Having followed the original Napster case quite closely, it was always interesting to see how Federal Judge Patel would rule on certain motions. She often surprised both sides by issuing very wide rulings, some of which were late rejected by the senior courts, but this tendency made her courthouse a tough place to be since you never really knew what was going to happen.
Well, the music labels re-learned that lesson on Friday when Judge Patel ruled (Reuters link here) that EMI and Universal may have deliberately misled the US Department of Justice about how much information they had on competitor pricing policies in the digital music business, and she ordered them to turn over all related materials. Without boring everyone with the details, this is related to the label-led creation of PressPlay and Musicnet as "independent" digital music companies in 2001, which we at Listen.com (and others) fought as a clear anti-trust violation. Unfortunately, the DOJ political appointees cowered under their desks when it actually came time to finish off the action, so they dropped the case in 2003, but it now appears that the labels may not have been entirely forthcoming (yes, shocking, I know).
So the "Son of Napster" case continues along (the 3 labels suing BMG and Hummer Winblad for funding Napster), dragging everyone in its wake, and again pointing out why being a start up in the digital music business is not an attractive proposition, and showing why having Judge Patel is always worth the price of admission. And the good news is that this action looks like it will continue to put pressure on the concept of the Most Favored Nation (MFN) clause, which is inherently anti-competitive, and yet still shows up in many label and publisher contracts - I would be wary of insisting on that clause going forward.
Good lord, will it ever stop...
Posted by: MDowning | May 09, 2006 at 02:28 PM