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By | OUT-LAW.COM 31st May 2007 07:02

CD WOW! vows to take £35m High Court defeat to Europe

'We make tiny margins on our goods and it is the consumer who benefits'

CD WOW!, the British online music retailer, will continue its legal fight against the music industry despite a £35m award against it in the UK courts this week. The firm says that it will take the battle to the European Court of Justice if it can.

Trade body the British Phonographic Industry (BPI) took a case against CD WOW! alleging that the company was engaged in parallel importing. In March the company was found guilty of breaching previously given undertakings to the court over its sale of CDs, and the level of damages has just been set at £35m plus costs.

"We are outraged by the judgment. We will fight this all the way to the European courts even if it takes another three years to win justice," said Henrik Wesslen, co-founder of the business. "There will be no let up on our part and CD WOW! will continue to trade now and in the future. We make tiny margins on our goods and it is the consumer who benefits not the big high street stores who rip off their customers by adding massive margins."

The BPI welcomed the damages order and said that it had won a freezing order on the Hong Kong bank accounts and assets of the company.

"CD WOW! is no consumer champion; it is a rogue trader that now has to face the consequences of its actions," said Geoff Taylor, chief executive of the BPI. "The vibrancy of British music depends on a fair return on the investments that allow British talent to shine. This decision is an important step in ensuring that British music has a bright future."

In March the High Court found that CD WOW! had infringed copyright and had broken undertakings given to the court by its sale of CDs that were not licensed for the UK market.

Many of the CDs the company sells are shipped from Hong Kong. Record companies charge different prices for CDs in different countries, and to protect those price differences they issue copyright licences for the sale of CDs on a country-by-country basis. To sell a CD licensed only for Hong Kong in the UK, for example, infringes copyright.

The High Court heard that the BPI had made a number of test purchases and had been sent CDs by CD WOW! that were not licensed for sale in the UK. CD WOW! said that those were sent in error.

Judge Justice Evans-Lombe said that he "unhesitatingly rejected" the claims that only human error was at fault. He said there was "strong evidence that CD WOW! was committing widespread breach of the undertakings ... when the contempt application was launched" and that "CD WOW! had taken no effective steps to ensure compliance with the undertakings even after an application for contempt had been served".

CD WOW! said after this week's damages announcement that it does abide by the laws but that it does not believe they are good ones.

“The current copyright laws are mad, but that doesn’t mean we don’t stick to them," said Wesslen. "We have always acted transparently and where we have been pulled up on a small number of unintentional instances we are big enough to hold our hands up. The fact is though, it shouldn’t matter whether we are buying from an official distributor in the UK, Europe or the Far East, what is important is that we are buying legitimate products from the record companies themselves. Isn’t it time we focused on a combined effort to stop the pirating that is hurting all of us?"

Copyright © 2007, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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