Another win for the RIAA, this time over file-sharing company LimeWire

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A federal judge ruled this week that the company behind the LimeWire file-sharing network was liable for infringing the major record companies’ copyrights, exposing the company and its former CEO, Mark Gorton, to potentially enormous financial penalties.

The ruling didn’t come as a huge surprise; LimeWire is similar to other second-generation file-sharing networks (Kazaa, Morpheus, Grokster) that the courts had previously held secondarily liable for infringement. Its distributor, LimeWire LLC, has long known it was in the music industry’s cross hairs, but it didn’t try to protect copyrighted works to the degree that, say, BitTorrent Inc. has done.

What’s most interesting about the ruling is the route that U.S. District Judge Kimba Wood took to find LimeWire and Gorton liable...

Relying on the Supreme Court’s ruling in MGM v Grokster, Wood held that the defendants deliberately induced LimeWire users to violate copyrights, and that it profited from the infringements. Here’s a snippet from the ruling (Wood refers to the company LimeWire by the initials LW):

[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.

Most of those factors are non-controversial applications of the Grokster principle that folks who encourage piracy in order to profit from it are liable for infringement. Wood cited internal documents to show that LimeWire executives knew most of its users were downloading songs illegally, and that they sought out such users through, among other things, ‘press campaigns on college campuses relating to ‘file-sharing and getting free MP3’s.’ ‘ The company aids would-be infringers, Wood wrote, by enabling them to search by categories (such as Classic Rock and Top 40) that ‘inevitably guide users to copyrighted recordings.’ She also noted that the more users it attracts, the more revenue it collects from advertisers and consumers who buy the ad-free version of the software.

Wood’s fifth factor, however, suggests that liability might ensue merely from the way a technology is designed and used. According to Wood, LimeWire built a filter into the software that could block copyrighted works from being downloaded, but left it inoperative unless users turned it on. A separate filter, however, barred users from sharing the songs they bought from the LimeWire store.

This selective filtering further demonstrates LW’s knowledge of infringement-mitigating technologies and the company’s intentional decision not to employ any such technologies in a way that meaningfully deters LimeWire users’ infringing activities....

Failure to utilize existing technology to create meaningful barriers against infringement is a strong indicator of intent to foster infringement.

As for former CEO Gorton, Wood cited precedents that held company executives liable for infringements when they had the ability to supervise them and they benefited from them. She went on to note:

Gorton directed and approved many aspects of LimeWire’s design and development. Gorton admits that he conceived of LimeWire and decided that the program should be decentralized and should use P2P technology.... Gorton oversaw the development of LimeWire’s filtering system, and decided that the filter should be turned “off” by default.... This evidence, taken together, also establishes that Gorton knew about the infringement being committed through LimeWire.

Several questions were left unanswered by the decision, including whether LimeWire was capable of substantial non-infringing uses. That issue, however, affects only the record companies’ claim that LimeWire was liable for contributory copyright infringement, which is essentially a moot point if the company is liable for inducing infringement.

LimeWire sounded a defiant note after the ruling. Here’s the statement from CEO George Searle:

LimeWire strongly opposes the Court’s recent decision. 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. We look forward to our June 1 meeting with Judge Wood.

Mitch Bainwol, head of the Recording Industry Assn. of America, offered a somewhat different reaction, focusing on the filtering issue and Gorton’s liability:

LimeWire is one of the largest remaining commercial peer-to-peer services. 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. The court’s decision is an important milestone in the creative community’s fight to reclaim the Internet as a platform for legitimate commerce. By finding LimeWire’s CEO personally liable, in addition to his company, the court has sent a clear signal to those who think they can devise and profit from a piracy scheme that will escape accountability.

-- Jon Healey

Healey writes editorials for The Times’ Opinion Manufacturing Division. Follow him on Twitter: @jcahealey