from www.hollywoodreporter.com – The record industry has dropped its lawsuit against a porn company accused of featuring copyrighted music in its videos. The dismissal may be the result of a confidential settlement, although neither side will comment on the case.

RK Netmedia [Reality Kings], which describes itself as the “World’s Best Reality Porn Website,” hires adult actors who perform sexual acts at exclusive nightclubs and parties. As the actors “perform” their lewd acts, popular recordings from artists like Justin Timberlake, Michael Jackson and Katy Perry provide the soundtrack accompaniment. Videos are allegedly named after songs, and actors are encouraged to lip-sync to the lyrics.

Not surprisingly, the company was targeted in July in federal court in California by the record industry. RK Netmedia defended itself by saying the music was incidental background noise, and thus fair use. But not too long after the suit was first filed, it was hit with another legal attack.

In October, the Darwin Select Insurance Co. filed its own action against RK Netmedia in an attempt to rescind the company’s media liability insurance policy. Darwin alleged there were misrepresentations made during the insurance application process, including concealment of material facts concerning the content of RK’s videos. According to the complaint filed in Florida, RK allegedly told its insurance provider that it had secured licenses for music in its productions.

If it lost its insurance, RK Netmedia could have faced huge liability. The record labels wanted maximum statutory damages of $150,000 per infringement on hundreds of RK’s videos. But the lawsuit has now been dismissed, suggesting a settlement has been reached. But the dismissal is without prejudice, meaning the case against RK can be pursued again in the future if the record labels so desire.