Saturday, May 14, 2011

Music File Sharing on LimeWire Will Cost $105 Million

Under orders from a federal court to stop facilitating peer-to-peer music file sharing Relevant Products/Services, LimeWire went out of business six months ago. But the company's founder, Mark Gorton, agreed Thursday to pay $105 million to settle charges of copyright infringement brought by the top four record labels.

RIAA Wanted $1.4 Billion

Federal Judge Kimba Wood of U.S. District Court for the Southern District of New York ruled last year in the case of Arista Records LLC v. Lime Group LLC that LimeWire, which had as many as four million users a day, was responsible for all the infringement by people using the system. The settlement is just a small fraction of the $1.4 billion the record labels, who formed the Recording Industry Association of America (RIAA), were seeking. The companies are Arista Records, Warner Music Group, Universal Music Group, and EMI Group Ltd.

In a joint statement, the two parties said they were "pleased that this case has concluded." The Wall Street Journal quoted the defendants' lawyer, Joseph Baio, as saying his clients admitted no wrongdoing.

Gorton is also Lime Brokerage, Tower Research Capital, and the software company Lime Medical.

The recording industry has spent millions to keep its property from being ripped off, with one case, MGM Studios Inc. vs. Grokster, Ltd. going all the way to the U.S. Supreme Court, where the justices unanimously ruled that the service could be sued for infringement of copyright. Most of the major file-sharing companies have been forced to pay damages to the industry.

'Target on the Back'

"The Supreme Court's Grokster judgment painted a target on the back of every media file-sharing entrepreneur in U.S. jurisdiction," said Charles King, principal analyst at Pund-IT Relevant Products/Services. "The music industry seems to have recognized the need to cooperate with legal services like iTunes and other online markets, but their saber rattling over Amazon's Cloud Drive and Google Relevant Products/Services's plans for a similar music storage Relevant Products/Services/streaming service suggest that the wrangling will continue."

The settlement comes as jurors had been convened to hear testimony in the Manhattan court to determine damages, including Warner Music CEO Edgar Bronfman Jr., the Journal reported.

RIAA Chairman and CEO Mitch Bainwol said the organization was pleased with the settlement.

"As the court heard during the last two weeks, LimeWire wreaked enormous damage on the music community, helping contribute to thousands of lost jobs and fewer opportunities for aspiring artists," he said. "The significant settlement underscores the Supreme Court's unanimous ruling in the Grokster case -- designing and operating services to profit from the theft of the world's greatest music comes with a stiff price. ... This hard-fought victory is reason for celebration by the entire music community, its fans, and the legal services that play by the rules."

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