German Pirate Party Wins Seats In Fourth Straight State Election

EMI Adds Insult To Bankruptcy In Misguided Gloating Over MP3Tunes Demise

from the time-poorly-spent dept

Mon, May 14th 2012 9:16am — Mike Masnick

We already wrote about EMI's success in bankrupting MP3Tunes via overly aggressive litigation. But, now the company has decided to add insult to bankruptcy with a bizarrely gloating statement provided to News.com's Greg Sandoval.

Since November 2007, EMI Music and EMI Music Publishing have been engaged in a lawsuit with MP3tunes and its principal, Michael Robertson, in connection with Mr. Robertson's facilitation of widespread copyright infringement on MP3tunes.com and Sideload.com. These sites have built their businesses on the unauthorized distribution of music, at the expense of EMI's songwriters and artists.

Here, they're simply lying. The court ruling in the MP3Tunes case stated explicitly: "MP3tunes did not promote infringement." To claim otherwise is to ignore what the court stated flat out.

Now on the eve of trial, and after an ongoing press campaign claiming that MP3tunes would fight to vindicate its 'right' to infringe, Mr. Robertson has filed for bankruptcy protection for MP3tunes in the Southern District of California. After four and a half years of Robertson's bluster and rhetoric, it is apparent to EMI that Robertson has finally realized that his case has no merit.

While Robertson may believe that MP3tunes will be able to escape liability in the upcoming trial through this bankruptcy, Robertson himself is still a named defendant in the case and the Court has already determined that both he and MP3tunes have infringed EMI's copyrights. As such, he is facing personal liability both for infringements that the Court has already determined have occurred and for the further alleged infringements that will be addressed at trial. Accordingly, EMI will continue to pursue its case against Robertson, to ensure that its songwriters and artists are properly compensated for their creative work.

This makes no sense, and is even self-contradictory. As they state above -- and which everyone here knows -- filing for bankruptcy does not get you out of a copyright damages award. Thus, there is no reason whatsoever for the company to file for bankruptcy "to escape liability." That's impossible. The only reason to file for bankruptcy is because the company is out of money from fighting the damn lawsuit. And it's bizarre for EMI to claim that Robertson realized his case has no merit, considering that he mostly won the original lawsuit. Yes, there were a few key points that he lost on, which may turn out to be expensive if he loses on appeal and depending on the damages calculation, but the key elements of the case were won by Robertson and MP3Tunes.

It seems here that EMI is simply insulting Robertson out of spite. In the meantime, Robertson has pointed out that EMI spent $10 million suing him -- or more than the entire cost to build and run MP3Tunes. Remember that some exploration into how much EMI makes from Katy Perry's hugely successful album showed that the label probably ended up with about $8 million? Yeah, so basically it spent more suing Michael Robertson than it got from Katy Perry. Perhaps that money could have been better spent. No wonder the company was taken over by a bank and then sold off in pieces. Its priorities are a complete mess.

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: bankruptcy, competition, innovation, michael robertson
Companies: emi, mp3tunes

57 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

jakerome (profile), 14 May 2012 @ 9:22am

EMI suing itself into bankruptcy
That's the real tragedy, in the Greek sense. All these lawsuits are wasting tens or hundreds of millions of dollars on lawyers. While at the same time crippling their business operations in order to facilitate the sue-first strategy of EMI & other RIAA members.

I can't keep track of who's been bought & who's gone bust. But in the end, it won't be "piracy" that ends the reign of Big Music, rather it will be their own courtroom-centric business strategy.
[ link to this | view in thread ]
Anonymous Coward, 14 May 2012 @ 9:31am

Do companies in the position of MP3tunes have any real remedy? I'm in the early stages of forming a startup (software, not music), and bogus patent lawsuits are one of my primary concerns. Is there any effective defense against a big company throwing money at their lawyers to drown you in legal costs (even if you successfully defend the case)?
[ link to this | view in thread ]
Lowestofthekeys (profile), 14 May 2012 @ 9:33am

You'd think they'd develop better common sense when it comes to dealing with money.

They're essentially using a club to hammer in a tac.

