- SAN FRANCISCO (Reuters) In a major defeat for
the recording industry, a federal appeals court ruled Tuesday
that a popular device used to download and play music from the
Internet did not violate federal anti-piracy laws.
- The 9th U.S. Circuit Court of Appeals in San Francisco found
that the Rio MP300, manufactured by Diamond Multimedia Systems
Inc., did not qualify as a "digital audio recording device"
and was not subject to the restrictions of the 1992 Audio Home
- In the 3-0 opinion, Judge Diarmuid F. O'Scannlain wrote that
the "brave new world of Internet music distribution"
was built on new technologies that did not mesh perfectly with
- The court found that the Rio, a pager-sized device that can
store CD-quality songs encoded in the so-called MP3 format, was
not primarily a recorder and so was not subject to the 1992 act.
- "The Rio's operation is entirely consistent with the
act's main purpose the facilitation of personal use,"
O'Scannlain wrote, saying the device would allow consumers to
record copyrighted music for their own private, noncommercial
- The court's decision torpedoed a suit filed in October by
the Recording Industry Association of America, which had targeted
the Rio and Internet MP3 music files as a major source of music
- MP3 is widely used by lesser-known artists to distribute
their music, but the record industry fears the format will lead
to rampant piracy in cyberspace, where files can be copied and
- After a lower court rejected its request for a preliminary
injunction barring sales of the Rio last fall, the industry association
appealed to the San Francisco-based 9th Circuit.
- In a statement released after the ruling, the RIAA said it
was disappointed with the court's decision.
- "We filed this lawsuit because unchecked piracy on the
Internet threatens the development of a legitimate marketplace
for online music, a marketplace that consumers want," the
- David Watkins, president of RioPort Inc., Diamond Multimedia's
Internet music subsidiary, said the decision created a whole
new future for music online.
- "The ruling opens a host of new opportunities for us,"
Watkins said in a statement. "We have always believed that
the Rio line of devices operated well within the law
a playback-only device for the thousands of legitimate music
and audio tracks on the Internet."
- At an MP3 conference that kicked off in San Diego on Tuesday,
makers of other MP3 playback devices hailed the ruling, saying
consumers were the winners.
- "It's not possible to stop this revolution," said
Hock Leow, vice president of the multimedia division of Creative
Labs, which plans to ship its device, dubbed the Nomad, later
this month. "Everyone is saying, 'We are going to be good
citizens, but at the same time we want to do what the customer
wants,'" Leow said.
- Doug Marrison, president of I-Jam Multimedia, a new entrant
into the digital music arena with its line of colorful MP3 players,
said the gadgets were no different from videocassette recorders
or compact disc recorders.
- "The decision is something that's obviously encouraging
to all the hardware people out there," Marrison said. "Manufacturers
aren't saying, 'Go out and rip off licensed music.' This has
already been accepted by consumers."
- Following Tuesday's ruling, both the RIAA and hardware and
software companies said they would devote their energies to a
joint effort dubbed the Secure Digital Music Initiative (SDMI),
which aims to establish guidelines for Internet music formats
and devices by the end of the year.
- Watkins said the makers of Rio "continue to share the
RIAA's concerns about piracy and protecting the rights of content
owners" and would work to make SDMI a success.
- The RIAA, for its part, said it was convinced that "the
shared interest in such a marketplace" had overtaken the
Rio lawsuit. "The technology and music industries have already
come together to create a secure environment in which
consumers can access the music they love in new ways," it