NEW YORK—Four years after being hauled into federal court by a coalition of 13 record companies, accused of copyright infringement and other illegal activity, file sharing network LimeWire was found guilty Tuesday in a Manhattan courtroom by U.S. District Court Judge Kimba M. Wood, who granted summary judgment on three key issues in the case: inducement of copyright infringement, common law copyright infringement and unfair competition.
The ruling in Arista Records v LimeWire LLC is bound to inflame an already divisive global argument pitting grass-roots advocates of a free and open marketplace of ideas and files against powerful coalitions of media and entertainment conglomerates determined to reform a system they believe encourages the wholesale sharing of copyrighted content across peer-to-peer networks. Thus far, the courts have agreed with the copyright holders.
The lawsuit was the first filed against a P2P network since the Grokster case in 2005, which was ultimately decided by the Supreme Court, which, according to The New York Times, “found that technology companies could be sued for copyright infringement on the grounds that they encouraged customers to steal music and movies over the Internet.”
LimeWire was accused of secondary liability for copyright infringement, which, according to Wood, is imposed on a party that has not directly infringed a copyright, but has played a significant role in direct infringement committed by others, for example by providing direct infringers with a product that enables infringement. The rationale for secondary liability is that a party who distributes infringement-enabling products and services may facilitate direct infringement on a massive scale, making it ‘impossible to enforce copyright protection effectively against all direct infringers.’ In such circumstances, ‘the only practical alternative is to go against the distributor of the copying device for secondary liability.’”
In order to prove secondary liability, the court needed to determine that copyrights had been directly infringed by users of LimeWire and also that LimeWire itself had induced the direct infringement. To establish a claim for inducement, “a plaintiff must show that the defendant (1) engaged in purposeful conduct that encouraged copyright infringement, with (2) the intent to encourage such infringement.”
In her ruling, Wood repeatedly referred to Grokster as a guide in supporting the inducement charge, specifically citing the high court’s findings regarding the three kinds of evidence necessary to support a finding that the defendants intended to induce infringement: (1) defendants’ internal communications and advertising efforts targeting users of the P2P client; (2) defendants’ failure to develop and implement filtering tools or other means of limiting infringement and; (3) defendants’ reliance on infringing activity for the success of their business (including evidence that advertising revenue depended on the network having a high level of traffic, which in turn depended upon the users’ ability to infringe copyrighted content).
The court found ample evidence to support all of the above allegations, including a marketing campaign conducted by LimeWire from 2002 to 2006 “through Google AdWords, whereby Google users who entered certain search queries, such as ‘replacement napster,’ ‘napster mp3,’ ‘napster download,’ ‘kazaa Morpheus,’ mp3 free download,’ and dozens of other phrases containing the words ‘napster,’ kazaa’ or ‘morpheus,’ would see an advertisement leading them to the LimeWire website.”
Other evidence introduced included internal LimeWire emails alluding to the awareness of infringing activity, search functions designed to facilitate searches for copyrighted digital content, and direct online communications between LimeWire and its users “that plainly relate to unauthorized sharing of digital recordings through LimeWire.”
At the time the case was first filed in 2006, LimeWire had 4 million users a day, up from 2 million users a month in 2003, according to the ruling. That rise in user base was accompanied by a commensurate rise in revenue, which grew from nearly $6 million in 2004 to about $20 million by 2006. The court found that LimeWire’s commercial success was directly attributable to the rise in the user base, which was attracted to the site by the promise of unfettered but unauthorized file sharing.
The coup de grace, legally speaking, was LimeWire’s failure to install any “technological barriers” that would have prevented or discouraged illegal file sharing, including methods such as “hash-based filtering, acoustic fingerprinting, filtering based on other digital metadata, and aggressive user education.”
Indeed, the ruling implies that even had these measures only mitigated infringing use, the court may have ruled differently. The fact that LimeWire in fact implemented a filtering technology, “but only to prevent LimeWire users from sharing digital recordings purchased from the LimeWire online store,” only further sealed the company’s fate. The only attempts made by LimeWire to address infringement were a notice on the site that appears when a user first downloads the client stating that the P2P program is for authorized sharing only, and an affirmative acknowledgment made by a user before s/he can download the client that “I will not use LimeWire for copyright infringement.” Those efforts were not seen as meaningful by the court.
LimeWire, whose founder, Mark Gorton, also was found guilty of the aforementioned charges by the court, issued the following statement Wednesday.
"LimeWire strongly opposes the Court’s recent decision,” it said. “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."
A court hearing to resolve the remaining issues in the case, including damages, was scheduled for June 1.
A copy of the ruling is available here.