Arista Records LLC v. Lime Group LLC, 715 F. Supp. 2d 481 (S.D.N.Y. 2010), is a United States district court case in which the Southern District of New York held that Lime Group LLC, the defendant, induced copyright infringement with its peer-to-peer file sharing software, LimeWire. The court issued a permanent injunction to shut it down. The lawsuit is a part of a larger campaign against piracy by the Recording Industry Association of America (RIAA).
Background LimeWire LLC was founded in June 2000 and released its software program, LimeWire, the following August. LimeWire was widely used; in 2006, when the lawsuit was filed, it had almost 4 million users per day.
LimeWire is a program that uses peer-to-peer (P2P) file sharing technology, which permits users to share digital files via an Internet-based network known as Gnutella; most of these were MP3 files containing copyrighted audio recordings. An expert report presented during the trial found, in a random sample of files available on LimeWire, that 93% were protected by copyright. These files were distributed, published, and copied by LimeWire users without authorization from the copyright owners, potentially competing with the recording companies' own sale of the music.
Thirteen major recording companies led by Arista RecordsThe thirteen consisted of Arista Records LLC (Sony BMG/Sony Music), Atlantic Recording Corporation (Warner Music Group), BMG Music, Capitol Records Inc. (EMI), Elektra Entertainment Group Inc. (Warner Music Group), Interscope Records (Universal Music Group), LaFace Records LLC (Sony BMG/Sony Music), Motown Record Company, L.P. (Universal Music Group), Priority Records LLC (EMI), Sony BMG Music Entertainment, UMG Recordings Inc., Virgin Records America Inc. (EMI), and Warner Bros. Records Inc. (Warner Music Group) (when sued owned by Sony BMG, now by Sony Music) sued LimeWire LLC, Lime Group LLC, Mark Gorton, Greg Bildson, and M.J.G. LimeWire Family Limited Partnership for copyright infringement. LimeWire filed antitrust counterclaims against the plaintiffs and ancillary counterclaims for conspiracy in restraint of trade, deceptive trade practices, and tortious interference with prospective business relations, all dismissed by the court in 2007.
The recording companies alleged that the software is used to obtain and share unauthorized copies, and that LimeWire facilitated this copyright infringement by distributing and maintaining the software. They claimed that LimeWire was liable for: inducement of copyright infringement contributory copyright infringement vicarious copyright infringement violations of state common law prohibiting copyright infringement and unfair competition
Opinion of the court On 11 May 2010, Judge Kimba Wood granted the RIAA's motion for summary judgment, finding LimeWire liable for inducement of copyright infringement, common law copyright infringement and unfair competition as to the plaintiffs' pre-1978 copyrighted works. The court amended its opinion and court order on 25 May 2010.
Because all persons and corporations who participate in, exercise control over or benefit from an infringement are jointly and severally liable as copyright infringers, all claims of copyright infringement were equally applicable against Lime Group LLC and Mark Gorton, as sole executive director. The claims against Bildson, a former employee, were dropped in exchange for providing factual information about LimeWire and payment of a settlement. The court did not settle the fraudulent conveyance claim against M.J.G. LimeWire Family Limited Partnership under summary judgment, due to a genuine issue of fact.
Secondary liability The RIAA based their infringement claims on theories of secondary liability, which may be imposed on a party that has not directly infringed a copyright, but has nonetheless played a significant role. A party that distributes infringement-enabling products or services may facilitate direct infringement on a massive scale, making effective enforcement for the copyright owner illusory.
The court established the prerequisite of direct infringement, supported by expert testimony which estimated that 98.8% of the files requested for download through LimeWire were copyright-protected and not authorized for free distribution.
Inducement To establish a claim for inducement, the RIAA had to show that LimeWire, by distributing and maintaining LimeWire, engaged in purposeful conduct that encouraged copyright infringement with intent to do so. Applying the inducement doctrine as announced by the Supreme Court in 2005 in MGM Studios, Inc. v. Grokster, Ltd., the court found overwhelming evidence of LimeWire's purposeful conduct fostered infringement. It established intent to encourage infringement by distributing LimeWire through the following factors: LimeWire's awareness of substantial infringement by users; its efforts to attract infringing users; its efforts to enable and assist users to commit infringement; its dependence on infringing use for the success of its business; and its failure to mitigate infringing activities.
