The long running and much previously reported legal fight between BMG owners Bertelsmann on the one side, and EMI and a consortium of music publishers on the other, over the former's financial support of the original Napster, continued this week with an appeal court ruling in favour of the German media conglom on the need to disclose, or not, confidential client-attorney documents relating to the case.
As previously reported, this dispute relates from 2000 and 2001 when BMG decided to loan funds to the original Napster company as they attempted to translate their then huge illegal P2P network into a legitimate licensed service. In the end that attempt was unsuccessful because lawsuits from other major record companies and content owners sent the firm into bankruptcy before any thing could be launched. After the bankruptcy, some of those who had been suing the P2P firm began legal proceedings against those who had funded Napster in its latter period of existence, on the basis that their financial support had enabled the service to continue to operate, allowing the further illegal sharing of millions of music files, and that therefore they were guilty of secondary copyright infringement.
As part of their litigation against Bertelsmann, in November 2005 EMI and the publishers asked the federal District Court in San Francisco to order the German firm to hand over attorney-client documentation relating to their Napster agreement. Normally the confidentiality of such documents is protected by US law, but not if they are believed to provide evidence of fraudulent activities. The claimants allege that Bertelsmann secretly took equity in the P2P firm in return for the monies they advanced which is important on two grounds - firstly it would strengthen the copyright infringement case against them and secondly it would suggest the confidential legal documents may discuss such an equity deal and how to keep it secret, in what possibly amounts to a fraud. All of which means there was a case for having the documents released and a chance they would strengthen the case against Bertelsmann.
In April 2006 the District Court sided with the claimants and ordered Bertelsmann to hand over the documents, but the Ninth Circuit Court Of Appeal, hearing the conglom's appeal, this week ruled EMI and the publishers had not provided conclusive evidence of any fraudulent activity on Bertelsmann's part, and therefore ruled the defendant was not required to hand over confidential legal communications.
Universal Music was originally one of the claimants in this case, of course, but they reached an out of court settlement with Bertelsmann as part of its deal to buy the German company's publishing firm, BMG Music Publishing. Talking of which...