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Last Thursday, May 12, the LimeWire lawsuit ended after five years of litigation with a $105 million dollar settlement for the plaintiffs, the record companies. This case is simply another example of how record companies and courts are cracking down on illegally downloading copyrighted materials and may provide a much-need boost for the music industry.
File sharing, in particular sharing copyrighted music, boomed in the early 2000s with the development of peer-to-peer (P2P) file sharing with Napster in 1999. Although Napster was shut down in mid July of 2000, many programs with similar file sharing capabilities popped up including Kazaa, Morpheus, and LimeWire. The music industry struggled with sales because illegal downloads of record companies’ copyrighted material were flying around the internet and scarcely regulated. In June 2005, the Supreme Court issued an opinion in MGM v. Grokster which held Grokster could be sued for inducing copyright infringement because they distributed their device “with the object of promoting its use to infringe copyright.” While seen by some as a major victory for record labels, others didn’t think it would have a large effect on P2P file sharing but just the way companies promoted the use of their programs.
Following the victory of the Grokster case, Arista Records and thirteen other major recording companies sued LimeWire for copyright infringement in the August of 2006, almost six years after LimeWire started up in 2000. About one year ago in May 2010, the record labels had a huge victory from U.S. District Court Judge Kimba Wood who found that LimeWire and its founder Mark Gorton were liable for infringement and unfair competition. Following that decision, in October 2010 the Kimba Wood entered a permanent injunction, ordering the service to be shut down. Now the website simply displays a notice about the court order and demanding that “all persons using the LimeWire software . . . must cease and desist from doing so.”
The case then proceeded to the damages part of the trial, with Arista and others plaintiffs asking for $1.4 billion. Although the case settled for $105 million, a mere fraction of the original amount, it is likely to act as a deterrent to current and future file sharing websites. The real blow to P2P file sharing programs is the court order that found the company and its founder liable for copyright infringement because it underlines the importance and effect the Grokster case will have as well as how judges are using the case. This settlement is most likely not enough to compensate the money the record labels lost, but it shows that they are serious about taking P2P file sharing companies to court, shutting the sites down with injunctions, and going after the money once infringement and liability is found. Whether the LimeWire case and settlement will results in more legal downloads or just sneakier ways to illegal download copyrighted material has yet to be determined.
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