FC: Copy protected CD case settled against Music City Records

[Declan McCullagh <declan () well com>]

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From: "Ira P. Rothken" <ira () techfirm com>
To: <declan () well com>
Subject: Settlement of Cloqued Music CD Case
Date: Thu, 21 Feb 2002 23:45:13 -1200
Organization: Rothken Law Firm
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Declan,

We just settled an interesting case involving "cloqued" (Digital Rights 
Management) music CDs.

Below I provide information regarding the suit and a summary of the settlement.

Here is the actual settlement agreement: 
<http://www.techfirm.com/sunnk.pdf>http://www.techfirm.com/sunnk.pdf

Ira P. Rothken
<mailto:ira () techfirm com>ira () techfirm com

Sunncomm and Music City Records Agree to Resolve Consumer Music CD-
Cloqueing Law Suit by Providing Better Notice and Enhancing Consumer
Privacy

FOR IMMEDIATE RELEASE

San Rafael, CA February 22, 2002

Sunncomm and Music City Records agreed today to settle a suit brought
against them by a California women arising out of Sunncomm s cloquing
technology used on Music CDs that allegedly acted against the reasonable
expectations of consumers by electronically tracking consumers listening
habits and preventing  consumers from spaceshifting songs to portable MP3
players.

The lawsuit, (entitled DeLise v. Fahrenheit Entertainment, Music City
Records, and Sunncomm)  was filed in Marin County Superior Court in
September, 2001 and alleged that Music City Records failed to disclose that
unlike millions of Music Compact Discs sold before it that Music City's CD
entitled "Charley Pride - A Tribute to Jim Reeves" would not work on
standard audio CD players found on millions of personal computers, that
electronic music files made available for download pursuant to purchase of
its CD were proprietary in nature, that such electronic music files would
not work on portable MP3 players, and that the CD included a proprietary
electronic music scheme that tracked, stored, and disseminated specific
consumer personal identifying information, listening data, and downloading
habits to entities beyond the control of the consumer. The suit also alleged
that there was no practical way to opt-out of the data collection or destroy
the data once it is collected. The suit requested relief from the Court to
stop the alleged privacy intrusion and to provide better consumer notices.

According to the settlement agreement summarized below, the Defendants ,
Music City Records, Fahrenheit Entertainment, and Sunncomm, agreed to the
following consumer remedies in the United States so long as they maintain
the Sunncomm or similar Cloqueing   (Digital Rights Management) technology
on the music CD entitled Charley Pride a Tribute to Jim Reeves ( Charlie
Pride CD ):

Privacy
1. Defendants shall immediately ensure that any and all Internet music file
downloads and listening of the music contained or arising out of said
Charlie Pride CD are always anonymous and personal identifying information
including, but not limited to, e-mail address and IP addresses shall not be
required nor obtained as a condition of downloading (including file
downloads from sunncomm.com) or playing or listening to the CD or music
files, thereby protecting consumer privacy.
2. Defendants shall immediately purge all personal identifying information
(including e-mail addresses and IP addresses) obtained via the music file
downloading process to date.
3. Defendants shall amend their privacy policy(s) to advise consumersthat
all Internet file downloads of the music contained on the Charlie Pride CD
are anonymous.

Right of First Sale
4. Defendants shall not impair or limit in any manner the ability and right
of consumers to lawfully sell or transfer ownership of the Charlie Pride CD
to others who shall have the equal ability to download related digital music
files;

Return Policy
5. Defendants shall immediately begin accepting from consumers not satisfied
with the Charlie Pride CD due to problems with playability on their CD
player, computer CD player, or electronic or portable playing device;

Platform Notices
6. Defendants shall include a warning that the Charlie Pride CD is not
designed to work in DVD players or Computer CD-ROM  players;
7. Defendants shall include a warning of the minimum system requirements for
playing the downloadable encrypted digital music files on a computer,
including Microsoft Windows 98 and above and Microsoft Windows Media Player
7.0 and above and access to the Internet;

Spaceshifting Notices
8. Defendants shall include a warning that the Charlie Pride CD and
encrypted digital music file downloads are not compatible with MP3 rippers
and players and are not compatible with MP3 electronic playing devices; .
9. Defendants shall include a notice to visit a web page with a simple URL
for an updated list of known compatibility problems related to computers. CD
players, and digital music playing devices;
10. Defendants shall include a warning that the downloadable encrypted
digital music files of the songs contained on the Charlie Pride CD may only
be downloaded six times.

I am very satisfied with the settlement we obtained for the benefit of the
General Public&I applaud Music City and Sunncomm in deciding to resolve this
case and to give consumers better notice so consumers can make an informed
decision as to whether they want to purchase such functionally impaired CDs"
said Karen DeLise plaintiff in the case.

Sunncomm and Music City, in our
view, have an obligation if they want to implement Digital Rights Management
technology on their music CDs to do so responsibly, with notice, so
consumers can make an informed decision about whether to buy such burdened
CDs. We are hopeful that this settlement will create a model for other
record companies to follow if they want to sell functionally inferior music
CDs by making them different from the millions of CDs sold in the past "
said Ira Rothken, an attorney representing the Plainitffs.

If you wish to discuss this case or have any questions please contact
Plaintiffs lead counsel, Ira Rothken of THE ROTHKEN LAW FIRM at 415-924-4250
or via e-mail at <mailto:ira () techfirm com>ira () techfirm com. The law firm 
web site is located at
<http://www.techfirm.com>http://www.techfirm.com.





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