It's just a desperate cycle too as they'll spend more and more money to try to get money back from the pirates, and int he end they'll burn themselves out.
[ link to this | view in thread ]
E. Zachary Knight (profile), 14 May 2012 @ 9:35am

Re:
Sadly, as long as there are still appeal options for the losing party (the big guys with lots of money) there are no solutions for the little guy. Once all appeals are exhausted, you might be able to recover all or most of your legal costs in the end, but it is a pretty sad "remedy", especially if you had to declare bankruptcy in the mean time.
[ link to this | view in thread ]
Ninja (profile), 14 May 2012 @ 9:37am

Re: EMI suing itself into bankruptcy
Actually we should be partying. They spent more in this lawsuit than with one of their blockbuster pop stars which mean they are right on track for a painful, bankrupt death. And along with that they helped pave the road for future services similar to MP3Tunes. And I do hope they sue Google and Amazon for their music lockers so they'll die an even faster death so the world will be a better place. It's no tragedy, it's just one damn big good news.
[ link to this | view in thread ]
Anonymous Monkey (profile), 14 May 2012 @ 9:40am

....Then they fight us....
Then we win.
[ link to this | view in thread ]
:Lobo Santo (profile), 14 May 2012 @ 9:41am

Re: Defender
Yes, start your company in a country which isn't beleaguered with such staggering amounts of legal bullshit.
[ link to this | view in thread ]
Ninja (profile), 14 May 2012 @ 9:48am

Re: Re:
And they say our judicial system is balanced. For me it's obvious that in a lawsuit where one of the sides has too much financial advantage there should be a mechanism to allow the smaller side to use Government money to build the defense. In case of a loss the 'loan' should be paid but in case of a victory the big player should pay ALL the costs, regardless if one or two points were rejected by the court.
[ link to this | view in thread ]
Anonymous Coward, 14 May 2012 @ 9:49am

They said: Court has already determined that both he and MP3tunes have infringed EMI's copyrights.

You said : The court ruling in the MP3Tunes case stated explicitly: "MP3tunes did not promote infringement." To claim otherwise is to ignore what the court stated flat out.

which is it, or is this just more word parsing?
[ link to this | view in thread ]
Loki, 14 May 2012 @ 9:51am

We at EMI would like to announce we have driven yet another of our growing competitors into bankruptcy. Of course, in the process, we've also driven ourselves out of business by wasting tens of millions of dollars on costly litigation that could have been better spent on trying to actually compete in the marketplace.

We encourage our fellow major labels (most particularly Universal Music Group) to continue to follow in our wake until they too litigate themselves broke and are all gobbled up in turn, until there is but one (there can be only one) which will most likely be Sony.

Given that corporations are people, it is our unwavering hope that Sony will then be able to get themselves declared an endangered species to forestall any anti-trust or monopoly lawsuits that might be possible.

Yours truly, the soon to be extinct EMI.
[ link to this | view in thread ]
RD, 14 May 2012 @ 9:52am

Greater Enforcement vs. Adapting and Innovating?
So, can we now finally put-paid to the idea that the solution to the music industry's problems is greater copyright restrictions and enforcement, and agree that maybe all that time and money would be better spent creating new markets, new technologies, and leveraging the ones already in place, to expand the pool of customers and increase revenues?

Trolls? Shills? Got anything to say about this?
[ link to this | view in thread ]
Anonymous Coward, 14 May 2012 @ 9:54am

Re: Re: Re:
there should be a mechanism to allow the smaller side to use Government money to build the defense

So the taxpayers end up financing every small business that finds itself in an intellectual property lawsuit? There's the stupidest idea of the year and it's only May.
[ link to this | view in thread ]
:Lobo Santo (profile), 14 May 2012 @ 9:54am

Re: Re: Re: Court Cost Balancer
It might make more sense to work that in the opposite direction: Regardless of how much funding one side has, they will be obligated (under insta-loss rules) to only use as much funding as the smaller player has available for their legal defense.
[ link to this | view in thread ]
fb39ca4, 14 May 2012 @ 9:56am

Well, B==========D
[ link to this | view in thread ]
Anonymous Coward, 14 May 2012 @ 9:59am

Re: Re: Defender
Which is a shame!

