GM and Ford Can’t Curb |Music-Ripping Lawsuit

(CN) - General Motors and Ford must face claims that they may have to pay royalties plus $2,500 for each car they made with a feature to rip music from CDs, a federal judge ruled.

The Alliance of Artists and Recording Companies, an Alexandria, Va. nonprofit that helps the U.S. Copyright Office enforce the 1992 Audio Home Recording Act, filed two suits, later consolidated in D.C. federal court in 2015, against car suppliers and manufacturers.

The plaintiff says since 2008, General Motors Co. Inc., Ford Motor Co., and FCA U.S., the entity formerly known as Chrysler, have been installing certain audio technology developed by suppliers like Denso International America, Clarion Corp. of America, and Mitsubishi Electric Automotive America.

Since the dashboard equipment qualifies as "digital audio recording devices," according to the Alliance, manufacturers, importers, and distributers must incorporate certain copying control technology into the devices and pay a set royalty for each one, as required by the 1992 Act.

The Alliance is responsible for both collecting those royalties and distributing them to featured recording artists and sound recording copyright owners.

But for the past eight years, the Alliance says, the defendants have failed to install the copy-control technology in their cars' recording devices or pay royalties.

The devices at issue - GM and Denso's "Hard Drive Device," Ford and Clarion's "Jukebox," and Mitsubishi's "Media Center" - automatically identify song info from CDs and download the songs onto a hard drive for later, in-car-only listening, the complaint states.

The five-count complaint seeks an injunctive and declaratory relief, the unpaid royalties plus an extra 50 percent, and $2,500 per device manufactured, imported, or distributed within three years of the filing of the complaint.

Ford and Clarion moved to dismiss for failure to state a claim, claiming the Jukebox does not reproduce material objects addressed by the statute, like CDs, LPs, or cassette tapes.

General Motors, in turn, moved for judgment on the pleadings.

U.S. District Judge Ketanji Brown Jackson denied the motions Friday.

To qualify as a "digital audio recording device" subject to royalty collection and the copy-control requirement under the Act, a device must be capable of producing a "digital audio copied recording" that also qualifies as a "digital musical recording," according to the ruling.

The "more likely reading of the statute as a whole is that a ['digital audio copied recording'] is, by definition, a type of ['digital musical recording']," Jackson wrote.

Thus, the 20th Century statute applies to the devices at issue if they have a recording function primarily meant to create a material object, but agreed with the Alliance that devices do not have to create a separate material object.

Yet the Alliance's complaint adequately alleges that "at least some of the challenged devices can produce ['digital musical recordings'] within the meaning of the AHRA," Jackson wrote.

For example, "Hard Drive Devices" on certain models of General Motors' Cadillac CTS Coupe that do not include a navigation feature "might well qualify as being capable of making ['digital audio copied recordings'] that count as ['digital musical recordings']," the ruling states.

While it may turn out that the defendants' music-recording devices share "a hard drive with a broader 'Nav System' or 'on-board, multipurpose computers' in a manner that precludes their output's characterization as a ['digital musical recording'], the exact nature of these devices - and therefore whether they fall within the scope of the AHRA - is a question of fact that must await resolution at the next stage of this litigation," Jackson wrote.

Ford and Clarion's attorney, Van Beckwith with Baker Botts in Dallas, said they "appreciate that the court "largely agrees with these defendants' interpretation of the statute."

They "look forward to continuing our presentation to the court," Beckwith wrote in an email.

Alliance Executive Director Linda Bocchi said the organization is "pleased that the court denied General Motors' and Ford's motions to dismiss and recognized that the serious allegations we have made warrant their day in court."

The nonprofit is "confident that we will prevail in these actions," Bocchi added.

In a separate sealed order, the court also denied Mitsubishi's motion for summary judgment, Bocchi wrote.

The other parties did not return emailed requests for comment on Monday.

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