New York - A federal judge has ruled that record labels may sue XM Satellite Radio over the company's new devices, which allow consumers to record and store copies of songs played on the radio service as MP3 files.

U.S. District Court Judge Deborah A. Batts on Friday denied XM's motion to dismiss the case, which was filed as a civil suit in May by the record labels.

XM's argument is that the ability to record broadcasts is legally justified by a 1992 law, the Audio Home Recording Act.

"We're pleased that the court has rejected XM's attempt to misuse the Audio Home Recording Act (AHRA) as a legal loophole," said Steven Marks, executive vice president and general counsel of the Recording Industry Association of America, which represents the major record labels.

"The AHRA was never intended to allow a service offering distributions of music to duck paying creators what they are due."

XM reiterated its defense in a statement: "At this stage of the proceeding, the court's ruling is required to be based on the false characterizations set forth in the plaintiff's complaint. The real facts strongly support our view that the lawsuit is barred by the Audio Home Recording Act. We look forward to making our case in court."

Related Links:
http://www.riaa.com/news/newsletter/011907.asp
http://tinyurl.com/37l755 (CNET)
http://www.xmradio.com