William Mitchell Law Review Volume 26 | Issue 4 Article 8 2000 A Day in the Life of the Digital Music Wars: The RIAA v. Diamond Multimedia Lisa M. Needham Follow this and additional works at: http://open.mitchellhamline.edu/wmlr Recommended Citation Needham, Lisa M. (2000) "A Day in the Life of the Digital Music Wars: The RIAA v. Diamond Multimedia ," William Mitchell Law Review: Vol. 26: Iss. 4, Article 8. Available at: http://open.mitchellhamline.edu/wmlr/vol26/iss4/8 This Note is brought to you for free and open access by the Law Reviews and Journals at Mitchell Hamline Open Access. It has been accepted for inclusion in William Mitchell Law Review by an authorized administrator of Mitchell Hamline Open Access. For more information, please contact [email protected]. © Mitchell Hamline School of Law Needham: A Day in the Life of the Digital Music Wars: The RIAA v. Diamond A DAY IN THE LIFE OF THE DIGITAL MUSIC WARS: THE RIAA V. DIAMOND MULTIMEDIA Lisa M. Needhamt I. INTRO DUCTIO N .................................................................... 1136 II. THE AUDIO HOME RECORDING ACT OF 1992 ...................... 1137 A. The Debate Over Home Copying and FairUse ................. 1138 B. The Relevant AHRA Definitions................................... 1140 III. M P3 TECHNOLOGY .............................................................. 1143 IV . THE RLAA CASES .................................................................. 1147 A. RIAA I-The District Court Decision ............................ 1147 1. The PreliminaryInjunction StandardDebate ............. 1148 2. The District Court's Review of the A-RA .................. 1150 3. The District Court Examination of AHRA Legislative H is tory ................................................................ 115 1 4. Serial Copying and the District Court's Decision ......... 1153 B. RIAA II-The Appellate Court Decision ........................ 1154 1. The Court's Technology and Piracy Overview ............. 1155 2. The Appellate Court and the AHRA ......................... 1156 3. The Rio and Personal Use ....................................... 1158 4. The Loophole in the AHRA ..................................... 1159 V. IMPACT OF THE RIAA DECISIONS ......................................... 1159 A. The Slow Pace of CongressionalChange ......................... 1159 B. Secure DigitalMusic Initiative ..................................... 1161 C. FutureDigital Protection Difficulties .............................. 1162 D. ContinuingLegal Troubles .......................................... 1163 1. The MP3 Cases..................................................... 1163 a. RIAA v. M P3.com .............................................. 1163 b. M P3.com v. RIAA .............................................. 1165 c. The Uneasy Recording Industr--MP3.com Truce ........................................................................ 1166 d. Lester Chambers v. MP3.com ........................... 1166 e. MPL Communications, Inc. v. MP3.com ......... 1167 t J.D. Candidate, May 2001, William Mitchell College of Law; B.A., College of Saint Benedict, 1991. 1135 Published by Mitchell Hamline Open Access, 2000 1 1136 WilliamWILLIAM Mitchell Law MITCHELL Review, Vol. 26, LAW Iss. 4 [2000],REVIEW Art. 8 [Vol. 26:4 2. The Napster Trilogy: The RIAA, Metallica and Dr. Dre ................................................................ 1167 VI. C O NCLUSIO N ........................................................................1169 I. INTRODUCTION The Recording Industry Association of America (RIAA) is a powerful lobbying force. As the recording industry's premiere trade organization, the RIAA represents the "creators, manufacturers, and distributors of over ninety percent of all legitimate sound recordings."' As such, the RIAA exercises considerable influence over music copyright policy and legislation, though this influence is tempered by the sometimes contrary goals of the electronics industry.2 The RIAA seeks to restrictively define music copyrights, hoping to limit new digital recording technologies that ostensibly encourage piracy. Conversely, the electronics industry seeks to maximize profits by continually introducing new and improved digital technologies that might be perceived as facilitating piracy. 