LABELS SUSPEND NAPSTER CASE

Record companies have asked for a temporary suspension in their ongoing lawsuit against Napster after facing potentially damaging inquiries into their own actions in maintaining their copyright.

According to transcripts made public today, the New York Times reports that Judge Marilyn Patel (remember her?) said on Jan. 16 she would honor a request by the beleaguered file-sharer to explore whether labels might have colluded to prevent Napster and other online competitors from licensing music to sell on the Internet. The judge added she might also let the service explore whether the record companies control all the copyrights they claim to own.

A day later, just before Patel was about to issue an order granting the requests, the labels and Napster asked for a 30-day suspension of the lawsuit, currently being heard in Federal District Court in Northern California.

RIAA general counsel Cary Sherman insisted the labels sought the suspension because they were nearing a settlement with Napster and didn't want to be distracted by the suit, fearing the file-sharer could run out of money and not be able to pay the millions of dollars sought by the labels. And we just want change for a dollar so we can buy a Coke from the office vending machine.

"Our companies aren't worried about these claims," said Sherman, denying the labels feared the judge's order, though several experts suggested the record industry might be concerned over the copyright issue. The major labels are facing a Justice Dept. investigation into antitrust issues with respect to their approach to licensing music to online companies. They have recently begun their own sub services with Pressplay and MusicNet.

Napster has claimed the joint ventures are anticompetitive and that they should be allowed to seek evidence about whether they are being precluded from competing on an even playing field. In her ruling Jan. 16, Patel agreed to let Napster pursue that area. She also planned to allow Napster to gather evidence to support its claim the labels did not control the Internet distribution rights to all the copyrights they claim to own.

If the two sides do not settle the case within the 30-day time frame, Patel may choose to issue her order allowing Napster to pursue such evidence.