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Court Rules Rio Player Legal; RIAA Says Impact Is Minimal

A federal appeals court ruled that Diamond Multimedia’s portable MP3 players don’t violate the Audio Home Recording Act (AHRA), but the music industry downplayed the decision’s impact.

The Recording Industry Association of America (RIAA), which hasn’t decided whether to appeal the decision, contended that the lawsuit has been “overtaken” by the “shared interest” of the technology and music industries in the “development of a legitimate marketplace for online music” through the Secure Digital Music Initiative (SDMI).

SDMI envisions two phases in the voluntary rollout of compliant computer application software and music content to protect digital-music copyrights on the Internet. The Phase I specifications are expected to be released by the end of the month. Phase II specifications, in which copyright protection kicks in, is scheduled for adoption in March 2000, an RIAA spokeswoman said.

The U.S. Court of Appeals for the ninth circuit ruled that because Diamond’s Rio portable is not a digital audio recording device as defined by the AHRA, Diamond does not have to pay AHRA-specified royalties, nor must the company incorporate the Serial Copy Management System (SCMS).

Flash-memory portables such as the Rio don’t meet the AHRA’s definition of a digital audio recording device because they don’t directly make recordings of recorded digital music media such as CDs, nor do they directly record digital music transmissions such as radio broadcasts, the court said.

Instead, a computer makes the recordings, and computers were specifically exempted from AHRA requirements because their primary function isn’t music recording, the court said. The computer sends the recorded files to the Rio to make them portable.

Despite the legality of such MP3 use, the court did state that “by most accounts, the predominant use of MP3 is the trafficking in illicit audio recordings.”

For its part, the RIAA contended the decision violates Congressional intent, but it said voluntary initiatives such as SDMI will “create a secure environment” in which consumers can access music online.

Diamond Multimedia itself is participating in the SDMI process, and even before Phase II kicks in, the company will use InterTrust’s digital rights management system to securely deliver music online for playback in flash-memory portables, said a Diamond spokeswoman.

“Content in a secure downloadable format [from major music companies] is important to the viability of these devices,” she said.

The SDMI initiative, however, does not prevent hardware manufacturers from making non-compliant application software and players, but compliant content downloaded from a web site won’t play on these players, the RIAA pointed out.

Compliant software and players will be allowed to play unprotected legacy formats such as MP3, but the software and players won’t play MP3 files made from future CD or DVD-Audio discs that incorporate an SDMI marker.