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Universal Music Sues Insurer To Pay For Its Copyright Infringement

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Tuesday November 15, 2011
Earlier this year, the four primary members of the Canadian Recording Industry Association (now Music Canada) - Warner Music Canada, Sony BMG Music Canada, EMI Music Canada, and Universal Music Canada - settled the largest copyright class action lawsuit in Canadian history by agreeing to pay over $50 million to compensate for hundreds of thousands of infringing uses of sound recordings. While the record labels did not admit liability, the massive settlement spoke for itself.

The Canadian case has now settled, but Universal Music has filed its own lawsuit, this time against its insurer, who it expects to pay for the costs of the settlement. National Union Fire Insurance Company has refused, understandably taking the position that the liability reflects Universal Music's own use of copyright works for which it promised to set aside money for future payment.  As the Hollywood Reporter notes:

UMG put out albums without artist permission, held back royalties from these artists, and then finally paid out when faced with a much bigger legal threat. Now, even though the settlement money seems to cover what was claimed and acknowledged to be owed to artists, UMG is using the guise of a copyright claim to recover the money from its insurer.

Perhaps this represents an innovative new business model - profit from infringing on tens of thousands of copyrights and then look to an insurance policy to cover the expense. Needless to say, if Universal Music is successful, this will presumably encourage infringing activities for anyone with insurance policies (ie. businesses, universities, even some homeowner policies) that could engage in risk-free conduct secure in the knowledge that an insurer would cover potential liability.
Comments (13)add comment

Doug said:

If the largest infringers are the labels themselves
Wouldn't shutting down the labels and dispersing their assets to artists be the only reasonable course of action? The labels have sued other infringers out of business so the same thing should apply to them for their wrong doing. Or maybe we should just end copyrights completely if the industry itself cannot function within the law?
November 15, 2011

Crockett said:

Oh the irony ;)
It's hard to know what more to say about this story that just keeps on giving. When some people ask for an example of 'free culture' accusations of double standards and hypocrisy in Big Media ... well here you go.

It becomes more apparent every day (and yes we get as tired saying it as hearing it) that these old business models do not serve anyone well.

Now, in a dying effort of survival they have the audacity to pass off their massive culpability against artists to another party while still pursuing multi-million dollar litigation against end users who shared a few songs?

This is such a poor and morally reprehensible move on their part that it is almost criminal behaviour against the well being of artists, whom they purport to represent. Just goes to show it all about the business.

I suggest artists and consumers both let big media know what R-E-S-P-E-C-T means, we are done with the sock it to me ... sock it to me.

Amazing ... just amazing.
November 15, 2011

Watching said:

...
How low can you go, how low can you go? Go, go, go!

Wow. This sure is one way to install a degree of hesitation and worry into every insurance company connected to the music industry. 'Will our clients sue us to make up for their illegal actions?' should be in everyone's mind on their side.
November 15, 2011

Catherine Jefferson said:

...
My first thought is that, should the sheer gall of this music company be upheld, insurance will become much less available and MUCH more expensive -- for everybody. :/
November 15, 2011

albert said:

"new business model"?
Goldman Sachs pulled this one through a subsidiary, raking in billions of recovery dollars on the recession their gambling heavily contributed to.
Not new at all as a business model (notwithstanding your point)
November 15, 2011

Dave said:

Settlement Size
Shouldn't the settlement have been much higher? According to the formula used in the US, the CRIA should owe trillions of dollars, right?
November 15, 2011

Napalm said:

...
Something interesting to watch:

http://arstechnica.com/tech-po...tracks.ars

:-)
November 15, 2011

end user said:

Wait, what?
Since Universal was commiting a crime/breaking copyright, doesn't that void their insurance?
November 15, 2011

Byte said:

Individual policies
I wonder how much the National Union Fire Insurance Company of Pittsburgh would charge individuals (or perhaps they have a family plan?) against copyright infringement lawsuits... we might need these once C-11 and those dark thunderclouds (ACTA implementation, TPP) on the horizon pass into law. This would set quite a precendent: knowingly or unknowingly infringe, and the insurance company covers you!


November 15, 2011

WorBlux said:

Unisurable Acts.
You can't insure against intentional acts that you engage in. Just the sheer scope of the claim make is impossible to believe it was anything but intentional. They likely infringed under the theory that no single artist would find is worth their while to launch a suit on their own. Even is this were a copyright claim, UMG would have to claim that the offense is or was insurable.

@end user
Copyright violation is not a crime. You can in good faith or by negligence find that you've violated copyright. You can insure against negligence and simple mistakes. What you can't insure against is intentional acts of the party being insured.
November 16, 2011

Bill Poser said:

copyright violation is a crime
Uninsurable Acts@Copyright violation is indeed a crime. See section 42(1) of the Copyright Act: http://laws-lois.justice.gc.ca....html#h-43
November 16, 2011

Byte said:

@WorBlux
It seems to me that Universal Music Group also knew what they were engaging in, and are aware of your point, but strangely enough they chose to litigate nonetheless. If UMG gets a pay-out (including "settlement out of court"), the game is on. Insurance anyone? Good rates!
November 16, 2011

Napalm said:

...
Not much different than AIG insuring Goldman Sachs.

Bailout, please!
November 17, 2011

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