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December 2, 1998

DIAMOND MULTIMEDIA COUNTERSUES RECORDING INDUSTRY

By CBR Staff Writer

Diamond Multimedia Systems Inc has filed its response to a suit brought by the Recording Industry Association of America (RIAA). On October 8, 1998, RIAA complained that Diamond’s Rio PMP300 portable music player, a Walkman-like device which lets users download music from the internet for later listening, violates the 1992 Audio Home Recording Act (AHRA). The RIAA originally wanted an injunction preventing Diamond from selling the device, but the US Central District Court of California denied the injunction and the Rio shipped as planned (CI No 3,526). Diamond denies all the material allegations in the RIAA complaint. It has counter-claimed that RIAA has violated State and Federal antitrust laws and has engaged in unlawful business practices under California law. Now Diamond wants damages for what it says is intentional misconduct on RIAA’s part, aimed at injuring Diamond. They have defamed, libeled and slandered us, saying we’re encouraging piracy, said VP of corporate marketing Ken Wirt. So anxious is Diamond to be seen to obey the letter of the law that it has included the Serial Copy Management System (SCMS) into the Rio, even though executives say this is technically unnecessary. The AHRA requires the inclusion of the SCMS or some equivalent. Wirt says the Rio had equivalent copy protection systems, and that the only reason these had not been certified in line with AHRA is that in the six years the law has been in force, no certification procedure has been devised. Diamond’s legal counsel, Andrew Bridges, said in a statement that the fact that RIAA has continued to pursue the case, even after the inclusion of SCMS in the Rio, makes it clear that what RIAA really wants is to squash the legal MP3 market. Bridges claimed that RIAA is trying to paint everyone in the MP3 industry as a copyright pirate, when in fact there are perfectly legitimate uses for the technology. Wirt agrees that the issue of piracy is beside the point, saying: If they thought we were really doing that they could have sued us for that. He insists that while MP3 is indeed likely to dilute the market share presently enjoyed by the big five record labels, what they will end up with is a smaller slice of a much bigger pie. Finally, Diamond contends that the AHRA itself is unconstitutional, in that it violates the First and Fifth Amendments. The Digital Millennium Copyright Act is a much better law, Wirt says, it regulates behavior, not technology. No date for the trial has been set.

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