## Facts

- Record companies owning copyrights in commercially released sound recordings sued an online music service operator.
- The defendant launched “My.MP3.com,” marketed as enabling subscribers to listen to recordings from their CDs anywhere with an internet connection.
- To provide the service, the defendant bought tens of thousands of popular CDs and, without authorization, copied the recordings onto its servers.
- Subscribers accessed the server-stored recordings after “verifying” CD ownership by briefly inserting the CD into a computer drive or by purchasing the CD through an affiliated retailer.
- Subscribers did not upload their own copies; they listened to the defendant’s centralized digital copies made from plaintiffs’ CDs.
- Plaintiffs sought partial summary judgment on liability for copyright infringement under the Copyright Act; the defendant asserted fair use and other affirmative defenses.

## Issues

1. Whether copying plaintiffs’ sound recordings onto the defendant’s servers and transmitting them to subscribers infringed the reproduction and related exclusive rights under the Copyright Act.
2. Whether the service qualified as fair use under 17 U.S.C. § 107 based on claimed “space-shifting” and alleged transformative character.
3. Whether affirmative defenses such as copyright misuse, abandonment, estoppel, or unclean hands barred liability.

## Decision

- The court granted plaintiffs’ motion for partial summary judgment on liability.
- The court held the defendant made unauthorized reproductions by copying plaintiffs’ recordings from CDs onto its servers.
- The court rejected the argument that MP3 files were not “reproductions” because they were not physically identical to CDs.
- The court held the defendant’s use was not fair use under § 107.
- The court rejected the remaining affirmative defenses as lacking merit.
- Issues such as damages were left for later proceedings.

## Legal Principles

- Making server-side digital copies of copyrighted sound recordings without authorization constitutes infringement, even if users own lawful physical copies of the recordings.
- A commercial intermediary’s mass copying and delivery of complete works through a subscription service is not protected by consumer-oriented “time-shifting” or “space-shifting” rationales.
- Fair use “transformative” character requires more than repackaging works for a new delivery system; providing the same recordings in a different format or location does not add new expression, meaning, or message.
- Copying entire creative works weighs against fair use, particularly where the purpose is commercial and non-transformative.
- Market harm includes interference with reasonably anticipated or developing licensing markets; copyright owners may require royalties for new modes of distribution.

## Conclusion

The court held that an online service cannot digitize and centrally host complete copies of copyrighted sound recordings, then provide subscriber access based on claimed CD ownership, without authorization; the defendant’s commercial “space-shifting” theory did not establish fair use, and liability for infringement was decided on summary judgment.


UMG Recordings, Inc. v. MP3.com, Inc., 92 F. Supp. 2d 349 (S.D.N.Y. 2000)