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Recording Industry Sues 'Next Napster' Companies

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SAN FRANCISCO -- Major music labels and movie studios moved to protect their products Wednesday, suing for copyright infringement the makers and distributors of a Napster stepchild program that lets users freely trade pirated music, movies and software on the Internet.

Plaintiffs including MGM Studios, Columbia Pictures, and the Sony Corp. (SNE) and AOL Time Warner Inc.'s (AOL) Warner music groups, filed suit late Tuesday in Los Angeles federal court.

The companies claim that a file-sharing program used by Grokster, MusicCity networks and Consumer Empowerment BV "developed and control a network largely dedicated to the repeated and exploitative unauthorized distribution and reproduction of plaintiff's protected works."

The software was developed by Amsterdam-based Consumer Empowerment BV, also known as FastTrack, and is licensed to MusicCity and Grokster. None of the companies being sued responded to phone calls and e-mails from The Associated Press seeking comment.

MusicCity is based in Franklin, Tennessee and Grokster operates from the island of Nevis in the West Indies.

Grokster and MusicCity license and distribute nearly identical peer-to-peer software that allows users to look for, trade and copy various computer files containing music, video and software content. MusicCity calls its version of the software "Morpheus," while Grokster has named its version after the company.
Each version of the software can communicate fluently with the other branded versions.

The software has grown rapidly in popularity since Napster went offline earlier this year in a desperate effort to comply with a court order that it cease maintaining a network of users trading copyright music.

Webnoize research figures released Wednesday found and average of 1 million simultaneous users on the FastTrack network during September, up from 580,000 average simultaneous users in August. During September, users on the FastTrack-powered network downloaded 1.51 billion files.

"The FastTrack network already is very close to the levels that Napster was at during its peak," said Webnoize analyst Matt Bailey. He predicted that Morpheus and Grokster users would be difficult for the entertainment industry to stifle because, unlike Napster, they seldom log on to central servers at a company's headquarters.

Instead, FastTrack allows the users with high-speed Internet connections to serve as 'supernodes' -- personal PCs acting as a hub to connect file-sharing users to each other. Napster required users to log on to the company's own servers, which were subject to a court-ordered shutdown.

A quick look at the Morpheus network Wednesday morning revealed 539,211 users sharing everything from Shania Twain songs to unauthorized digital copies of the hit movie "Hannibal." Also available on the network were full versions of Adobe Photoshop, the professional-quality image editing software that normally retails for more than $600.

The suit comes at a time when the recording industry hopes to deflate the growing move toward unauthorized file-sharing by launching its own subscription online music services. MusicNet will offer content from the BMG, EMI and Warner labels while pressplay will offer EMI, Sony and Universal content. Both services are scheduled to launch later this year.

The record industry in particular is showing little patience for would-be successors to Napster, which made trading MP3s popular, and the wide-open bazaar similar technology has spawned.

"We cannot sit idly by while these services continue to operate illegally, especially at a time when new legitimate services are being launched," said Hilary Rosen, president of the Recording Industry Association of America.
Motion Picture Association of America president Jack Valenti echoed Rosen's sentiments, adding that "those named in this suit have sought to profit from works protected by copyright, without obtaining the copyright owner's permission."

The suit seeks the maximum damages allowable by law, $150,000 for each infringed work. The suit also seeks a permanent injunction enjoining the defendant companies from directly or indirectly infringing on the copyright material in the future.

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