Judge Refuses to Ban Internet Music Device

In a defeat for the nation’s largest record companies, a federal judge in Los Angeles refused Monday to issue a preliminary injunction against the maker of a device that can play back pirated songs downloaded from the Internet.

The ruling paves the way for Diamond Multimedia Systems Inc. to release its Rio portable MP3 player--a hand-held device priced at $200 that can store up to an hour of CD-quality music.

The association had argued that the overwhelming majority of MP3 music files posted daily in chat rooms and Web sites on the Internet are illegal and that Diamond was promoting the use of illicit files.

The court’s decision is the result of a lawsuit filed three weeks ago by the Recording Assn. of America, a Washington trade group representing the music industry’s six major conglomerates, which accused San Jose-based Diamond of violating the 1992 Digital Audio Home Recording Act.

The act requires manufacturers of digital audio recording devices to pay a royalty to artists, composers, publishers and record companies. Manufacturers must also incorporate a serial copyright management system into their product to prevent the unauthorized making of second-generation copies. The suit says Diamond has not registered the Rio or made any attempt to comply with the law.

Lawyers for Diamond had argued that the 1992 law does not apply to the Rio because it is technically not a recording unit but a playback-only device that retrieves content stored in a home computer.

Judge Audrey B. Collins ruled that the Rio is a recording device that falls under the law, meaning Diamond is likely to pay royalties in the future. But Collins said there was no point in forcing Diamond to include a serial copyright management system in the Rio because it would do nothing to curtail the explosion of illicit MP3 files on the Internet.