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CEA Decries Record Industry Lawsuit Against XM Radio

Record Labels Turn to Courts Once Again to Stifle Innovation, Eliminate Private Home Recording Rights

The following statement was issued today by Consumer Electronics Association (CEAA) Vice President of Government Affairs Michael Petricone regarding the lawsuit filed yesterday against XM Satellite Radio Holdings Inc. by a group of record labels:

“Here they go again. The record industry is returning to the courts in their non-stop efforts to stop new technology, neuter existing products, frustrate consumers and make illegal long-standing consumer home recording activities. Their new target is XM Satellite Radio, one of America’s top technology success stories of the new millennium. XM’s only offense is providing legal and exciting programming options to millions of Americans, while opening new revenue and promotional opportunities for the recording industry.

The lawsuit announced yesterday is a brazen effort by the labels to strong-arm more money from a successful technology industry startup. XM Radio already is the largest single payer of digital music broadcast royalties. More, the record labels receive royalties on every XM recording device sold as provided by Congress under the Audio Home Recording Act (AHRA).

“Through this lawsuit, the record industry is trying to block private, noncommercial recording off the radio-an activity which Americans have enjoyed for decades, has always been considered legal, and in this case has been expressly recognized by Congress, in the AHRA, as protected from lawsuit.

“The record companies cut a deal, embodied in legislation, which said digital audio recording devices are legal if they do not allow copies of copies. And, throughout their pursuit of the Grokster case, the labels insisted that they had no intention of threatening the sort of in-home, private, noncommercial recording enabled by the devices under question in this suit.

“The products at issue in this lawsuit do not allow redistribution over the Internet or to any other product. They simply allow consumers to time-shift music they are lawfully receiving through subscription fees – fees that support the royalty payments to the labels. No matter how hard the record labels try to stretch the truth, XM has zero resemblance to the old Napster or other peer-to-peer file sharing services.

“The recording industry seems to have developed amnesia about the AHRA into which we and they had substantial input. Under this law, there is no doubt that the satellite recorders at issue in this lawsuit are legal. Specifically, the AHRA says:

‘No action may be brought under this title alleging infringement of copyright based on the manufacture, importation, or distribution of a digital audio recording device, a digital audio recording medium, an analog recording device, or an analog recording medium, or based on the noncommercial use by a consumer of such a device or medium for making digital musical recordings or analog musical recordings.’

The lawsuit is yet another ambush in the labels’ ongoing war on innovators and consumers. In addition to this lawsuit, the industry is pushing the PERFORM Act in Congress. This legislation would raise royalties and impose new technology mandates on satellite radio. We urge Congress to refrain from acting on this and any related legislation pending an outcome of this lawsuit in the Courts.

“It is time to say ‘enough is enough.’ It is time to put an end to ill-founded lawsuits and over-reaching legislation that effectively impose an ‘innovation tax’ on consumers and technology developers. These ongoing efforts discourage innovation and jeopardize America’s global technology leadership.

“If only the music industry spent as much time adopting new business models as they do filing lawsuits and aggressively lobbying for anti-consumer, anti-technology changes in the law, they might find they can actually expand their market.

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“This lawsuit undermines our efforts to work with the recording industry to seek inter-industry cooperation on digital technology issues. On behalf of American consumers and technology innovators, we look forward to standing with XM as it defends this lawsuit. The consumer technology industry will continue to take a strong stand against persistent, punitive, obnoxious and over-reaching efforts by the record labels to control innovation and limit reasonable consumer activities.”

About CEA:
The Consumer Electronics Association (CEA) is the preeminent trade association promoting growth in the consumer technology industry through technology policy, events, research, promotion and the fostering of business and strategic relationships. CEA represents more than 2,100 corporate members involved in the design, development, manufacturing, distribution and integration of audio, video, mobile electronics, wireless and landline communications, information technology, home networking, multimedia and accessory products, as well as related services that are sold through consumer channels. Combined, CEA’s members account for more than $125 billion in annual sales. CEA’s resources are available online at www.CE.org, the definitive source for information about the consumer electronics industry.

CEA also sponsors and manages the International CES – Defining Tomorrow’s Technology. All profits from CES are reinvested into industry services, including technical training and education, industry promotion, engineering standards development, market research and legislative advocacy.

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