subscription. Accordingly, the court found that these songs were effectively leased to the XM
subscriber for as long as he or she maintained status as a subscriber.^351
XM brought a motion to dismiss the copyright claims on the ground that it was shielded
from infringement actions by Section 1008 of the AHRA because it was acting as a distributor of
a digital audio recording device (DARD) immunized by the AHRA. The court first turned to
whether the XM + MP3 players constituted a DARD. The plaintiffs argued that they did not,
citing the Ninth Circuit’s decision in Recording Industry Ass’n of Am. v. Diamond Multimedia
Sys.,^352 which held that the Diamond Rio device at issue was not a DARD because it could not
make copies from a transmission but instead could make copies only from a computer hard drive,
which is exempted under Section 1001(5)(B) of the AHRA. The court distinguished the facts of
the Diamond case, noting that the XM + MP3 players could receive from transmissions and were
capable of copying without an external computer or computer hard drive.^353 “Accordingly, at
this stage of the proceeding, relying on plain meaning statutory interpretation and the definition
of a DARD contained in Diamond, until proven otherwise by means of discovery, the Court
treats the [XM + MP3 players] as DARDs.”^354
The court next turned to whether the AHRA offered XM complete immunity from the
plaintiffs’ copyright claims. XM argued that, because it was a distributor of DARDs, it did have
such immunity. The court rejected this argument, noting that, while Section 1008 would protect
XM from suit for actions based on the distribution of DARDs, such protection would not act as a
wholesale, blanket protection for other conduct that XM might be engaged in beyond such
distribution. In particular, XM’s acts as a satellite radio broadcaster could form a separate basis
for copyright liability. Indeed, the plaintiffs’ complaint made clear that their claims of copyright
infringement were based on XM’s acting without authorization as a commercial content delivery
provider that delivered permanent digital copies of sound recordings to those devices without
permission from the copyright owner.^355
More specifically, the plaintiffs alleged that, in providing services specific to users of
XM + MP3 players, XM was acting outside the scope of its statutory license for broadcast
service under Section 114 of the copyright statute – XM’s only source of permission to use the
plaintiffs’ recordings. Such unauthorized acts, according to the plaintiffs, were encroaching
directly on their digital download business.^356 The court agreed, finding that by broadcasting and
storing copyrighted music on DARDs for later recording by the consumer, XM was acting as a
both a broadcaster and a distributor, but was paying license fees only to be a broadcaster.^357
(^351) Id. at 10-11.
(^352) 180 F.3d 1072 (9th Cir. 1999).
(^353) XM Satellite, 200 U.S. Dist. LEXIS 4290 at 14 n.4.
(^354) Id.
(^355) Id. at 16-18.
(^356) Id. at 19.
(^357) Id. at *20.