The court ruled that the copying by MP3.com of the commercial CDs made out a prima
facie case of direct copyright infringement,^119 and rejected the defendant’s assertion that such
copying was a fair use. The court ruled that the first fair use factor (purpose and character of the
use) weighed against the defendant because the defendant’s purpose for the use was commercial
- although defendant was not charging users a fee for the service, “defendant seeks to attract a
sufficiently large subscription base to draw advertising and otherwise make a profit.”^120 The
court rejected the defendant’s argument that the copying was transformative because it allowed
users to “space shift” their CDs into another format in which they could enjoy their sound
recordings without lugging around physical CDs, ruling that the argument was “simply another
way of saying that the unauthorized copies are being retransmitted in another medium – an
insufficient basis for any legitimate claim of transformation.”^121
With respect to the second factor (nature of the copyrighted work), the court held that,
because the copyrighted works at issue were creative musical works, this factor weighed against
defendant.^122 The third factor (amount and substantiality of the copyrighted work used) also
weighed against the defendant because the defendant had copied, and the My.MP3 service
replayed, the copyrighted works in their entirety.^123
Finally, with respect to the fourth factor (effect of the use upon the potential market for or
value of the copyrighted work), the court noted that the defendant’s activities “on their face
invade plaintiffs’ statutory right to license their copyrighted sound recordings to others for
reproduction.”^124 The defendant argued that its activities enhanced the plaintiffs’ sales, since
subscribers could not gain access to recordings through MP3.com unless had already purchased,
or agreed to purchase, their own CD copies of those recordings. The court rejected this argument
on the following rationale:
Any allegedly positive impact of defendant’s activities on plaintiffs’ prior market
in no way frees defendant to usurp a further market that directly derives from
reproduction of the plaintiffs’ copyrighted works. This would be so even if the
copyrightholder had not yet entered the new market in issue, for a
copyrightholder’s “exclusive” rights, derived from the Constitution and the(^119) “Thus, although defendant seeks to portray its service as the ‘functional equivalent’ of storing its subscribers’
CDs, in actuality defendant is re-playing for the subscribers converted versions of the recordings it copied,
without authorization, from plaintiffs’ copyrighted CDs. On its face, this makes out a presumptive case of
infringement under the Copyright Act of 1976 ....” 92 F. Supp. 2d at 350.
(^120) Id. at 351.
(^121) Id. Contrast this holding with the Ninth Circuit’s statement in RIAA v. Diamond Multimedia Sys., 180 F.3d
1072, 1079 (9th Cir. 1999), in which the Ninth Circuit found space shifting of a recording from a CD onto the
“Rio” portable MP3 player device (through a process known as “ripping,” or re-encoding of music data encoded
in CD format into the MP3 file format) to be “paradigmatic noncommercial personal use entirely consistent
with the purposes of the [Audio Home Recording Act].”
(^122) UMG, 92 F. Supp. 2d at 351-52.
(^123) Id. at 352.
(^124) Id.