I've read here and there that guys planning to make start ups and other services are thinking about moving out of the US and venture capitalists are skeptical about where they put their money in fear of future litigation due to copyright and patent issues in a nearby future.

Good for the guys outside of the US who may see their tech industries grow strong, but ultimately bad for the US economy that loses both new business and work posts in one of the fastest growing sectors of the economy.
[ link to this | view in thread ]
jakerome (profile), 14 May 2012 @ 10:08am

Re: Re: EMI suing itself into bankruptcy
Tragedy, in the Greek sense. http://faculty.gvsu.edu/websterm/Tragedy.htm

Tragedy depicts the downfall of a noble hero or heroine, usually through some combination of hubris, fate, and the will of the gods. The tragic hero's powerful wish to achieve some goal inevitably encounters limits, usually those of human frailty (flaws in reason, hubris, society), the gods (through oracles, prophets, fate), or nature. Aristotle says that the tragic hero should have a flaw and/or make some mistake (hamartia). The hero need not die at the end, but he / she must undergo a change in fortune. In addition, the tragic hero may achieve some revelation or recognition (anagnorisis--"knowing again" or "knowing back" or "knowing throughout" ) about human fate, destiny, and the will of the gods. Aristotle quite nicely terms this sort of recognition "a change from ignorance to awareness of a bond of love or hate."
[ link to this | view in thread ]
Anonymous Coward, 14 May 2012 @ 10:10am

Re: Re: Re: Re:
"So the taxpayers end up financing every small business that finds itself in an intellectual property lawsuit? There's the stupidest idea of the year and it's only May."

Actually, we're already pretty much funding businesses as it is. You can look up how much some of those big corporations (who outsource pretty much everything) receive after getting tax breaks and it's ridiculous. Some of those companies make literally hundreds of millions of dollars off the tax payers.

So if it's okay to receive tax breaks for shipping jobs and production outside the U.S. while writing it all off, why not finance a legal fund that allows for small businesses to receive some aid in intellectual property lawsuits? We already have funds set aside for small businesses to apply for and receive funding to provide training for their employees.

You want stupidest idea of the year? Pretty much anything you say, you're a real Negative Nancy. I'm sure you're one of the same people talked about in the article the other day about tearing down artists who try new things. If EMI can't take a cut of an artists' funds or beat down the company which did not commit copyright infringement then there's something wrong with the world, am I right?
[ link to this | view in thread ]
Anonymous Coward, 14 May 2012 @ 10:10am

Re:
Your only options are to buy or obtain some nuk--er, patents or to find a new line of work.
Or cast the dice and hope no one notices you.
[ link to this | view in thread ]
Anonymous Coward, 14 May 2012 @ 10:19am

this seems to me to be the typical strategy. someone with loads of money sues someone until they have no money left to fight with, then spout out about how you are the winner and that the win has come about because the loser has given up. all that has happened here is that yet another of the ways for people to get music has been destroyed. what is so sad is that i recently read how the labels reckon there are more legitimate ways available than ever before. that may be true, but the prices charged, the formats available and the never ending DRM are what keeps customers from embracing them. this has just stopped another source, done simply out of jealousy!
[ link to this | view in thread ]
John Fenderson (profile), 14 May 2012 @ 10:29am

Re:
Is there any effective defense against a big company throwing money at their lawyers to drown you in legal costs (even if you successfully defend the case)?

Not really.

There are a number of things you can do to reduce your risk, but the risk will always be there. First, incorporate as a real corporation (not an LLC or subchapter S) to gain the "corporate veil" (and make sure that you are very uptight about keeping the company's finances and your personal finances entirely different things. You get a salary.) This will make it more difficult for them to personally bankrupt you if they decide to ruin your business.

You should also consult with a business attorney specializing in these issues. There are procedural and recordkeeping things you can do that won't provide a complete defense, but will make you a less attractive target.

