LimeWire Crushed in RIAA Infringement Lawsuit; Wired.com, 5/12/10

David Kravets, Wired.com; LimeWire Crushed in RIAA Infringement Lawsuit:

"LimeWire was found liable of copyright infringement Tuesday in a decision that threatens to financially devastate the New York company behind the file sharing application.

In a 4-year-old case brought by The Recording Industry Association of America, U.S. District Judge Kimba M. Wood ruled that LimeWire’s users commit a “substantial amount of copyright infringement” (.pdf) and that the Lime Group, the company behind the application, “has not taken meaningful steps to mitigate infringement.”

The RIAA was seeking up to $150,000 per copyright violation, though the final damages in the lawsuit have not yet been determined. The lawsuit claimed at least 93 percent of LimeWire’s file sharing traffic was unauthorized copyright material.

Limewire claims “50 million unique monthly users.” Its website says its “software is downloaded hundreds of thousands of times every day and boasts millions of active users at any given moment.”

It was the first case targeting a file sharing software maker following the 2005 Grokster decision, in which the U.S. Supreme Court cleared the way for lawsuits targeting companies that induced or encouraged file sharing piracy.

Before the RIAA filed suit, the record label’s trade group urged LimeWire to license its material or shut down.

“LimeWire is one of the largest remaining commercial peer-to-peer services,” Mitch Bainwol, the RIAA’s chairman, said in a statement. “Unlike other P2P 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.”

George Searle, LimeWire’s chief executive, said in a statement that the company “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.”

Searle was not immediately available for comment.

Judge Wood scheduled a June 1 hearing to determine how to proceed.

http://www.wired.com/threatlevel/2010/05/limewire-crushed/#ixzz0r8Mg5a3p"

Mark Gorton, Man Behind the Music Service; New York Times, 5/24/10

New York Times; Mark Gorton, Man Behind the Music Service:

"Mark Gorton is a confident guy. He’s confident about his ideas. He’s confident about his enthusiasms. And he’s confident that his successes — like making money on Wall Street and promoting alternative transportation in New York — provide a record that backs him up.

But that confidence faces a new test, Joseph Plambeck writes in The New York Times. Two weeks ago, a federal judge ruled that he and the popular file-sharing service he created, LimeWire, were liable for copyright infringement and could be forced to pay up to $450 million in damages.

Mr. Gorton, 43, says he did not think it would come to this point. He thought that the record industry, sometime since the lawsuit was filed in 2006, would come to appreciate his vision for the future of LimeWire — a paid subscription service providing unlimited downloads of licensed songs — and want to join forces instead of continuing litigation...

The Recording Industry Association of America, the industry group that managed the lawsuit on behalf of 13 record companies, said it thought he had willfully skirted the law, motivated by the money generated by the millions of users of LimeWire. Total revenue increased to an estimated $20 million in 2006 from $6 million two years earlier, according to the court ruling, much of it from a paid service that allowed for faster downloads.

“He thought with his cleverness that he could get away with it,” Mitch Bainwol, the association’s chief executive, said. “He’s the Bernie Madoff of Internet crime. He was thumbing his nose at the rule of law to profiteer enormously.”...

“People have a short memory, and they’ve gotten caught up in the mythology of P2P’s being run by ne’er-do-wells and eye-patch pirates,” said Fred von Lohmann, a senior staff lawyer at the Electronic Frontier Foundation who has represented some of the file-sharing services in copyright cases. (Mr. Lohmann was named in the ruling as having given legal advice to the company about how to protect itself from liability.)

“LimeWire was not a fly-by-night operation,” he said...

Mr. Gorton says he has tried to take that same strategy to the record labels to explain the new service he is proposing.

“I tell them to think of Woodstock,” he said. “The first one was free, but it ended up making the industry a lot of money and was a huge success. The second and third ones were very expensive for fans and were failures.”

But before he can hope to make any progress with the labels on his paid service, he will need to get the lawsuit behind him. And given the heated rhetoric from Mr. Bainwol and the record association, the coming negotiations may not be easy.

At a minimum, the record association says, LimeWire needs to shut the current service and Mr. Gorton needs to pay for damages out of his own pocket. A status conference with Judge Wood is scheduled for June 7.

Mr. Gorton says he knows that the music industry needs to alter the behavior of a generation of people who have grown accustomed to getting their music free.

Still, he says that LimeWire has a relationship with that generation that can help make the change. And he says he remains optimistic that, in the end, his idea will triumph.

“I don’t want to be on my deathbed thinking that I kept a bunch of musicians from making money,” Mr. Gorton said. “I have a lot of work to do to get my karma scores up.”"

http://dealbook.blogs.nytimes.com/2010/05/24/mark-gorton-man-behind-the-music-service/?scp=2&sq=limewire&st=cse