3 On a (AHRA)4 superficial level, the Audio Home Recording Act of 1992 resolved these competing interests by imposing a levy scheme on each digital recorder sold in exchange for a "home recording exemption" which legitimizes limited consumer copying.5 However, technology has outstripped traditional copyright law, 6 and the industries were at 1. Recording Indus. Ass'n of America v. Diamond Multimedia Sys., Inc., 29 F. Supp.2d 624, 625 (C.D.Cal. 1998) [hereinafter R/AA 1] The RIAA serves as the lobbying arm for the recorded music industry, which is dominated by five major labels: BMG Entertainment, Warner Music Group, Universal Music Group, EMI Recorded Music, and Sony Music. See Heather D. Rafter et. al., Streaming Into the Future: Music and Video on the Internet, in 19TH ANNUAL INST. ON COMPUTER LAw 605, 611 (Practicing Law Institute 1999). These industry giants, which control approximately eighty percent of the "popular" music industry, dominate and constrain the political goals of the industry. 2. See generally Lewis Kurlantzick & Jacqueline E. Pennino, The Audio Home Recording Act of 1992 and the Formation of Copyright Policy, 45 J. COPYRIGHT SOC'Y U.S.A. 497, 499-500 (1998). 3. This debate already has played out between the electronics industry and the entertainment industry in Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 455-56 (1984) (holding that VCRs have legitimate uses, such as creation of home videos, despite their possible role in facilitating piracy). 4. The Audio Home Recording Act of 1992, Pub. L. No. 102-563, 106 Stat. 4237 [hereinafter AHRA] (codifed as amended at 17 U.S.C. §§ 1001-1010 (1994 & Supp. IV 1998)). The AHRA sought to create a working, mutually profitable compromise between the electronics and recording industries. 5. Seel7 U.S.C. §§ 1003, 1008. 6. SeeJennifer E. Markiewicz, Seeking Shelter from the MP3 Storm: How FarDoes the Digital Millennium Copyright Act Online Service ProviderLiability Limitation Reach?, 7 COMMLAW CONSPECrUS 423, 426 (1999). http://open.mitchellhamline.edu/wmlr/vol26/iss4/8 2 2000] DIGITALNeedham: MUSIC A Day WARS: in the LifeTHE of theRIAA Digital v. DIAMOND Music Wars: MULTIMEDIAThe RIAA v. Diamond 1137 loggerheads again in 1998 with the advent of portable MP3 technology in the form of Diamond Multimedia's Rio player. MP3 is a form of compression technology (which will be discussed at length later) that allows computer music files to be rendered significantly smaller. MP3 files typically are available for downloading from the Internet and Diamond's portable Rio player (much like a Sony Walkman) enables the user to transport these files easily. The RLAA's recent Ninth Circuit lawsuit against Diamond Multimedia, an electronics company, sought to block Diamond from 7 and appellate8 selling the first portable MP3 player. Both the district courts returned verdicts for Diamond, which surprised industry watchers expecting an easy RIAA victory. 9 Part II of this article examines the AHRA and clarifies the controlling standard in the law of digital music reproduction. Part III explains MP3 technology and its potential threat to the traditional recorded music industry. Part IV details the district and appellate court decisions, focusing on the differences in the decisions. Part V discusses the ramifications of the appellate court's assertions and explores the legal future of digital music technology. Part VI concludes that the appellate court decision flings open the door for technological expansion and new digital recording futures. II. THE AUDIO HOME RECORDING ACT OF 1992 The RIAA sued Diamond under several provisions of the AHRA. Both the trial and appellate courts undertook an extensive examination of the AHRA in deciding the case.' ° The courts came to vastly differing conclusions, however, regarding the intent and scope of the Act." Technology has proven to be a continuous challenge for legislators attempting to preserve the basic premise of the Copyright Act. Prior to the recent amendments to the Copyright Act... case law clumsily attempted to apply old standards to new problems. Courts have struggled to discover a nexus between copyright theories that were intended to endure modern technology and situations that exist online. Id. (citations omitted). 7. See RIAA 1, 29 F. Supp.2d 624, 633 (C.D.Cal. 1998). 8. See Recording Indus. Ass'n of America v. Diamond Multimedia Sys., Inc., 180 F.3d 1072, 1081 (9th Cir. 1999) [hereinafter RIAA I/]. 9. The force of the RIAA as a shaper of music technology policy will be discussed in the section on the AHRA. See infra Part II. 10. See RIAA II, 180 F.3d at 1075; RIAA 1, 29 F. Supp.2d at 628. Both decisions delved into the legislative history of the Act. 11. See infra Part IV. The trial court found that the Rio fell within a narrow exception to the Act based on the Rio's inability to digitally output sound files and Published by Mitchell Hamline Open Access, 2000 3 1138 WilliamWILLIAM Mitchell Law MITCHELL Review, Vol. 26, LAW Iss. 4 [2000],REVIEW Art. 8 [Vol. 26:4 The AHRA largely was a Congressional response to the introduction of Digital Audio Tape (DAT) technology in the mid-1980s." Whereas previous home taping involved analog transfer with poorer sound