t covered under AHRA. Labels had no comment, although Sony Music spokeswoman told us company hadn’t issued copy-protected discs at retail in U.S. Sony has put copy protection on advance titles distributed to reviewers and has sold copy-protected music in Europe. Spokeswoman repeated earlier Sony statements that label was evaluating copy-protection technologies and would label discs prominently as such if any copy protection were implemented.