If your risk is very great, and you expect a good profit, then you can also purchase insurance against such things. It is expensive, though, and typically not worth the cost.

Personally, I've been comfortable with just doing the incorporation for my software business. I've never had a lick of trouble, but if I did, it provides a bit of a firewall so at worst I'd lose the company and not my house, car, etc. And you can always start another company.
[ link to this | view in thread ]
Anonymous Coward, 14 May 2012 @ 10:32am

Re: Re: Re: Re: Re:
So if it's okay to receive tax breaks for shipping jobs and production outside the U.S. while writing it all off, why not finance a legal fund that allows for small businesses to receive some aid in intellectual property lawsuits?

In my opinion, it's NOT okay to provide tax credits to ship jobs overseas. Yet the tech companies seem to be doing just that. Are any consumer electronics manufactured in the US? Between that and abusing the visa system to import engineers from India and other third world nations to avoid paying the salary commanded by an American is a scandal. No company in any industry should be incentivized to export jobs or import cheap, foreign labor.
[ link to this | view in thread ]
Anonymous Coward, 14 May 2012 @ 10:33am

Re: Re: Re: Re: Court Cost Balancer
It might make more sense to work that in the opposite direction: Regardless of how much funding one side has, they will be obligated (under insta-loss rules) to only use as much funding as the smaller player has available for their legal defense.

So this is the part where you ignore free speech rights? Got it.
[ link to this | view in thread ]
Anonymous Coward, 14 May 2012 @ 10:35am

Re:
the revolution will be ASCII, uu=====D----0:
[ link to this | view in thread ]
Chronno S. Trigger (profile), 14 May 2012 @ 10:37am

Re: Re: Re: Re: Court Cost Balancer
Nah, that still wouldn't work. They could hire a big time lawyer team and pay them pennies with a promise of a bigger payout latter.

The problem, as is, is impossible to fix. What we really need to do is educate the judges, the patent office, the lawmakers, and fix the damn laws. That would solve this problem.
[ link to this | view in thread ]
jupiterkansas (profile), 14 May 2012 @ 10:38am

There's only three majors left. How much will it cost to take em down?
[ link to this | view in thread ]
Chronno S. Trigger (profile), 14 May 2012 @ 10:39am

Re: Re: Re: Re: Re: Re:
I agree with you here, so why don't we support the small businesses who tend to keep as much local as possible.
[ link to this | view in thread ]
Anonymous Coward, 14 May 2012 @ 10:50am

Re: Re: Re: Re: Re: Re: Re:
That's a partial solution. But nothing will really happen until the tax break for outsourcing becomes a tax penalty. In the meanwhile, I can't find a phone, tv, computer or anything else that plugs into the wall that is made in the US.
[ link to this | view in thread ]
Anonymous Coward, 14 May 2012 @ 10:55am

Re:
Not really. That's why software patents are so controversial in the industry.
[ link to this | view in thread ]
Not an Electronic Rodent (profile), 14 May 2012 @ 11:17am

Re: Re: Re: Re: Re: Court Cost Balancer
So this is the part where you ignore free speech rights? Got it.
So money == speech? Got it.
[ link to this | view in thread ]
Dementia (profile), 14 May 2012 @ 11:19am

Hmm, shouldn't this be considered slander or libel, and shouldn't EMI be held accountable for such actions?
[ link to this | view in thread ]
nasch (profile), 14 May 2012 @ 11:30am

Re: Re: Re: EMI suing itself into bankruptcy
Tragedy depicts the downfall of a noble hero or heroine,

So you're arguing the record labels are noble heroes?
[ link to this | view in thread ]
Anonymous Coward, 14 May 2012 @ 11:43am

Re: EMI suing itself into bankruptcy
EMI is and has been dead in the water for decades as a record company. They only live on The Beatles and if they loose the way of abusing that copyright they are more or less bankrupt.

What they should do. Well, I quote Sir Paul Mccartney:
"You used to say
live and let live.
But if this everchanging world in which we live in
makes you give up and cry;
say live and let die."
(Paul Mccartney and the Wings, Live and Let Die, Live and Let Die, 1973)
[ link to this | view in thread ]
Anonymous Coward, 14 May 2012 @ 12:02pm

Re: Re: Re: Re: Re: Court Cost Balancer
So this is the part where you ignore free speech rights? Got it.

