Squeezing the Lime Dry?

On 14 May we reported that US District Judge Kimba Wood had decided that the Lime Group, the company behind Limewire, was liable for the copyright infringements committed by Limewire users. Two weeks later the Lime Group asked the court to reconsider this judgment. This request was followed by one from the RIAA, asking the court to shut down Limewire by granting a permanent injunction with the RIAA arguing that Limewire’s operation has to be stopped immediately, to avoid it doing any more harm to the music industry saying “It is patently obvious that the rampant illegal conduct that Lime Wire intentionally induced, and for which it has been adjudged liable, will continue uninterrupted day after day unless and until the Court issues an injunction to rein in this massive infringing operation” with the RIAA’s lawyers saying “Every day that Lime Wire’s conduct continues unabated guarantees harm to Plaintiffs that money damages cannot and will not compensate” adding for good measure “The scope of the infringements that Lime Wire induced...boggles the mind."

Bloggers in the USA have pondered the quantum of damages facing Lime Group and Limewire founder Mark Gorton, with one estimating damages at $1.5 trillion (see link below) The RIAA itself said “In every case in which a perpetrator of massive online infringement has been held liable on summary judgment, the courts have promptly issued an injunction to try to stop the continued harm to the plaintiffs. It does not require sophisticated mathematics to calculate that the likely damage award in this case will run into the hundreds of millions, if not the billions of dollars”. The RIAA has also argued that following the Supreme Court’s decision in MGM v Grokster, Gorton moved his own assets into ‘family partnerships’ to shield them from any judgment. Despite the fact that many bloggers and some academic papers argue that careful scrutiny of relationship between illegal downloads and lost sales to the music industry shows no direct correlation, The RIAA are relying on US statutory damages which can indeed lead to massive awards when thousands and thousands of illegal acts of infringement are involved.

In another twist to this story, Limewire has told Computerworld that it hopes it can “amicably settle” its dispute with the record industry. Pointing out that Lime Group have been developing legitimate digital services, a spokesperson told Computerworld that the company was "actively engaged" in working with the music industry to settle the labels' legal claims, and to then "move forward with a new way of working together that benefits all parties involved" adding "LimeWire absolutely does not encourage or condone the illegal copying or sharing of copyrighted material", pointing out that LimeWire had added an option to its P2P platform that could filter out unlicensed files. It has to be said that Judge Kimba Wood was earlier unimpressed by the filter – not least because it had to be activated by the user, and was disabled by default
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The words ‘pigs’, ‘might’ and ‘fly’ spring to mind about any potential settlement but the fact remains that closing Limewire itself might have very little impact on global digital piracy and perhaps the RIAA might (just might) consider a deal, however unpalatable, to show that it is trying to promote legitimate business models for users to easily buy music.

The RIAA and representatives of Lime Wire will appear before the court on Monday. A Lime Wire spokeswoman to US reporters "We are looking forward to an opportunity to address the Court for the first time in two years and show that as a matter of fact and law there is no support for this motion."

http://news.cnet.com/8301-31001_3-20006879-261.html

http://the1709blog.blogspot.com/2010/05/limewire-bites-dust.html

Does Limewire owe the RIAA 1.5 Trillion? http://www.p2pnet.net/story/40481

Limewire bites the dust .....

The international music industry has responded with delight at a court ruling that has found against Limewire, one of the oldest file-sharing networks on the Internet. In a 59-page decision issued Tuesday (May 12th) in New York, U.S. District Judge Kimba Wood has ruled in a summary judgment that the peer-to-peer company is guilty of inducing copyright infringement, committed copyright infringement and practiced unfair competition. Reuters report that the judge leaned heavily on one of the plaintiff's expert witnesses, Dr. Richard Waterman of the Wharton School, who testified that a random sample of 1800 files turned up copyright infringement in 93% of them, including 43.6 percent of copyrighted files owned by the plaintiff record labels. Based on the results, Dr. Waterman concluded that "98.8 percent of the files requested for download through LimeWire are copyright protected or highly likely copyright protected, and thus not authorized for free distribution."

