Original URL: http://www.theregister.co.uk/2010/05/13/limewire_case/

LimeWire induces infringement, Judge rules

Shown to profit from illegal file sharing

By Andrew Orlowski

Posted in Broadband, 13th May 2010 09:02 GMT

A US District Court has has ruled that the company behind the LimeWire P2P software is responsible for inducing copyright infringement, even though the software theoretically has quite legitimate, non-infringing uses. It's likely to be the end for the company, which markets the most popular file sharing client worldwide.

The judgement is substantially based on the 2005 Grokster ruling, which established a standard for secondary copyright infringement. This is where a party did not make material available, but gave others a means to do so, encouraged the activity, and profited from it. So the clinching argument - that the software was tied to an unlicensed service, unlike a 'neutral' file sharing programs (such as a generic FTP client, for example) - came as no surprise.

"Plaintiffs have presented significant evidence showing that LW purposefully marketed LimeWire to individuals who were known to use file-sharing programs to share copyrighted recordings, or who expressed an interest in doing so," ruled Judge Kimba Wood in New York. The case was filed by 13 record labels owned by two majors, Sony and Warner, in 2006.

Establishing that LimeWire profited from the infringement wasn't difficult, either. The Judge accepted a study that showed over 98 percent of material being exchanged through LimeWire was not licensed for distribution, rejecting LimeWire's claims that it was not liable.

Summing up, Wood concluded:

"[T]he following factors, taken together, establish that LW intended to encourage infringement by distributing LimeWire: (1) LW’s awareness of substantial infringement by users; (2) LW’s efforts to attract infringing users; (3) LW’s efforts to enable and assist users to commit infringement; (4) LW’s dependence on infringing use for the success of its business; and (5) LW’s failure to mitigate infringing activities."

LimeWire CEO George Searle said in a statement he looked forward to "working with the entire music industry" to create innovative new services. But it might be a bit late for that. In one of the most intriguing but poorly documented stories in the history of the copyright wars, the major labels agreed to an experiment where P2P services could be encouraged. Companies could use fingerprinting software from Shawn Fanning's next company after the original Napster, Snocap, and the experiment became known as the 'Big Switch'.

"Let's take advantage of all those people who like us [Napster] and are connected and are largely music fans - the hacker boy side, the spyware distributors hadn't come into the picture yet," Snocap's former attorney Chris Castle explained here.

But of all the P2P operators, only former Grokster boss Wayne Rosso wanted to take it seriously, says Castle. The others were terrified of the responsibility of going legit, and too unimaginative to see how a business could work.

"These P2P operators looked like little teenage boys who had suddenly realized they weren't going to drive the car this weekend", Castle now recalls.

Instead, the LimeWires put their faith in the courts finding them a loophole, a belief based on the hope that the internet would be beyond the norms of copyright.

Alas, that strategy hasn't worked out too well. Today we have legal pseudo file sharing via Spotify: the software is making copies in the background of other Spotify users' songs. But it's tantalising to imagine what we might have had now, had history played out differently. And how much wealthier artists and investors might be, too. ®