Online music storage firm MP3tunes Inc filed for bankruptcy in a U.S. court, after years of withering legal attacks.
MP3tunes is a cloud music service that lets users store music in online "lockers."
EMI Records had sued MP3tunes alleging the service massive infringed and had built its business on piracy.
Later a judge found the opposite - that "MP3tunes did not promote infringement". The Judge ruled that MP3tunes did not violate the federal Digital Millennium Copyright Act (DMCA) in permitting downloads, except as to songs specifically identified as having been pirated.
In essence, the judge said it was users rather than MP3tunes that were responsible for any infringements. But the court found the defendants liable for "contributory" copyright infringement for songs where notices of alleged infringement were provided.
The judge had also said Robertson was liable for having personally transferred songs from unauthorized websites. The copyright case is still pending before the Southern District of New York court.
Unhappy with the outcome, EMI has asked for the ruling to be re-examined 3 times - even before the first trial has occurred.
According to MP3tunes chief executive, Michael Robertson, the legal pressure was not just confined within MP3tunes. "EMI sent legal demands to existing partners and potential partners were told they could not work with MP3tunes or risk losing their license to sell EMI music. More than one digital company told us they wanted to work with us, but were prohibited from doing so by EMI. They used their government-granted copyright monopoly to get MP3tunes blackballed in the industry," he said.
Robertson estimats that EMI spent $10 million dollars with multiple law firms to arm their attack against MP3tunes.
"Continued legal bills and the entrance of substantial competitors make bankruptcy the only practical option," Robertson said. "A costly trial is slated for the summer which could cost millions."
"If MP3tunes would have been allowed to cultivate partners over the last few years it would be an entirely different scenario going forward, but without those relationships survival as an independent company is unlikely" he added.