|NEW YORK (AP) - A judge today found the Internet-based music service MP3.com liable for infringing the copyrights of the Recording Industry Association of America.
The brief order by U.S. District Judge Jed S. Rakoff was a blow to the San Diego- based company that allows users to instantly hear music and add their personal music to a play list.
Michael Carlinsky, representing MP3, said the company was considering an appeal. "There's a lot of fight left in this case," he said. "This is round one."
But MP3.com Inc. shares dropped 33 percent, or $3.871/2, to $7.75 a share in midday trading on the Nasdaq Stock Market.
The recording industry, which includes most of the nation's record companies, had argued that MP3.com was not authorized to use the music because it does not own it and has not obtained permission from recording companies.
Lawyer Katherine Forrest, representing Warner Brothers Records Inc., called it "a straightforward case of copyright infringement."
It was not immediately clear exactly how the ruling would affect MP3.com or its practices on the Internet.
"We believe that the conduct ... should cease," Forrest said. "Now we move on to the next phase."
The next phase in court will determine damages and other relief.
The judge said in a one-page order that he will explain the reasoning behind his ruling in a written decision to be issued in the next two weeks.
The lawsuit had claimed that MP3.com's Instant Listening Service and Beam-it violate copyright laws. Instant Listening Service allows customers to listen to a CD after they have purchased it while Beam-it is a program allowing users to add their own CDs to their MP3.com personal playlist online.