MP3.com has filed a malpractice suit for more than $175m against its external firm of lawyers.
In the lawsuit, MP3 argued that Cooley Godward's advice was responsible for MP3's decision to launch its music distribution service, MyMP3.com.
The suit alleges that the California-based legal firm did not provide MP3 with meaningful advice as to whether the service would prevail. The decision to launch the service has resulted in dozens of copyright suits being filed against the music service company.
It also alleges that the law firm falsely represented to MP3 that it had secured expert opinion testimony that there were viable defences to be emphasised in favour of the company's business model.
The MyMP3 service allows customers to listen to their CDs through the company's website. Unlike other similar services, which ask their customers to upload music to online storage lockers for access, MP3.com copied and stored a database of CDs on its own servers. Customers could draw on this database if they proved they had their own copy of the CD.
According to Sonia Katyal, who practices intellectual property litigation, Cooley Godward probably did not fail to meet a reasonable standard of care.
"It is important to remember that at the time Cooley advised MP3, the area of online music was a legal morass of unsettled questions," Katyal said.
Katyal said many scholars and lawyers thought a fair-use argument could be made in favour of MP3's business. "If Cooley Godward so advised MP3, it should not be held liable, for it simply adopted a view that many other reasonable attorneys have endorsed."
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