The Recording Industry Association of America has filed suit in federal court against XM Satellite Radio, alleging that XM’s new Inno device permits users to violate copyrights. (Although the press reports allege that the Inno violates copyright, this isn’t right – inanimate devices don’t violate copyrights, people do. This is important because XM can’t violate copyright unless XM’s users do – no one is alleging that XM itself downloads and stores music. I assume that the RIAA is pressing a complaint based upon secondary liability for copyright infringement (contributory or vicarious), along the lines of Grokster, or is simply alleging breach of contract based on the agreement with XM regarding broadcast rights.) The Inno lets users store material broadcast over XM’s satellite radio system and listen to it at a later time. XM naturally says that the device is perfectly legal. XM’s competitor, Sirius, has already agreed to licensing fees on similar facts.

The RIAA’s case seems weak on the facts (though I haven’t been able to find the complaint yet). XM can’t be liable unless the satellite service’s users are, in fact, infringing copyright. I think XM users would have quite a strong defense based on fair use. Since the Inno doesn’t permit transfer of music files (at least until someone cracks the device’s storage), the risk of infringement along the lines of P2P doesn’t exist. The situation seems analogous to that of the classic Sony fair use case: users store music to listen to it later, they don’t control what is played, and there is no threat to the revenue stream (since there’s a monthly fee for XM, and no ads, the revenue model continues to work). If this does go to court – I expect it will settle, since that is in both sides’ best interest – the fight will likely be along the lines of the original Sony struggle: will users “time-shift” their music, or will they slowly amass a library of songs (read: TV broadcasts) that diminishes sales of compact disks and iTunes? Given that DVD sales of television shows continue to grow, despite the presence of TiVo and VCRs, I think the former is the right answer.

A side note: if XM’s actions with the Inno already violate copyright law, why ask Congress to “reform the appropriate section of copyright law to assure satellite services play by the same rules as Internet music services”?

Update: The complaint is up, and EFF has blogged about it.  Evidently the RIAA has accused XM of direct infringement.  More to come once I’ve digested the complaint!  (Props to Derek Slater for the link!)

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