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Unauthorized internet reseller of plaintiff’s products is not guilty of trademark infringement, and does not cause actionable initial interest confusion, by using plaintiff’s trademarks in meta tags of website at which plaintiff’s and its competitors’ products are sold, and in...

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UMG Recordings, Inc. v. MP3.Com Inc.

92 F. Supp. 2d 349 (S.D.N.Y., May 4, 2000)

Court held that defendant's service infringes plaintiffs' copyrights in various sound recordings. Defendant claims in advertisements that this service permits users to store and listen to their CDs from any location at which they can access the Internet. To operate this service, defendant purchased a large number of CD's containing plaintiffs' sound recordings, converted them to MP3 files, and stored these MP3 files on its servers. A user wishing to access any of the songs contained in these files was first required either to demonstrate to defendant that it owned a CD containing the song in question (by inserting the CD into its computer), or to purchase the CD from a designated online vendor. Once the user satisfied this requirement, he was permitted for free to access the MP3 file resident on defendant's server, which MP3 file had been created from plaintiffs' CDs.

The court held that defendant's act of converting plaintiffs' CDs into MP3 files, and providing access to these files to users in the manner outlined above, infringed plaintiffs' copyrights in these sound recordings.

The court rejected defendant's argument that this was a fair use of plaintiffs' sound recordings. In reaching this conclusion, the court held that defendant's use was commercial (defendant intended to sell advertising on its site once it had adequate user traffic) and not transformative, the protected work was close to the core of those intended to receive copyright protection, defendant had copied virtually all of plaintiffs' works and by its actions, adversely impacted plaintiffs' ability to license their works in this fashion. Of note, the court, relying on Infinity Broadcasting Corp. v. Kirkwood, 150 F3d 104, 108 (2d Cir. 1998)(rejecting the fair use defense by operator of a service that retransmitted copyrighted radio broadcasts over telephone lines), stated:

[A]lthough defendant recites that provides a transformative "space shift" by which subscribers can enjoy the sound recordings contained on their CDs without lugging around the physical discs themselves, this is simply another way of saying that the unauthorized copies are being retransmitted in another medium - an insufficient basis for any legitimate claim of transformation.
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