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MP3.com, Universal end legal dispute
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November 14, 2000: 5:34 p.m. ET
Web music service, world's biggest music company end copyright battle
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NEW YORK (CNNfn) - A New York district judge on Tuesday ordered online music service MP3.com to pay $53.4 million in damages to Universal Music Group, ending a copyright infringement suit brought by Universal and bringing MP3.com's lengthy dispute with the recording industry near a close.
An MP3.com spokesman said the company does not intend to appeal the decision, which was handed down by Jed S. Rakoff, U.S. district court judge for the Southern District of New York. MP3.com faced penalties of as much as $250 million.
Rakoff announced the deal in court after lawyers completed 48 hours of intensive negotiations.
 Separately, San Diego-based MP3.com and New York-based Universal, a unit of Seagram Co. (VO: Research, Estimates) struck a deal for Universal to buy "a significant amount" of MP3 warrants, MP3.com CEO Michael Robertson said.
Universal also agreed to license its entire music catalog to be used as part of My.MP3.com, the service that allows any user to store music digitally and then access it via any computer, he added.
MP3.com said the company had set aside $170 million to pay for legal costs.
The company did not say when the service would be relaunched.
Shares of MP3.com rose 68 cents, or about 19 percent, to $4.68 a share in after-hours trade, after ending the regular session at $4, up 18 percent from Monday's close.
Pact gives MP3.com rights to "big music" songs
The pact removes what was likely the final hurdle before MP3.com can restart the service, originally launched about a year ago. This past summer, MP3.com inked agreements with the other four major music companies: BMG, which is the music unit of Bertelsmann AG; EMI Group PLC; Warner Music Group, and Sony Music Entertainment. Warner Music, like CNNfn.com, is a unit of Time Warner (TWX: Research, Estimates).
All had sued MP3.com, charging that it had copied some 80,000 music disks and stored them in a "digital locker" for playback by any device linked to the Internet. The music industry charged that MP3.com did not receive permission from the artists and their record labels to offer such a service, thereby violating copyright law.
Earlier this year, Judge Rakoff ruled that the online music company willfully violated those copyrights. After the other four settled, reportedly for roughly $20 million each, Rakoff ordered MP3.com (MPPP: Research, Estimates) to pay Universal $25,000 for each Universal CD it had copied to its database.
Under the terms of their settlements, each of those record companies have allowed their music to be used in MP3.com's database.
"Universal Music pursued this case to send a strong message that copyrights will be protected and that copyright owners and artists need to be properly compensate for use of their work," said Zach Horowitz, President and Chief Operating Officer of Universal Music, in a press release.
"Although we believe our proof at trial would have led to a greater damage award, we are satisfied with the award," he added. "It was never our intent to put MP3.com out of business with a judgment so large that it would threaten their viability as a company."
In October, MP3.com struck a licensing agreement with the National Music Publishers Association Inc. Under that three-year licensing arrangement, MP3.com is expected to pay up to $30 million to Harry Fox Agency Inc., the NMPA's licensing agency, for the rights to some 25,000 music publishers and their affiliated songwriters.
-- from staff and wire reports. 
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