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Diamond at crossroads on broad MP3 suit

After yesterday's court victory, Diamond Multimedia must decide whether to continue pressing its counterclaim against the music industry, potentially bringing down a digital recording law.

Culture
After yesterday's court victory, Diamond Multimedia must decide whether to continue pressing its counterclaim lawsuit against the music establishment and, in the process, potentially bring down a law that governs digital recording devices.

Diamond Multimedia, which won a key federal appeals court ruling yesterday, has filed a countersuit against the Recording Industry Association of America, a trade group that represents record companies.

Among the issues raised in the countersuit are challenges to the constitutionality of the Audio Home Recording Act. The law, enacted in 1992, requires digital recording devices to encode a serial copy management system.

"If Diamond proceeds and prevails with its counterclaim, this would be significant and a rare occurrence," said Brad Biddle, an attorney who specializes in digital music issues for Cooley Godward and is an adjunct professor of cyberspace law at the California Western School of Law. "In the most extreme result, we may see [the home recording act] go away."

In its lawsuit filed last fall, the RIAA alleged that Diamond's Rio PMP300 player violated that law. But yesterday's ruling found that the Rio player was not covered under the act.

"In a week or two, we'll decide on whether to continue to pursue the counterclaim," said David Watkins, president of Diamond's Rio Division. "Our position was that the Rio should not fall under the act, and we were successful in convincing the appeals court of that. Next, we will be asking ourselves what's to gain by pursuing the counterclaim. We'll have to weigh the industry's needs with our business needs and see if this is a battle we need to carry forward."

He added that Diamond also will hold discussions with the RIAA on its plans involving the case.

The RIAA has not yet decided whether it will take its case to the Supreme Court, said Lydia Pelliccia, a spokeswoman for the industry group. "We're going to study the opinion and decide how to proceed," she said.

As part of its counterclaim, Diamond alleges that the Audio Home Recording Act violates both the First and Fifth amendments of the Constitution.

Andrew Bridges, an attorney representing Diamond, argues that Congress cannot impose limitations and demand royalties for technology designs because they are a matter of free expression. Although Congress has the right to address copyright issues, he added, the home recording law concerns the design of technology, not the copying of work.

Another challenge to the act is its "void for vagueness," Bridges said. Basically, if Congress mandates that a certain standard needs to be met under an act, it has to define that standard--and the statute contains no such definition for serial copy management.

Finally, Diamond is alleging that Congress lacks authority in this act.

Providing an example, Bridges said: "It's unconstitutional to say we fear photocopies will be used to infringe on the copyright of books. Therefore, they have to copy images no larger than an index card," Bridges maintained. "That would be unconstitutional, and so would having to pay a royalty to the government if you make or own a copy of a book."

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