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Business News (more headlines) 09-09-2004

Brilliant Digital Entertainment And Altnet File Suit Against Infringers Of Its "TrueNames" Patent

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Action Alleges Abuse of Protected Algorithm by "Spoofers," Names Web Services and Riaa as Defendants

Stating its efforts at cooperation have proven fruitless, Brilliant Digital Entertainment (BDE) subsidiary Altnet has filed a civil suit against a number of companies and organizations, including the RIAA, alleging the breach of the "TrueNames" patent it licensed in 2002. The suit names RIAA chief Mitch Bainwol, and the RIAA's Hillary Rosen, Cary Sherman and Marc Morgenstern as defendants, in addition to The RIAA, Overpeer, Inc., Loudeye, Inc., and Media Sentry Inc. Altnet alleges some of the defendants infringe on its patents to "spoof" peer-to-peer (P2P) users with bogus or corrupted media files. Altnet alleges this has inhibited the growth of P2P for legitimate file sharing that benefits copyright holders (which Altnet advocates) and thereby has injured its business.

The suit, while narrowly focused on a specific, patented algorithm that permits the unique naming of files across peer-to-peer networks, has far-ranging implications in the ongoing battle between artists, copyright holders, labels and consumers over their respective rights to share files over the Internet. Recently, the US 9th Circuit Court of Appeals ruled that certain file sharing networks were not liable for the actions of their users who share files.

"Regrettably, our unique business proposition, backed by our exclusive patent rights, has been rejected continuously over the past three years, forcing us to seek injunctive relief. We've exhausted every means of trying to work with defendants and those they represent to patiently encourage and positively develop the P2P distribution channel," says Altnet CEO Kevin Bermeister. "Ironically, Altnet has built its business to directly address the modern moral dilemma of digital copyright infringement; yet their failure to establish -- or embrace -- legitimate, consistent and competitive business practices, delays the day when we will both see significant revenue from this incredible distribution stream that is already providing substantial benefit to many copyright owners and consumers. In the interim, we cannot stand by and allow them to erode our business opportunity by the wholesale infringement of our rights."

Altnet President Lee Jaffe adds, "Overpeer claims it spoofs up to 200 million files per month. That adds up to a lot of instances of patent violation. The defendants have had the opportunity to work closely with us to innovate and improve the overall content experience for file sharers, yet they choose to send users damaged files that erode relationships between artists, bands, and their fans."

Altnet, for its part, has built its business advocating authorized distribution of files over the Internet and stresses its commitment to providing full compensation for copyright holders through advertising, content sales and revenue sharing. The company has successfully distributed video and audio clips from the recent Warped Tour online and has agreements with over seventy independent record labels to assist them in distributing their artists' music over peer-to-peer networks. TrueNames, according to Bermeister, is the most efficient method to identify unique files on distributed networks. "Nothing else is as simple or effective," he says.

Ironically, Overpeer collects -- and sells -- information gathered from consumers' computers. While officially dubbed "data mining," the information gathering practice is more often compared to "adware" or "spyware," which provides clients with information about computer users' web habits -- without informing users the data mining is going on. Others claim this kind of software slows down user computers.

Bermeister concludes, "We're saddened to have had to take this kind of action and are confident we will prevail."

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