Chalk another one up for the record companies. In a lawsuit brought by Atlantic Recording Corp, BMG Music, Capitol Records Inc, and other music distribution companies against XM Satellite Radio, the companies claimed that XM directly infringes on their exclusive distribution rights by letting consumers record songs onto special receivers marketed as “XM + MP3″ players. However, XM argued that it is protected from infringement lawsuits by the Audio Home Recording Act of 1992, which permits individuals to record music off the radio for private use.

The judge ruled in favor of the music industry, saying she did not believe XM was protected by the same act. She said that by broadcasting and storing copyrighted music for later listening by the consumer, XM is both a broadcaster and a distributor, but only paying to be a broadcaster. XM argued in court papers that an XM + MP3 player is much like a traditional radio-cassette player. The judge disagreed. “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.

source