### Amway: The Untold Story

Recording Industry Association of America Lawsuit

Due to the length of the lawsuit filed by the Recording Industry Association of America against Amway Corp. and some of its top distributors, I decided to instead post the RIAA's official press releases concerning the suit, from the RIAA News. My thanks to the RIAA for providing this information.

AMWAY CORPORATION AND HIGH-LEVEL AMWAY DISTRIBUTORS SUED BY RECORD COMPANIES FOR COPYRIGHT INFRINGEMENT AND UNFAIR COMPETITION

ORLANDO (February 20, 1996) -- A group of the music industry's largest record companies filed a multi-million dollar lawsuit today against Amway Corporation and numerous of its top distributors for copyright infringement and unfair competition.

The suit centers on the production and sale of motivational and promotional videotapes by Amway distributors utilizing sound recordings without the authorization of the record companies, including some of the most valuable recordings in the industry: The Beatles' "Help," Michael Jackson's "Remember the Time," Whitney Houston's "One Moment In Time," Gloria Estefan's "Live For Loving You," Michael Bolton's "Love Is A Wonderful Thing," and many more.

Filed in the United States District Court, Middle District of Florida, Orlando Division, the claim currently involves 108 counts of infringement for the unauthorized commercial use of 57 different sound recordings. According to the Recording Industry Association of America (RIAA), which spear-headed the investigation leading to the suit, it is believed that the infringements now known are only the "tip of the iceberg," and many more counts of infringement will likely be added to the complaint once the "discovery" phase of the lawsuit is underway.

Based on the present evidence, should the plaintiffs choose to seek statutory damages, the Copyright Act would permit recovery of $11 million on the copyright claims alone. Given the value of the sound recordings used, however, the plaintiffs may opt for compensatory damages which could very well lead to a damage award far in excess of that amount, said Jason Berman, Chairman and CEO of the RIAA.

The videos were produced and sold all over the country by very high level distributors, known in Amway jargon as "Diamonds." The videos "play an integral role" within the Amway distribution system, Berman said. "Not only are the videos by themselves highly profitable products--sold at approximately $25 each--but the videos also play a significant role in the defendants' other commercial ventures, which earn millions of dollars each year, such as promoting conventions, recruiting additional Amway distributors and selling Amway products."

While the videos were produced by individual Amway distributors, Amway Corporation had "the right, ability and duty to supervise the actions of these defendants, and financially benefitted from the infringing" activities, according to the Complaint. "Under these circumstances, Amway simply cannot turn a blind eye to the activities of its distributors, particularly when Amway is the ultimate beneficiary of the motivating effects of the videos," Berman said.

The videos were often played before large audiences attending Amway distributor conventions at such locales as the Georgia Dome, with Diamond distributors explaining the various uses to which the tapes could be put and urging attendees to purchase large quantities for their own use or for lower-ranked distributors within their "sales group."

Many of the videos depict the various Diamond distributors' lifestyles, including mansions, yachts, private planes and exotic cars purportedly owned by the Diamonds with such sound recordings as Tina Turner's "The Best" and Jefferson Starhip's "Nothing's Gonna Stop Us Now" providing the musical accompaniment.

"The record companies' properties are blatantly exploited to help convey Amway's 'rags-to-riches' theme--without their permission and compensation," Berman said.

The plaintiffs are Arista Records, Inc., BMG Music, Zomba Recording, Motown Record Company, PolyGram Records, Sony Music Entertainment Inc., Solar Records, EMI Christian Music Group, MCA Records, Inc., Capitol Records, Inc., and Virgin Records America, Inc.

"It is difficult to determine at this point the scope of financial loss suffered by the record companies, but it is immense," Berman said. "Rights to use copyrighted sound recordings, particularly for commercial gain, must be negotiated and licensed from the record companies. Even then, there are sound recordings for which permission would not be granted at any price."

Berman said the issues at stake go far beyond financial ones. "Artists and record companies have the right to control how their creative works are used. It is a matter of artistic integrity. Moreover, when a copyrighted work is used commercially without permission, such as here, the consumer is given the false impression that the artist or copyright owner sponsors, supports, or is somehow affiliated with the commercial venture for which it is used. That is real harm to the creators and owners of the work and to the public at large."

The RIAA began its investigation of the Amway distributor tapes approximately two years ago when the infringing videos were brought to its attention. The RIAA learned that at least some of the defendants had taken the first step toward acquiring licensing rights, but when those requests were denied, the sound recordings still were used. After learning about the videos, the RIAA sent "cease and desist" letters to many of the distributors and the Amway Corporation notifying them of the record companies' rights and ordering them to discontinue the infringing activities. However, those demands were not met, prompting the current lawsuit.

"It is common practice for us to notify and order a stop to individuals and organizations when they are using copyrighted sound recordings without authorization prior to filing suit. More often than not, this formal notification process works. If not, the copyright owner has no choice but to seek redress from the courts or risk losing the value of its copyrighted work," Berman said.

The RIAA is a private, not-for-profit trade association whose members produce, manufacture and distribute approximately 90 percent of all legitimate recorded music in the United States. To report information pertaining to the allegations of this lawsuit, or to report copyright infringement and other music piracy, call the Association's toll free number at 1-800-990-5020.

RIAA ADDS INFRINGEMENTS AND DEFENDANTS IN AMENDED COMPLAINT IN AMWAY LITIGATION

WASHINGTON, November 25, 1996 -- The Recording Industry Association of America has filed an amended complaint in a multi-million dollar law suit against Amway Corporation and many of its top distributors for copyright infringement and unfair competition. According to RIAA President and COO Hilary Rosen, the statutory damages recoverable under the Copyright Act would increase from $11 million to $19 million based on the additional infringements.

"Since the filing of the initial complaint in February 1996, our efforts have provided considerable additional evidence of infringing activities -- far beyond that known or suspected at the time of the initial civil action," said Rosen. "We have added 114 new counts of infringements to the original 125, the number of defendants have increased from 40 to 86, and there is one additional record company plaintiff."

The original suit, which was filed in Orlando, Florida, centers on the production and sale of motivational and promotional videotapes by Amway distributors utilizing sound recording without the authorization of the record companies. The videos were sold all over the country as products, and were also used to promote upcoming conventions, recruit additional Amway distributors and sell Amway product. According to the complaint, while the Amway distributors infringed RIAA member companies' rights, the Amway Corporation was charged with vicariously infringing the plaintiff's intellectual property rights.

The National Music Publishers Association is also expected to file a similar action today based on the same infringing videotapes.

The RIAA is a trade association whose members produce, manufacture and/or distribute more than 90 percent of all legitimate sound recording produced and sold in the United States.