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A Blow to the San Diego-based Company

A judge found the Internet-based music service liable for infringing
the copyrights of the Recording Industry Association of America.

The brief order by U.S. District Judge Jed S. Rakoff was a blow to the San
Diego-based company that allows users to instantly hear music and add their
personal music to a play list.

Michael Carlinsky, representing MP3, said the company was considering an
appeal. ”There’s a lot of fight left in this case,” he said. ”This is
round one.”

But Inc. shares dropped 33%, or $3.88 to $7.75 a share in midday
trading on the Nasdaq Stock Market.

The recording industry, which includes most of the nation’s record
companies, had argued that was not authorized to use the music
because it does not own it and has not obtained permission from recording

Lawyer Katherine Forrest, representing Warner Brothers Records Inc., called
it ”a straightforward case of copyright infringement.”

It was not immediately clear exactly how the ruling would affect or
its practices on the Internet.

”We believe that the conduct … should cease,” Forrest said. ”Now we
move on to the next phase.”

The next phase in court will determine damages and other relief.

The judge said in a one-page order that he will explain the reasoning behind
his ruling in a written decision to be issued in the next two weeks.

The lawsuit had claimed that’s Instant Listening Service and Beam-it
violate copyright laws. Instant Listening Service allows customers to listen
to a CD after they have purchased it while Beam-it is a program allowing
users to add their own CDs to their personal playlist online.

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