The judgment itself is perhaps unsurprising given the Supreme Court's stance in MGM v Grokster where the Court unanimously held that defendant P2P file sharing companies Grokster and Streamcast (maker of Morpheus) could be sued for inducing copyright infringement for acts taken in the course of marketing file sharing software

Here it is interesting that the judge was willing to take a long hard look at the evidence available and the fact that the site promoted filesharing - Judge Wood dismissed LimeWire's contention that the statistics weren't reliable and accepted evidence that the service was not only aware of the copyright abuse but actively tried to attract infringing users. Wood also noted that the only step LimeWire took to curtail abuse was to make users agree not to infringe copyrights in its terms of service. The notice does "not constitute meaningful efforts to mitigate infringement," she wrote. The Court found that from 2004 to 2006 Limewire's annual revenue grew from nearly US$ 6 million to an estimated US$20 million. The judge found this growth depended greatly on Limewire users’ ability to commit infringement through Limewire.

Record label trade bodies were naturally delighted with Mitch Bainwol, CEO of Recording Industry Association of America saying "This definitive ruling is an extraordinary victory for the entire creative community" adding "Unlike other P2P (peer to peer) services that negotiated licenses, imposed filters or otherwise chose to discontinue their illegal conduct following the Supreme Court's decision in the Grokster case, LimeWire instead thumbed its nose at the law and creators. The court's decision is an important milestone in the creative community's fight to reclaim the Internet as a platform for legitimate commerce." IFPI chairman and CEO John Kennedy said: “Limewire has been a major hurdle in the music industry's efforts to make the transition to a new, legitimate online music business. This ruling will be hugely valuable both as an educational message and as a legal precedent internationally. It shows the stark reality of a site which made a fortune by violating the rights of artists and creators. The judgment also ends years of uncertainty among consumers, many of whom have felt free to use Limewire in the incorrect belief that it was a legitimate music site. Now it has been made clear to them that Limewire is not legal, does not respect artists and creators, has profited handsomely from its illegality and is not OK to use.”

In related news, a German court has granted a preliminary injunction against the current Germany-based Web hosts of file-sharing hub The Pirate Bay, TorrentFreak has reported. The Motion Picture Association petitioned a court in Hamburg for an injunction against CB3ROB Ltd, operators of the CyberBunker Web hosting service. The court said that CyberBunker must specifically remove links to torrents purporting to facilitate downloads of "The Bounty Hunter," "Alice in Wonderland," "Our Family Wedding," "Green Zone," "Repo Men" and "Cop Out." CyberBunker now must either disconnect The Pirate Bay entirely, or else The Pirate Bay must remove those specific torrents to comply with terms of the court's order. Sanctions include fines of up to E250,000 for each instance of infringement and potential custodial sentences for CB3ROB directors.

http://abcnews.go.com/Entertainment/wireStory?id=10632737

MGM v Grokster 545 U.S. 913 http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?court=US&navby=case&vol=000&invol=04-480

UPDATE

See http://news.cnet.com/8301-31001_3-20004982-261.html

Legal experts: LimeWire likely doomed: "It is obviously a fairly fatal decision for them," said Michael Page, the San Francisco lawyer who represented file sharing service Grokster in the landmark case, MGM Studios, vs. Grokster and also represented Lime Wire's former CTO in the company's most recent copyright case. "If they don't shut down, the other side will likely make a request for an injunction and there's nothing left but to go on to calculating damages."

With an injunction, the RIAA can force LimeWire to cease file-sharing operations. Music industry sources who spoke to CNET on condition of anonymity said the RIAA, the trade group representing the four largest music labels, is considering whether to seek an injunction prior to a status conference Wood scheduled for June 1. If that happens, LimeWire may have little room to maneuver and the company could be forced to shutter operations within weeks. Representatives for the Lime Group did not respond to interview requests. An RIAA spokesman declined to comment. "

Ruling could have chilling effect on P2P Services
http://www.reuters.com/article/idUSTRE64E09C20100515