Um.. this isn't about how much money someone (or company) can contribute to a political campaign. It's about how much they can spend to abuse the judicial process.. Really, get a f***ing clue.
[ link to this | view in thread ]
Cowardly Anonymous, 14 May 2012 @ 12:13pm

Re: Re: Re:
Nah, there's a better place to get the money from. We already have statutory damages for the losers if they are the defendant. Implementing damages for the plaintiff for wrongful suit (proportional to all expenses paid in the suit) and placing them in a fund for those finding themselves unable to sustain a defense would be a much better place to take that money from. Replace the incentive to draw out the process with a firm disincentive.
[ link to this | view in thread ]
Cowardly Anonymous, 14 May 2012 @ 12:15pm

Re: Re: Re: Re:
Addendum: This should be automatically assessed by the judge, just as the damages from the defendant would be. Dismissed cases and especially those dismissed with prejudice should have twice to four times the damages assessed (note that this will still be far lower by virtue of being so early in the process).
[ link to this | view in thread ]
Cowardly Anonymous, 14 May 2012 @ 12:20pm

Re:
Infringement occurred on the site. The site did not promote it.

Thus, they may have technically infringed (via a user submission or bookkeeping error) but not be liable under safe harbor provisions or some other defense.

Kind of like how someone who kills in self-defense would neither promote murder nor be found guilty for it, despite the very real fact that they killed someone.

The world is very rarely dichotomous, no matter how hard so many people try to force it to be.
[ link to this | view in thread ]
Anonymous Coward, 14 May 2012 @ 2:44pm

"Since November 2007, EMI Music and EMI Music Publishing have been engaged in a lawsuit with MP3tunes and its principal, Michael Robertson, in connection with Mr. Robertson's facilitation of widespread copyright infringement on MP3tunes.com and Sideload.com. These sites have built their businesses on the unauthorized distribution of music, at the expense of EMI's songwriters and artists."

Aint propaganda, grand
[ link to this | view in thread ]
IronM@sk, 14 May 2012 @ 2:45pm

Re: Re: Re: Re: EMI suing itself into bankruptcy
...or all on heroin.
[ link to this | view in thread ]
JMT (profile), 14 May 2012 @ 2:54pm

From a quick look at Wiki, EMI appear to have around 400 artists/groups signed to them. They could've just given ~$25k to each of them instead of $10M to lawyers, and be able to truthfully claim they're "supporting artists" for a change. The net effect on piracy would've been the same.
[ link to this | view in thread ]
TDR, 14 May 2012 @ 4:13pm

Any person or company with enough money to influence judges and politicians should be denied the right of appeal. And they should also be made the bear the entire cost of the case they are bringing, for both sides. The price of being an aggressor, as it were.
[ link to this | view in thread ]
Anonymous Coward, 14 May 2012 @ 4:16pm

Re: Re: Re: Re: Re: Re: Court Cost Balancer
Here's a clue for you: Who are you to tell me how many lawyers I can hire, how vigorously I can pursue my legal rights and how much money I can spend doing it? You seek to censor me by limiting my advocacy on a matter I feel passionate about? Go pound salt. My First Amendment rights are sacrosanct. How dare you seek to limit them simply because I happen to have more money than my opponent.
[ link to this | view in thread ]
Anonymous Coward, 14 May 2012 @ 4:19pm

Re: Re: Re: Re: Re: Re: Court Cost Balancer
Perhaps you're not as stupid as I previously thought. Just in case this was some weak attempt at sarcasm, I offer the following:

In the landmark 1976 case of Buckley v. Valeo, the court said that �virtually every means of communicating ideas in today�s mass society requires the expenditure of money,� so restricting campaign spending meant restricting political speech. The First Amendment required that political speech be unfettered, so the same was required for political spending.

