XM Satellite to face off with record companies

It was decided today that XM Satellite Radio Holdings Inc. (NASDAQ:XMSR) will have to stand up and face charges regarding the ability of its users to record copyrighted material played over its service.

XM had hoped that it was protected under the Audio Home Recording Act of 1992, which allows anyone to record any music that they wish off of the radio. XM had argued that this should provide it shelter from record company charges, but according to U.S. District Judge Deborah A. Batts this is not the case.

So why are radio stations immune from these sort of lawsuits if XM Satellite is not? According to today's ruling the answer is pretty simple. Radio stations are not charging their users while XM is. "It is manifestly apparent that the use of a radio-cassette player to record songs played over free radio does not threaten the market for copyrighted works as does the use of a recorder which stores songs from private radio broadcasts on a subscription fee basis," she said.

XM continues to be hopeful in this case, and stated that it still believes that this case has no merit and that it is confident that it will prevail in the end. Shareholders were anxious to sell on today's news and the stock has fallen almost 6% on the day down to $15.50.

Michael Fowlkes has worked as a stock trader for seven years and spent the last 2 years working as an analyst for the online investment advisory service Investor'sObserver.