Music Publishers Sue Roblox (RBLX) and Seek More Than $200 Million in Damages Over Licenses

Several major music publishing companies have filed a lawsuit against videogame maker Roblox Corp. (NYSE: RBLX) accusing the company of copyright infringement.

The group of publishing companies, which includes Universal Music Publishing and other companies representing some of the most famous artists in the world - Ariana Grande, Ed Sheeran, and The Rolling Stones - claim Roblox hasn’t licensed the music that its creators have used in its games.

The publishers seek a minimum of $200 million in damages in the lawsuit, and other company plaintiffs include entities associated with Big Machine Records, Concord Music Group, Downtown Music Publishing, Kobalt Music Group, and Hipgnosis Songs Fund.

In the lawsuit, the publishers accused Roblox of selling users a feature to use virtual music players that play copyrighted music. These virtual music players have been purchased by hundreds of thousands of Roblox players, who play unlicensed music of artists such as Dedmau5, Imagine Dragons and more.

“Roblox actively preys on its impressionable user base and their desire for popular music, teaching children that pirating music is perfectly acceptable,” the lawsuit says.

Roblox developed a free online platform used by millions of users who design their own games and is one of the fastest-growing companies in the interactive entertainment industry. Roblox Corp. went public in March, and hit a market cap of around $52 billion on Wednesday, surpassing video game giants Electronic Arts Inc. and Take-Two Interactive Software Inc.

Video game makers have been partnering up with various artists to organize virtual in-game performances to lure more customers, which in some cases resulted in drawing millions of attendees. Roblox has also hosted such events and concerts, hiring Lil Nas X and the bands Why Don’t We and Royal Blood, as well as Fortnite maker Epic Games Inc., which has done the same with DJ Marshmello, Travis Scott and others.

Before its public debut, Roblox warned investors that it is possible it could face challenges regarding this area.

“As we face increasing competition and gain a higher profile, the possibility of intellectual property rights and other claims against us grows,” the company said in the filing. “Our technologies may not be able to withstand any third-party claims against their use. In addition, many companies have the capability to dedicate substantially greater resources to enforce their intellectual property rights and to defend claims that may be brought against them.”

Roblox reported 42.1 million daily users in March.

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