Got it?
[ link to this | view in thread ]
Anonymous Coward, 14 May 2012 @ 5:00pm

Re:
Sounds fair. So when Wikileaks sues Paypal for cutting off payment processing services, it should bear the entire cost of the case- including Paypal's defense. The price of being an aggressor, as it were.

BTW, you are out of your mind. Why don't you just sway what you mean. You think the side you agree with ought to pay and have limited legal rights. Isn't that closer to the truth? Because what you actually said was utter nonsense.
[ link to this | view in thread ]
Anonymous Coward, 14 May 2012 @ 5:01pm

Re: Re:
*say* and *disagree*
[ link to this | view in thread ]
Anonymous Coward, 14 May 2012 @ 6:11pm

Re:
It's been discussed here before that Apple, or any number of billionaires should just buy the labels and run them.
[ link to this | view in thread ]
Jonathan, 14 May 2012 @ 6:27pm

Re: Re: Re: Re: Re: Re: Re: Court Cost Balancer
It's a right shame that the only Amendments most people ever read is the First and Second, as the other eight in the Bill of Rights are falling to pieces.

But you are right. You absolutely should be able to pursue with maximum vigor the privileges granted to you by law, and it is rather difficult to prevent that without stepping on other fundamental rights. Therefore, the more palatable solution, per the Equal Protection clause, is to take away the privileges you are abusing, through a) copyright reform and b) taxing all that idle money the Devil has made work for.
[ link to this | view in thread ]
Anonymous Coward, 14 May 2012 @ 6:29pm

Re: Re: Re: Defender
Hence why some have come up with this idea
http://venturebeat.com/2012/05/06/blueseed-startup-ship/#s:blueseed-typea
[ link to this | view in thread ]
Anonymous Coward, 14 May 2012 @ 6:34pm

Get rid of IP
A better idea is getting rid of IP laws.
[ link to this | view in thread ]
The Moondoggie, 14 May 2012 @ 7:10pm

Re: Get rid of IP
LOL Good luck with that.
[ link to this | view in thread ]
The Moondoggie, 14 May 2012 @ 7:13pm

Re:
Too bad the gov't will never agree to that, since it violates the law that everyone is free to make an appeal.
[ link to this | view in thread ]
The Moondoggie, 14 May 2012 @ 7:18pm

Re: Greater Enforcement vs. Adapting and Innovating?
>>the solution to the music industry's problems is greater copyright restrictions and enforcement

You're mad! The solution is to burn them all to the ground and enhance technology further.

>>all that time and money would be better spent creating new markets, new technologies, and leveraging the ones already in place, to expand the pool of customers and increase revenues

For companies like EMI? You're mad!
[ link to this | view in thread ]
RadialSkid (profile), 14 May 2012 @ 7:41pm

Re: Get rid of IP
Sadly, that's an idea so simple and so viable that nobody in charge will ever seriously consider it.
[ link to this | view in thread ]
TDR, 15 May 2012 @ 9:18am

Re: Re:
And because of that right of appeal, the judicial system is constantly clogged up with suits that should have been definitively decided long ago, to say nothing of companies deliberately drawing out the process for their own gain and to decimate their opponent. Forbidding them from appealing would stop that. Or at least limit it to one appeal and one only, which would limit that ability.
[ link to this | view in thread ]
jupiterkansas (profile), 15 May 2012 @ 9:19am

Re: Re:
Good lord, what's stopping them!?
[ link to this | view in thread ]
TDR, 15 May 2012 @ 9:25am

Re: Re: Re:
Oh, one other thing. The law, as I understand it, says that only a person has the right of appeal. Strip corporations of the right and status of personhood, which they never should have been given, and you also strip their right to appeal. And seriously curb their ability to abuse the populace.
[ link to this | view in thread ]
Anonymous Coward, 4 Jun 2014 @ 7:09pm

No, it IS a tragedy
Despite what people feel about EMI being like this about MP3's, losing a company with an amazing and varied history like EMI is bad, and this history of the company shows why.
[ link to this | view in thread ]
Anonymous Coward, 4 Jun 2014 @ 7:15pm

Because said idea is bullshit
Just like the person saying it.
[ link to this | view in thread ]