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XM Files Motion to Dismiss Record Company Suit

7/19/2006 02:50:00 PM Eastern

Washington — XM Satellite Radio filed this week a motion to dismiss the case brought against it in May by 10 record companies.

In addition, the Consumer Electronics Association (CEA), together with The Home Recording Rights Coalition (HRRC), filed a brief with the US District Court for the Southern District of New York in support of XM.

Both alleged that the copyright-infringement lawsuit by the music industry should be dismissed. The music industry suit charged that XM turned its radio service into a music-download service without authorization and without paying the higher royalty fees required. At the heart of the suit, is the XM Pioneer Inno — an audio headset XM/MP3 player.

The music industry must file a reply to XM's motion by Aug. 31.  At that time XM must respond by Sept. 29, according to Judge Batts chambers.

The XM motion to dismiss, and the supporting brief by CEA, claims that the Pioneer Inno is legal under the terms of the Audio Home Recording Act of 1992 (AHRA). They state that the AHRA: a) already designed a system of compensation to the record companies for devices such as the Inno; and, b) was specifically enacted by Congress to prevent such lawsuits against companies marketing digital recording devices.

The CEA brief also asserted that if the court fails to grant XM’s motion to dismiss the suit, it would lead to the intimidation of suppliers. The brief said that the clear intention of the AHRA is “to avoid the potential of chilling the prospect of new devices coming to market.”

Countering the claims in the music industry’s suit, XM stated that “XM is not an ‘interactive service’ ... because an XM subscriber hears only what XM chooses to play. An XM subscriber cannot order a particular song from XM for her Inno.”

XM also stated in the motion, “In bringing this suit, plaintiffs are attempting to upset the balance that Congress struck when it enacted the AHRA.”

Plaintiffs in the music company suit against XM include Atlantic, BMG, Capitol Records, Elektra, Interscope, Motown, Sony BMG, UMG, Virgin Records and Warner.

A spokesman for the  Recording Industry Association of America (RIAA) which serves as counsel to the record companies, said in response to XM's motion, "Arcane legal arguments cannot obscure the plain facts.  XM's own business model is demonstrated by its slogan, 'It’s not a pod, it’s the mothership.'  If XM wants to compete with iTunes, Rhapsody and similar music distribution services, it needs to obtain the appropriate authorization."

The music industry is also pushing legislation in Congress that would force both XM and Sirius Satellite Radio to limit consumers’ ability to record satellite radio programming and raise the royalties that the companies pay to copyright holders.