Fuel was added to the controversy surrounding the MP3 format this week as a federal court in California ruled Diamond Multimedia Systems Inc.'s Rio MP3 player does not infringe on any music copyrights.

Diamond's Rio player is one of the more popular MP3 devices. Looking and functioning much like a portable stereo system, it allows users to download near CD-quality music from the Internet in MP3 format and then play it back through headphones.

The Recording Industry Association of Americafiled a lawsuit in October in the Ninth U.S. Court of Appeals in San Francisco. The group argued that the Rio player violated the 1992 Audio Home Recording Act because it was a digital recording device and was capable of distributing pirated copyrighted music.

A three-judge panel decided in favor of Diamond, ruling the Rio player does not qualify as a digital audio recording device because it does not reproduce a digital music recording directly from a transmission; it only makes a copy from the computer's hard drive to render portable use.

"The Rio's operation is entirely consistent with the act's main purpose -- the facilitation of personal use," the panel stated.

The RIAA said decision is important because it sets a precedent for cases involving digital download technology.

"We filed this lawsuit because unchecked piracy on the Internet threatens the development of a legitimate marketplace that consumers want," the RIAA said.

Since the original lawsuit was filed, the digital download industry has blossomed into a viable alternative for music enthusiasts. Jupiter Communications predicts the industry to be worth $1.4 billion by 2002.

In an attempt to prevent piracy and standardize the market, the RIAA is working with Diamond and other industry firms on the Secure Digital Music Initiative (SDMI).

"We. . .continue to share the RIAA's concerns about piracy and protecting the rights of content owners," said David Watkins, president of RioPort Inc., Diamond Internet music subsidiary.

"As larger content providers begin to distribute digital audio content, security becomes a critical component of delivery that we are addressing through our strategic relationship with InterTrust and our participation in the RIAA's Secure Digital Music Initiative."