German media company Bertelsmann AG, after writing off a substantial investment in defunct song-swap pioneer Napster, now faces a multibillion-dollar lawsuit from a group of music publishers, according to a report published Thursday.
According to the report in the Wall Street Journal, the music publishers are seeking damages of at least $17 billion, claiming that Bertelsmann contributed to wide-scale infringement of their copyrighted works by funding Napster, which created an Internet song-swapping service based on peer-to-peer technology. The plaintiffs, including the songwriters Jerry Leiber and Mike Stoller, allege that Bertelsmann’s decision to provide funding to Napster prolonged the service’s life and thus the illicit sharing of music, the Wall Street Journal reported.
Rocco Thiede, a spokesman for Bertelsmann in Gütersloh, Germany, said he had no knowledge of the lawsuit and no comment other than the company’s official statement on the online music venture: “Napster was never a Bertelsmann company.”
The lawsuit adds a new chapter in the short but heavily litigious history of Napster.
According to the Wall Street Journal report, the same plaintiffs in the original suit against Napster, which forced the company to discontinue service two years ago, are going after its biggest funder, Bertelsmann, in a move that could encourage media companies to sue deep-pocketed backers of controversial file-sharing services.
Bertelsmann invested over $100 million in Napster, according to the company’s annual report.
In November, software vendor Roxio acquired the remaining assets of the song-swapping company immediately after a bankruptcy court in Delaware approved the deal. The Santa Clara supplier of CD-burning software agreed to pay $5.3 million in cash and stock for Napster’s intellectual property, including domain name and trademarks, and extensive technological portfolio.
