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Hummer Winblad's lawyers countered that the labels broke antitrust and copyright laws by refusing to license music to Napster on reasonable terms while sending heavily restricted tracks industry-sponsored ventures MusicNet and Pressplay, which were under investigation by the Justice Department from 2001 to 2003.

NAPSTER REARS ITS HEAD AGAIN

Federal Investigators Looking Into Whether Labels Were Guilty of Collusion in Keeping Downloads Off the Internet
Here we go again.

According to today’s L.A. Times, federal antitrust investigators are reopening the books on Napster's long-standing claims that the major record labels improperly conspired to keep authorized downloads off the Internet. Justice Department officials are taking a close look at the federal court case in San Francisco between the labels and the financial backers of the original file-sharing network that debuted in 2001 and became a symbol—at least to the record industry—of online piracy.

Napster has since been acquired by Roxio and turned into a legitimate subscription service. See related Aug. 9, 2004, hitsdailydouble.com story here.

The labels are suing venture capital firm Hummer Winblad Venture Partners and German conglomerate Bertelsmann, accusing them of contributing to the piracy.

As part of its defense, Hummer Winblad has alleged that the labels violated antitrust laws by colluding to refuse to license their music for legitimate distribution.

Antitrust investigators have asked both sides to pass along filings in the case, but it is unclear whether the review has led to a full reopening of an inquiry that ended in 2003, when the department first announced there was no proof that the major labels manipulated the digital music market.

Investigators were reportedly examining how present-day prices are set on iTunes Music Store and other authorized services.

The ongoing suit by UMG and EMI accuses Hummer Winblad and Bertelsmann of having controlled Napster and therefore shares liability for the massive copyright infringement.

Hummer Winblad's lawyers countered that the labels broke antitrust and copyright laws by refusing to license music to Napster on reasonable terms while sending heavily restricted tracks industry-sponsored ventures MusicNet and Pressplay, which were under investigation by the Justice Department from 2001 to 2003.

The Hummer Winblad lawyers turned up discrepancies between the labels’ testimony to the Justice Department and what they were actually doing. And the documents that the labels submitted to the Justice Department had some serious omissions, including a full discussion of most-favored-nation clauses that guaranteed some labels the same licensing terms that their rivals received, which judge Marilyn Hall Patel said suggested collusion.

The documents were so suspicious that Patel said last month that they were "deliberately misleading." She ordered additional material turned over under what is known as the "crime-fraud exception" to the privilege that protects communications between lawyers and their clients from disclosure.

Universal and EMI appealed that ruling and this month won a stay until their arguments could be heard by a higher court.

New York Atty. Gen. Eliot Spitzer also is investigating the most-favored-nation clauses and has issued subpoenas to the major record labels.

EMI press spokesperson Jeanne Meyer told the L.A. Times she believed that Patel had "misconstrued" the relevant documents.

"EMI was forthright with the Department of Justice in its 2001-03 investigation and cooperated with that inquiry, and we are confident that Judge Patel's ruling will be reversed," she said.

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