Rio Stopped in its Tracks

Diamond Multimedia, the maker of the Rio MP3 playback device, suffered a blow Friday evening as a federal court issued a temporary restraining order prohibiting the sale of the unit. The Recording Industry Association of America (RIAA) and the Alliance of Artists and Recording Companies (AARC) were granted the order for a period of ten days until a court hearing on Monday, October 26. At that hearing, the RIAA and the AARC's motion for a preliminary junction will be addressed.

The two organizations believe that the Rio violates the Audio Home Recording Act (AHRA) which was enacted to prevent the illegal copying and distribution of digital audio. Basically, the law says that if you have a digital audio recording device, manufacturers and distributors of the devices have some immunity from copyright infringement. In order to receive this partial immunity, those makers must pay a royalty to compensate recording artists and their publishing companies. Along with the royalty, the manufacturer must place a serial copyright management system (SCMS) into the device to prevent making second generation copies.

Today's court decision came about because the court felt the Rio device wasn't in compliance with the AHRA.

"While we are gratified by the court's action today, it is unfortunate that we had to resort to legal action to deal with this issue," said Hilary Rosen, president and CEO of RIAA. "Our preference has always been to work together with the many computer and consumer electronics companies to arrive at solutions to legitimize the commercial marketplace for digitally distributed music in a manner that protects the rights of artists."

In the early evening hours of Friday evening, Diamond issued a statement reacting to the RIAA's restraining order - and included additional information about a US$500,000 bond imposed on the RIAA as part of the temporary restraining order. If Diamond prevails in court, the $500,000 will cover Diamond's damages from the delay in shipping its Rio product.

"Although a temporary restraining order was granted for ten days, it is not definitive. If fact, Judge Collins, in her tentative ruling distributed at the beginning of the hearing indicated that, "the Rio is not capable of serial copying," said Ken Wirt, vice president of corporate marketing for Diamond Multimedia.

Since the RIAA's initial suit, Diamond has maintained that the Rio doesn't break the AHRA because it isn't a recording device.

Diamond pointed out the Judge presiding over the case refused the RIAA's request to hold Diamond back from advertising the product. In any case, gamers waiting for the device to release will have to wait a little longer.

GameSpot News will be watching as the October 26 court date approaches.