CD Wow to pay damages in copyright case

[Richard]

Hello everybody!

Here is some news about CD Wow from Reuters. It may be of interest to anybody in the UK or Ireland who's thinking of ordering CDs from them.

CD SELLER TO PAY DAMAGES OF 40 MILLION POUNDS IN COPYRIGHT CASE

Leading record companies have won more than 40 million pounds ($79.5 million) in damages after the High Court ruled that Hong Kong-based retailer CD Wow had breached a 2004 court undertaking not to illegally import CDs into the UK and Ireland. The judgement shows the level of penalties that online retailers face if they are found to be in breach of international copyright laws. John Enser, head of the music team at law firm Olswang, said the award represents a deterrent to retailers trying to illegally exploit the grey market in goods sourced from low-price markets abroad.

Richard

[Dave]

Hi Richard, thanks for posting that... you resolved my dilemma; I wasn't sure if I should post a longer report from "Music Week" yesterday but now, I will. I think CD Wow's continued existence may now be in doubt and as for other Companies who do the same thing, I suspect they will be trying rapidly to re-model their businesses!

There is also a reference near the end to the next UK Court battle... over the VAT "loophole" that allows UK Companies to sell CDs from the Channel Islands to the UK, free of Value Added Tax.

CD Wow loses infringement case
29 May 2007 - 06:00:00

The BPI has been awarded £41m in damages in its case against online retailer CD Wow.

It says the award is “the largest settlement secured by the UK recording industry to date in a copyright infringement case”.

The award comes after CD Wow was in March found to be in contempt of court and in breach of copyright in a case brought by the BPI, having signed undertakings in January 2004 that it would cease to sell CDs to UK and Irish customers that had first been placed on the market outside the European Union, a practice known as parallel importing.

Judge Mr Justice Evans-Lombe ruled that CD Wow had breached this undertaking, ordering the company to disclose its trading records to the BPI and to pay £150,000 as a contribution to its costs.

The full sum for fines, costs and damages was originally to be decided at a hearing in early July. However, as a result of CD Wow’s failure to co-operate with the court’s orders for disclosure and payment of security, Evans-Lombe decided to award damages last Wednesday.

The figure comprises £37m to settle the BPI’s “core claim” and £4m in interest, increasing at the rate of £9,000 a day. The judge will at a later date decide on the level of additional damages that the retailer must pay, as well as the size of the fine the company faces for contempt of court and legal costs to be awarded to the BPI.

In addition, the BPI has obtained a “freezing injunction” against the Hong Kong-based company, meaning that all of its assets are frozen. As a result, CD Wow will be allowed to fulfil orders made before the injunction was granted, but none thereafter.

BPI general counsel Roz Groome, who spearheaded the BPI’s case, says that the ruling – and the size of the damages awarded – sets an important legal precedent.

“This will have a huge deterrent effect against other parallel importers. We will use the judgment and award to eliminate the practice,” she says. “The judgment is very, very clear that parallel importing is illegal. If there was any doubt, there is no doubt now.”

BPI chief executive Geoff Taylor adds, “Illegal imports of this kind undermine the huge investments made in homegrown musical talent. This ruling illustrates the lengths that the rogue retailer went to flout the law and maximise its profits at the expense of British musicians and the record companies that support them.

“CD Wow is no consumer champion. It is a rogue trader that now has to face the consequences of its actions.”

Meanwhile, in another case that will have resonance for retail, the group of independent music stores fighting the Treasury over Low Value Consignment Relief – the tax mechanism that allows online retailers to sell goods such as CDs under the value of £18 into the UK without paying VAT – is now seeking funding to take its battle to the courts.

In January, the group wrote to the Treasury threatening legal action over the mechanism, which they see as a tax loophole. They have since received a reply. However, the group’s legal adviser says that the Treasury’s line of reasoning is largely irrelevant and does not affect their own legal argument.

Delerium Mail Order owner Richard Allen, who heads the group, says that it is now looking to secure funding and expects a final exchange of letters before going to court.

Cheers, Dave