The makers of file-sharing software LimeWire are liable to 13 major record companies that accused the service of infringing their music copyrights, a Manhattan federal judge has ruled.
In a ruling made public on Wednesday, U.S. District Judge Kimba Wood agreed with the record companies that LimeWire's parent Lime Wire LLC and its founder Mark Gorton were liable for infringement and engaging in unfair competition.
The evidence demonstrates that Lime Wire optimized LimeWire's features to ensure that users can download digital recordings, the majority of which are protected by copyright, and that Lime Wire assisted users in committing infringement, Wood wrote in her 59-page ruling.
She added that Gorton directed and benefited from many of the activities that gave rise to Lime Wire's liability, and knew about the copyright infringement.
The lawsuit was filed in August 2006.
Lime Wire created its service in 2000 and describes it as the world's most popular peer-to-peer file-sharing service, with more than 50 million monthly users.
These users account for 58 percent of people who said they downloaded music from a peer-to-peer service in 2009, CNET News said, citing a survey by NPD Group.
The New York-based company strongly opposes Wood's ruling and is committed to working with the recording industry to develop products that help music listeners, said Lime Wire Chief Executive George Searle.
Arista, Atlantic, BMG Music, Capital, Elektra, Interscope, LaFace, Motown, Priority, Sony BMG, UMG, Virgin and Warner Brothers are the 13 record companies that sued Lime Group.
Mitch Bainwol, chief executive of The Recording Industry of Association of America, a trade group representing the labels, in a statement praised Wood's ruling.
The court's decision is an important milestone in the creative community's fight to reclaim the Internet as a platform for legitimate commerce, he said. The court has sent a clear signal to those who think they can devise and profit from a piracy scheme that will escape accountability.
In her decision, Wood drew on a unanimous 2005 U.S. Supreme Court ruling involving the file-sharing service Grokster Ltd. (http://www.supremecourt.gov/opinions/boundvolumes/545bv.pdf)
Justice David Souter ruled that someone who distributes a device with the object of promoting its use for copyright infringement, as shown by clear expression or other affirmative steps, is liable for third-party infringement, even if the device is also used lawfully.
Wood set a June 1 conference for further proceedings in the LimeWire case.
The case is Arista Records LLC et al v. Lime Group et al, U.S. District Court, Southern District of New York, No. 06-05936.
(Reporting by Jonathan Stempel. Editing by Robert MacMillan)