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Record companies and NPEs February 15, 2011

Posted by Brian Schar in General.

It has occurred to me that record companies share similar characteristics with the much-maligned non-practicing entities (NPEs), pejoratively referred to as “patent trolls” by some.  An objection to the NPE is that it doesn’t make anything and didn’t invent anything, and can only sue for infringement of its IP; therefore, it is not entitled to a return on its intellectual property.   However, that describes a record company just as well.  Artists, not record companies, create music.  Record companies need not manufacture CDs; they can simply place music on iTunes, Zune, Pandora or the like.  Record companies constantly buy and sell portfolios of back catalog music.  Further, infringement is a one-way street; a record company can sue an infringer, but the infringer doesn’t have any corresponding copyright cause of action to assert against the record company.   So, if a record company that happens to own the rights, by purchase, to an album by Musician X (which would be a great name for a band, by the way), and that record company doesn’t make CDs, promote the artist, or do anything but collect royalties and sue anyone who makes a copy of that music, how is a record company any different from an NPE?

Hardcore opponents of the idea of IP will say there is no difference and that both are illegitimate.  However, if one accepts that a record company owns IP that it can exploit, I think one has to also accept an NPE can do the same.


1. patent litigation - February 22, 2011

Interesting perspective; I had never before considered the similarities between record labels and patent trolls. I agree with your conclusion.

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