UMG, the world's largest label, filed the lawsuit in U.S. District Court for California's Central District, after Jay-Z's highly anticipated come back album Kingdom Come was leaked on MySpace.com.
"I'm sure it's cut into our sales, and not by a small amount," Antonio' "LA" Reid said. "Even if it [sells] a million units it's not what it should have been."
UMG and MySpace had been negotiating a deal that called for News Corp. to pay a licensing fee for Universal content.
The deal stalled when UMG requested that News Corp. also pay restitution for content that had previously appeared on MySpace.
MySpace is in the process of testing digital rights management software to report and remove files that infringe on an owners copyright.
"Notwithstanding MySpace's frank admission that it is 'unable,' i.e., prohibited by law, from offering its music and video services without first obtaining the permission of the copyright owner, MySpace has knowing and intentionally operated its business on the fiction that it has obtained the licenses it needs to exist from members that MySpace well knows are not the true copyright owners," the suit stated.
UMG seeks $150,000 in damages for 58 songs and videos MySpace allegedly infringed upon.
MySpace.com representatives were confident that they would "prevail in court."