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"For years, the big labels have virtually opened the door to this thing and did nothing about it. They knew the technology was in place to do this sort of thing and knew there was a way to do something to prevent this."
——Matthew Katz
ANTI-NAPSTER PRODUCER
SUES AGAIN
Suit From Former Jefferson Airplane Producer Might Just Be A Flashback Though
While many quietly question its controversial business decision, Bertelsmann's deal with Napster has raised the ire of at least one Napster foe.

Matthew Katz, the former producer for Jefferson Airplane, claims Bertelsmann's e-commerce division is helping Napster infringe on copyrighted recordings, and has decided to sue.

Katz, already embroiled in litigation with the file swapper, has now sued Bertelsmann e-Commerce Group and the netco's 38 million users, claiming his record label has been nearly put out of business because the service has reduced demand for his product.

In October, Bertelsmann formed an alliance with Napster to further develop and legitimize Napster's person-to-person service (hitsdailydouble.com, 10/25).

While terms of the Bertelsmann-Napster agreement have not been disclosed, Katz said that based on media reports, he believes Bertelsmann has made a $50 million investment in Napster and will get a 40% stake in the company, Bloomberg said.

"Until something is done, they (at Bertelsmann) are party to an illegal activity," Katz said. "For years, the big labels have virtually opened the door to this thing and did nothing about it. They knew the technology was in place to do this sort of thing and knew there was a way to do something to prevent this."

Bertelsmann allegedly contributes to the unauthorized copying and distribution of music by "investing substantial sums of money, supporting, guiding, encouraging and promoting defendant Napster Inc. for its own future benefit," Katz claims in the suit filed last week (11/22).

The music industry is still awaiting a decision from the 9th U.S. Circuit Court of Appeals that will determine whether Napster can continue operating until a trial is held.

Among other things, the producer is asking for an accounting of all profits allegedly made by Bertelsmann and Napster from alleged infringement.

Katz has a separate suit pending against Napster (hitsdailydouble.com, 7/25).

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