The music industry signaled the next front in its legal battle with digital music services today, filing a federal lawsuit against satellite radio firm XM over its Inno portable device that lets users record and store music.

The four major record labels--Universal Music, Sony BMG, EMI, and Warner Music--filed the lawsuit against XM in federal court in New York today. In it, the companies said XM's Inno (made by Pioneer), which is able to store up to 50 hours of recorded music, facilitates "massive wholesale infringement" of the labels' copyrights.

The lawsuit seeks $150,000 in damages for every song copied by XM Satellite customers using the devices, which went on sale weeks ago for $400 apiece.

The suit centers on the royalties that satellite radio companies pay to broadcast songs. The major labels contend that while broadcasting songs dictates the royalty rate, allowing the user to record and store music should increase that rate. Congress has also taken on the issue.

The lawsuit comes just weeks after the labels agreed to settle their dispute with XM rival Sirius Satellite Radio over the same issue. Sirius' S50 player allows the same record and store capabilities that the Inno does, but Sirius reportedly agreed to up its royalty rate and pay a per-unit fee for every S50 it sells.

XM officials said the company will fight the lawsuit and accused the labels of using the courts as leverage during business negotiations.

"These are legal devices that allow consumers to listen to and record radio just as the law has allowed for decades," the company said in a statement. "The music labels are trying to stifle innovation, limit consumer choice and roll back consumers' rights to record content for their personal use."