Napster backers must face the music

A federal court has allowed record labels to continue a lawsuit against Bertelsmann and Hummer Winblad Venture Partners, both onetime backers of the defunct Napster file-swapping network.

UMG Recordings and Capital Records are the rival entertainment conglomerates suing Bertelsmann - which owns BMG Music - and the Silicon Valley venture group for copyright infringement, alleging that each had substantive control of Napster during that company's anarchic music-swapping peak.

Judge Marilyn Hall Patel ruled yesterday that the case should proceed, because the record labels have made claims that are sweeping enough to need a full trial to rule on.

"Rather than alleging that [Bertelsmann and Hummer Winblad] merely supplied Napster with necessary funding...the plaintiffs have specifically accused the defendants of assuming control over Napster's operations," Patel wrote.

The ongoing trial, which relates to actions now years past, marks an unusual and potentially precedent-setting attempt to hold financial backers liable in a roundabout sense for the legal transgressions of companies they fund.

The idea had been anathema to Silicon Valley forces, which view venture capital as the seed for many risky ventures.

Most copyright cases deal either with the direct infringers, the person who makes an illegal copy, or "contributory" or "vicarious" infringers - people who encouraged or directed the original copy maker.

John Borland writes for News.com