LimeWire Found to Induce Copyright Infringement

NEW YORK — In a ruling that could tip the scales against companies that distribute and market file-sharing software, a federal judge has ruled that LimeWire is liable for committing and inducing infringement and engaging in unfair competition.

U.S. District Judge Kimba Wood agreed with 13 plaintiff record companies that LimeWire's parent LimeWire LLC and its founder Mark Gorton didn't offer any supervisory control with their peer-to-peer software that mostly distributes music, as well a well-stocked inventory of pirated porn.

On Tuesday, she granted summary judgment to the labels.

"There is substantial evidence that LimeWire had the right and ability to limit the use of its product for infringing purposes, including by implementing filtering, denying access and supervising and regulating users," Wood said.

"LimeWire has not exercised any meaningful supervisory control over LimeWire users’ infringing activity, or provided a legitimate reason for its failure to do so."

Wood's ruling was a landmark one for the plaintiffs, which included Arista Records, Atlantic Recording Corp., BMG Music, Capitol Records Inc., Elektra Entertainment Group Inc., Interscope Records, Laface Records, Motown Record Co., Priority Records, Sony BMG Music Entertainment UMG Recordings, Virgin Records America Inc. and Warner Bros Records Inc.

In the case, the labels hired Dr. Richard Waterman, a statistics professor at Penn's Wharton School, who looked at a random sample of 1,800 LimeWire files and concluded that 93 percent were copyrighted and unlikely to be licensed for download through LimeWire.

"Dr. Waterman next logged the number of times LimeWire users sought to download each of the files in the sample," Wood said in her ruling. "Based on these results, Dr. Waterman estimated 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."

Wood's 59-page decision primarily was based on a unanimous U.S. Supreme Court ruling involving file-sharing service Grokster.

In the 2005 decision, the court ruled that entities that distribute a device with the object of promoting its use for copyright infringement, "as shown by clear expression or other affirmative steps," is liable for third-party infringement, even if the device is also used lawfully.

LimeWire created its service in 2000, six years prior to the record companies suit. The company at one point describes itself as the world's most popular peer-to-peer file-sharing service, with more than 50 million monthly users.

LimeWire issued a statement on Wednesday after analyzing the ruling.

"LimeWire strongly opposes the court’s recent decision," the company said in a statement. "LimeWire remains committed to developing innovative products and services for the end-user and to working with the entire music industry, including the major labels, to achieve this mission.

Wood set a June 1 conference at U.S. District Court in New York for further proceedings.

The four largest music labels are 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 close shop within weeks.