RIAA getting desperate, sues over non-existant service

The RIAA is at it again. This time, they're suing Streamcast (yes, I know, they just lost a separate case against Streamcast) over a service that Streamcast never brought to market.

According to an article in Wired, the RIAA is suing because Streamcast (in preparation for launching a radio service) bought thousands of CDs and ripped them. After not being able to negotiate the license with the big 5 record companies, the company dropped its service idea.

I'm still trying to figure out what Streamcast did wrong if all they did was use their fair use rights as an owner of the CDs to back them up onto hard drives. If they used them for nothing else, I don't understand how they would lose this case.