German media company Bertelsmann faces a multibillion dollar lawsuit from a group of music publishers.
The publishers are chasing damages of at least $17 billion. They allege Bertelsmann contributed to wide-scale infringement of their copyrighted works by funding Napster and its peer-to-peer file sharing technologies. Bertelsmann has already lost $100 million it invested in Napster.
The plaintiffs claim Bertelsmann's funding of the company prolonged the services life.
Music publishers and record companies, including Bertelsmann's own record label BMG, originally sued Napster in late 1999 for copyright infringement and were granted an injunction against it.
However, the plaintiff's claim: "Notwithstanding Bertelsmann's full knowledge of Napster's gross infringement of music copyrights, which its own record label had only just decried in court as 'the most egregious case of massive copyright infringement that has even existed', Bertelsmann shocked the industry by throwing Napster a lifeline."
It was at that time, in October, 2000, that the German firm formed a strategic partnership with Napster and funded it with $50 million in capital, the complaint states. Bertelsmann's initial investment was followed by several more.
The plaintiffs allege that if it weren't for Bertelsmann's funding of Napster, the service would have closed in 2000, instead of in 2001 when it was ordered to shut down by a California federal court.
"But for Bertelsmann, the massive infringement on the Napster service would have ceased nearly a year earlier," the complaint states.
Rocco Thiede, a spokesman for Bertelsmann in Gütersloh, Germany, said he had no knowledge of the lawsuit and no comment other than the company's official statement on the online music venture: "Napster was never a Bertelsmann company."