German court rules AI music firm Suno broke copyright rules

MUNICH, July 31 (Reuters) - A German court ruled on Friday that AI music firm Suno violated copyrights and has to disclose illicit revenue, part of a wider legal battle by artists and publishers against technology firms.

The Munich-based regional court said Suno did not have the right to process songs by artists represented by Germany's state-mandated licensing agency Gema.

According to the verdict, which can be appealed before a higher court, Suno will have to pay damages that have yet to be quantified.

"This is a verdict of global significance," Gema CEO Tobias Holzmueller told Reuters.

Suno said that it disagreed with the ruling and would evaluate all available options, including an appeal.

Gema sued against Suno's use of free music on Alphabet's YouTube from a number of artists including Alphaville, the band behind 1980s hits "Forever Young" and "Big in Japan".

The German government's culture representative, Wolfram Weimer, called the verdict an important signal to support creators' rights in the digital music industry. 

"We need a regulatory framework that strengthens innovation and creativity," he said in a statement.

Massachusetts-based Suno, valued at $5.4 billion in a June funding round, allows users to generate songs via prompts.

In various litigation proceedings, AI music companies have been accused of failing to compensate composers.

More than 1,800 artists are supporting class-action lawsuits against Suno and peer Udio.

(Reporting by Joern Poltz in Munich, writing by Ludwig Burger, Editing by Miranda Murray)