Artists' lawsuit: major record labels are the real pirates; Ars Technica, 12/7/09

Jacqui Cheng, Ars Technica; Artists' lawsuit: major record labels are the real pirates:

Between $50 million and $60 billion may be owed to musicians and artists in Canada, but not from your run-of-the-mill file sharers. The Canadian recording industry itself is being accused of massive copyright infringement, and the list of miffed artists just keeps getting longer.

"Given how aggressively the recording industry likes to pursue file sharers, one would assume that the industry itself is in the clear when it comes to copyright infringement. But that assumption has been put to the test in Canada, where a massive infringement lawsuit is brewing against some major players. Members of the Canadian Recording Industry Association, including the Big Four (Warner Music Canada, Sony BMG Music Canada, EMI Music Canada, and Universal Music Canada), face the prospect of damages ranging from $50 million up to $60 billion due to their use of artists' music without permission. That's right: $60 billion.

The lawsuit in question goes back to October 2008, but continues to be dragged up in the news because new plaintiffs keep joining the case. Most recently, jazz musician Chet Baker's estate has joined the growing list of musicians and artists who are getting on the music industry's case for their abuse of a certain aspect of Canadian copyright practices—something that the labels themselves don't even deny doing.

As University of Ottawa law professor Michael Geist pointed out on his blog, the issue stems from a change to the law in the 1980s that eventually produced something known as the "pending list." Essentially, record companies no longer had to get a compulsory license every time they wanted to use a song for, say, a compilation album. Instead, they went ahead and used the song without waiting for authorization or making payment, adding the song to a list of music that is pending authorization and payment. If you're questioning whether you read that right, that basically means the record industries could use songs as long as they pinky swore they would get authorization and pay the artist for it eventually.

As you can imagine, the business didn't quite work that way. Instead of keeping up with its tab on the pending list, the recording industry just kept adding songs—without obtaining any rights. The pending list among the lawsuit's defendants has topped 300,000 songs from both large and small artists alike—300,000 songs that the labels are openly admitting that they have not secured the rights for. In the complaint, the plaintiffs claim that the record companies have been unjustly enriched by the use of their unauthorized music (they have, after all, been selling the music without permission and not paying out).

The plaintiffs also show that they are painfully aware of the hypocritical stance the industry has taken in regard to copyright abuse. One part of the complaint says the companies have shown "reckless, high-handed and arrogant conduct aggravated by their clandestine disregard for the copyright interests of the class members in contrast to their strict compliance enforcement policy and unremitting approach to consumers in the protection of their corporate copyright interests." Ouch.

The recording companies targeted in the suit acknowledge that the pending list reflects unpaid royalties "in excess of $50 million," but the real extent of the damage could go far higher—possibly to the tune of $60 billion. This is because the class is asking for both statutory and punitive damages for the labels' behavior (as Geist points out, the same standards being used to go after individual file sharers), meaning that the labels could be asked to pay up to $20,000 per infringement."