Ambitious music streaming services launched by Google and Amazon in the US have been boosted by a district court ruling that digital music lockers do not directly infringe copyright.
In a summary judgment at a district court in Manhattan, Judge William Pauley ruled that the music website MP3Tunes.com was protected under US law because its users, not the website, were responsible for uploading the tracks and potentially infringing copyright.
Google and Amazon unveiled music lockers similar to MP3Tunes.com earlier this year, allowing listeners to upload music from their computer to the internet for playback on smartphones and other devices.
Major record labels, including Sony and EMI, had suggested that such cloud-based lockers were unlawful because they made a copy of a file without seeking permission from the rights owners. Sony at the time said it was keeping its legal options open over Amazon's Cloud Player.
Pauley, however, ruled on Monday that MP3Tunes.com was lawful under the "safe harbour" provision of the Digital Millennium Copyright Act (DMCA), which protects online services from potential infringements by their customers.
Michael Robertson, the founder of MP3Tunes.com, said: "We're pleased that the court upheld our fundamental business model and, more broadly, unlicensed cloud music. This is great news for those that are emulating our personal music service like Amazon and Google and those involved in lawsuits like Grooveshark."
Robertson previous fought, and lost, a similar court battle in the late 1990s as the head of MP3.com, which offered a similar service.
Duncan Calow, partner in intellectual property at the law firm DLA Piper, told the Guardian that the ruling gave the "thumbs up" to the online locker services launched by Google and Amazon.
He added: "Ultimately, the services that will be successful are those that are able to strike a deal with content owners, so from that perspective I don't think this will make that much difference."
Tim Bamford, intellectual property partner at Withers law firm, said: "On the face of it, it does fall in favour of Amazon and Google as it justifies [the MP3Tunes] basic business model. Subject to the appeals process the judgment is a green light for others to jump on the same bandwagon."
Alexander Ross, head of commercial music at the London law firm Wiggin, said the judgment made clear that the user was responsible for uploading material, rather than the service provider. But he noted that there were still legal ambiguities over how copyrighted works were transmitted over cloud players.
EMI, the label behind Jay-Z and Usher, and 14 other record labels launched the legal battle in 2008 in an attempt to force MP3Tunes.com to store a separate copy of each track, rather than one track for multiple listeners.
But although the MP3Tunes.com cloud model was ruled lawful, Pauley said the website contributed to online infringement when it failed to take down infringing material after being notified by the rights holders.
A spokesman for EMI said: "We are pleased that MP3tunes and Michael Robertson have been held liable for infringing hundreds of sound recordings and musical compositions through their Sideload and MP3tunes websites. The court's decision confirms that businesses cannot simply pay lip service to the law while undermining the rights of the musicians, artists and writers that create popular music.."
He added: "At the same time, we're disappointed that the court found that MP3tunes was entitled to a safe harbour for some of its conduct under the DMCA. EMI believes that companies like MP3tunes, which knowingly build a business based on stolen music, should not be entitled to any DMCA safe harbour defence.
"We will continue to fight – in this case and in the future – for the rights of our artists and writers, and to ensure that they are always properly compensated every time their music is used in a commercial setting."
In Europe, the legality of cloud-based services remains far from clear. Neither Amazon nor Google has offered any timings for the launch of their music services outside the US. Europe has far tighter laws restricting the copying of songs, even in digital form. Strictly speaking it is still illegal in the UK to transfer a song from a CD to an iPod.
Calow said it was unclear whether the internet giants would have the same protection under European law as in the US. He added, however, that rights holders could be forced to support cloud-based services if they want the protection of the law. "European law will continue to support copyright but at the same time [legislators] need to see steps from rights holders to embrace new services," he said.
"Since cloud is the flavour of the month, there will be a specific pressure on engaging with service provders. Whether that is sufficient to launch over here we'll have to wait and see."
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