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Ex-MP3tunes chief hit with estimated $41 million copyright verdict

Michael Robertson (R), CEO of MP3.com, testifies before a Senate Judiciary committee on Capital Hill on the future of digital music, July 11
Michael Robertson (R), CEO of MP3.com, testifies before a Senate Judiciary committee on Capital Hill on the future of digital music, July 11

By Nate Raymond

NEW YORK (Reuters) - The former chief executive of defunct online music storage firm MP3tunes was ordered to pay an estimated $41 million on Wednesday after being found liable for infringing copyrights owned by record companies and music publishers once part of EMI Group Ltd.

Lawyers for Michael Robertson and the EMI companies are expected to take until next Tuesday to figure out exactly how much money was awarded in the complex, lengthy verdict issued by the federal jury in Manhattan.

But a lawyer for EMI, Luke Platzer, estimated after the verdict was read that it added up to roughly $41 million. The verdict included $7.5 million in punitive damages.

The verdict came a week after the same jury found Robertson and the bankrupt company liable on various copyright infringement claims.

The case marked the latest victory for the music industry in its court battles with online content providers like Napster, Grokster and LimeWire, which they have accused of illegally distributing copyrighted recordings, resulting in lost revenue and profit.

Ira Sacks, a lawyer for Robertson, said he planned to appeal, saying that many of the claims against his client were not sustainable.

Andrew Bart, a lawyer for the EMI recording labels, declined to comment.

"Sony/ATV Music Publishing commends the jury on their careful consideration of the facts and their decision in the MP3Tunes.com case," Martin Bandier, chairman and chief executive of Sony/ATV Music Publishing, said in a statement.

"The judicial process has worked in favor of the songwriter and demonstrated a respect for the copyrights laws," he said. "We will continue to vigorously pursue action against those who have disregarded the copyright laws of the works entrusted in our care."

Founded in 2005 initially as a website selling independent musicians' songs, San Diego-based MP3tunes came to be known for its so-called cloud music service that allowed users to store music in online lockers.

EMI, however, contended in a 2007 lawsuit that the MP3tunes website and a related one called Sideload.com enabled the infringement of copyrights in sound recordings, musical compositions and cover art.

The lawsuit was regarded in some circles as a barometer for how courts might view cloud-based music storage services.

In the trial, Robertson's lawyers contended MP3tunes had shut out users who abused the locker system and that many of the songs had been made available online for free by EMI as a promotion.

In the years since the lawsuit was filed, EMI was split up, with Vivendi SA's Universal Music Group buying its recording music business and a consortium led by Sony Corp acquiring its publishing arm in 2012. MP3tunes filed for bankruptcy in May 2012.

The lawsuit was only the most recent run-in between the recording industry and Robertson. In 1997 he founded MP3.com, a website that allowed users to play music the company copied from thousands of CDs it bought, as long as users could show they already owned the music.

A federal judge's ruling against MP3.com in 2000 led to a shutdown of the service and more than $160 million in estimated payouts by the company to the five major record labels and music publishers.

MP3.com was sold a year later to Vivendi Universal for about $372 million, with $120 million going to Robertson's family trust, he testified at trial. The website is today owned by CBS Corp.

The case is Capital Records Inc et al v. MP3tunes LLC et al, U.S. District Court, Southern District of New York, No. 07-09931.

(Reporting by Nate Raymond; Editing by Dan Grebler and Kenneth Maxwell)

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