Slide Ruling: MP3 Might Owe $3M After Math Error

MP3.com (Nasdaq: MPPP) woke up to quite a shock Monday morning when the company was informed by a U.S. District Court that a US$300,000 copyright infringement award in favor of Tee Vee Toons (TVT) Records on Friday might actually be almost $3 million.

According to published reports, the eight-member jury in the case discovered over the weekend that there was an error in the calculations of the damages awarded against MP3.com for its posting of 145 copyrighted TVT CDs online.

After informing the judge in the case of their apparent error, the jurors reportedly were summoned to a closed-door hearing Monday.

No grand total was given in the court announcement Friday, but press over the weekend had reported $296,873 in total damages, which the jury apparently found to be in error.

TVT had sought $8.5 million in the lawsuit, industry press said.

Check, Please

In March, the U.S. District Court of the Southern District of New York ruled that MP3.com willfully violated TVT copyrights. Judge Jed Rakoff ordered in March that TVT "may recover statutory damages for infringements of both the composition and the recording" of songs.

A jury was asked to decide how many copyrights MP3.com had infringed and how much each infringement was worth in damages. The jury returned Friday with amounts ranging from $750 to $3,125 per violation, reports said, with at least one ruling coming in as high as $50,000.

Apparently, however, the figures were not totaled correctly.

MP3 Defeats Truman

MP3.com executives were initially thrilled with the jury's decision on Friday. The ruling was viewed as a promising precedent for the half-dozen or so lawsuits MP3.com still faces from small labels.

Prior to Monday's revelation, MP3.com reportedly said that the jury awarded TVT no actual damages based upon proof of lost revenue.

"Open season is over at MP3.com," MP3.com president Robin Richards reportedly said.

Addition, Not Subtraction

According to MP3.com, the court recognized only a fraction of the thousands of songs contested by TVT as eligible for any form of recovery.

"Even with the positive outcome in this venue, we dispute that MP3.com willfully or otherwise infringed upon Tee Vee Toons' copyrights and therefore is not entitled to any damages whatsoever," Michael Robertson, chairman and chief executive officer of MP3.com said Friday. "For that reason, MP3.com will seek vindication in the appellate court and we look forward to submitting our arguments before a new court."

Lawsuit Log

MP3.com has already paid out nearly $150 million in copyright infringement settlements with five major record labels, including Universal Music Group, Sony Music Entertainment, EMI Recorded Music, BMG Entertainment and Warner Music Group.

MP3.com hosts more than 926,000 songs and audio files posted from over 144,000 digital artists and record labels on its Web site.

In January, TVT dropped a similar lawsuit against Napster, after the popular online music swapping service implemented a subscription service allowing users to share songs copyrighted by BMG.