May 13, 2011

LimeWire Settles With RIAA For $105M

A federal trial over copyright infringement damages has settled out-of-court after defendant LimeWire agreed to pay $105 million to 13 record companies, Reuters is reporting.

The defunct file-sharing service, founded in 2000, offered thousands of people an easy way to find and download all sorts of files, primarily music and video. Last May, US District Judge Kimba Wood that LimeWire's parent companies, Lime Group and Lime Wire LLC, illegally assisted users in pirating digital recordings.

Judge Wood ordered LimeWire to turn off its servers in October, leaving open the question of damages that could have exceeded $1 billion on roughly 10,000 recordings released since 1972. A jury trial over that issue had begun last week.

"LimeWire and its founder, Mark Gorton, are pleased that this case has concluded," according to their law firm Willkie, Farr & Gallagher, which announced the settlement.

In a statement, Recording Industry Association of America (RIAA) Chairman Mitch Bainwol said his group, which represents the labels, is pleased with the settlement. "The resolution of this case is another milestone in the continuing evolution of online music to a legitimate marketplace that appropriately rewards creators," he told AP.

A jury in Manhattan has been listening to evidence for the last two weeks in the case as it prepared to determine what amount LimeWire and Gorton personally would have to pay, CNet reports. If the jury had found he deserved the maximum under the law, Gorton could have been required to pay as much as $1.4 billion.

Gorton's lawyer, Joseph Baio, in a statement, attempted to show that the $100 million settlement was far short of the kind of money the RIAA sought. "In the recent past, the plaintiffs have pressed for a $75 trillion verdict. The Court labeled that claim "Ëœabsurd'."

Plaintiffs then claimed that they suffered $40 to $50 billion of damages and that LimeWire was responsible for it all. Later the RIAA claimed that the amount of damages exceeded $1.4 billion."

The $105 million will be a dent in Groton's checkbook but may not affect him in the long term. The RIAA noted he possessed $100 million in an IRA account. His Manhattan home is worth more than $4 million. In addition to LimeWire, Gorton operates a hedge fund and a medical-software company.

Gorton's lawyers claimed in court that he made little money from LimeWire, but records show the privately owned company generated $26 million in revenue in 2006 and sales climbed dramatically after that. Throughout most of LimeWire's 10-year history, Gorton was chairman, CEO, and only board member.

So will the artists of the swapped song titles be compensated? In similar past cases, the RIAA has split up big awards with the four member labels. How much of the money goes back to the artists is unclear.

RIAA spokesman Jonathan Lamy previously told TorrentFreak that the "Ëœdamages' accrued from piracy-related lawsuits will not go to any of the artists, but towards funding more anti-piracy campaigns. "Any funds recouped are re-invested into our ongoing education and anti-piracy programs," he said.

Despite presenting thousands of artists as victims in the case, none of them are expected to see any of the settlement money in their bank accounts anytime soon. This makes today's decision on compensation a victory for the major labels, but certainly not one for musicians.


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