The court said that LimeWire's electronic notice asking users to affirm that they were not using it for copyright infringement, did not constitute any meaningful effort to mitigate infringement. In 2006, LimeWire had implemented an optional hash-based filter capable of identifying a digital file with copyrighted content and blocking a user from downloading the file, but the court did not consider this a sufficient barrier. It found inducement, noting that failure to utilize existing technology to create meaningful barriers against infringement is a strong indicator of intent.
Contributory copyright infringement The parties also cross-moved for summary judgment on the claim that LimeWire was secondarily liable for contributory copyright infringement because it materially contributed to the infringement committed by users. Unlike an inducement claim, a claim for contributory infringement does not require a show of intent, rather it must show that the defendant 1) had actual or constructive knowledge of the activity, and 2) encouraged or assisted others' infringement or provided machinery or goods that facilitated infringement. A joint amicus curiae brief was submitted by the Electronic Frontier Foundation and a coalition of consumers and industryThe Electronic Frontier Foundation was joined on the amicus curiae brief by the Center for Democracy and Technology, the Computer and Communications Industry Association, the Consumer Electronics Association, the Home Recording Rights Coalition, the Information Technology Association of America, Public Knowledge, the Special Libraries Association, and the U.S. Internet Industry Association. urging the court to apply the law in a manner that would not chill technological innovation. In particular, the brief urged the court to preserve the "Sony Betamax" doctrine developed in Sony Corp. of America v. Universal City Studios, Inc., which protects developers of technologies capable of substantial noninfringing uses from contributory infringement liability. The court declined to rule on this point of law because the case lacked enough facts to determine whether or not the software was actually capable of substantial noninfringing uses.
Vicarious copyright infringement LimeWire also moved for summary judgment on the claim that it was vicariously liable for copyright infringement. Vicarious liability occurs when a defendant profits from direct infringement, yet declines to stop it. The court found substantial evidence that LimeWire had the right and ability to limit the use of its product for infringing purposes, including by implementing filtering, denying access, and by supervising and regulating users, none of which were exercised. Furthermore, the court found that LimeWire possessed a direct financial interest in the infringing activity, that its revenue was based on advertising and increased sales of LimeWire Pro, both consequences of its ability to attract infringing users. The court denied LimeWire's motion.
Common law copyright infringement and unfair competition The parties cross-moved for summary judgment on the claim of common law copyright infringement and unfair competition. The claim was included because federal copyright law does not cover sound recordings made prior to 1972. The elements for finding inducement for copyright infringement are, as under federal law: direct infringement, purposeful conduct, and intent. The court found these established on the previously introduced evidence and granted summary judgment to the RIAA. The unfair competition claim was also granted because they had had to compete with LimeWire's free and unauthorized reproduction and distribution of plaintiffs' copyrighted recordings.
Evidentiary motions LimeWire filed a number of motions challenging the admissibility of evidence submitted by the RIAA.Motions included objections as to the reliability of one expert opinion, the properness of another, failure to identify individuals as witnesses, exclusion as to exhibits purportedly relating to settlement negotiations, exclusion of evidence of conduct outside of limitation period, strikes as to a declaration from a former LimeWire employee, and objections based on relevance, authentication and hearsay. The court found all the evidentiary objections without merit and denied the motions; it did place certain conditions on plaintiffs' future interaction with a specific former LimeWire employee.
Subsequent developments
Permanent injunction As the litigation continued, the parties consented to a permanent injunction on 26 October 2010 shutting down the LimeWire file-sharing service. The permanent injunction prohibits LimeWire from copying, reproducing, downloading, or distributing a sound recording, as well as directly or indirectly enabling or assisting any user to use the LimeWire system to copy, reproduce or distribute any sound recording, or make available any of the copyrighted works. LimeWire was also required to disable the file trading and distribution functionality for current and legacy users, to provide all users with a tool to uninstall the software, to obtain permission from the plaintiffs before offering any new version of the software, to implement a copyrighted content filter in any new versions developed, and to encourage all legacy users to upgrade if a new version was approved. The court order also required that if LimeWire sells or licenses any of its assets, as a condition of the transfer, it must require the purchaser or licensee to submit to the court's jurisdiction and agree to be bound by the permanent injunction.
Following the permanent injunction, the website www.limewire.com was effectively shut down and displays a notice to that effect. LimeWire also shut down its online store.
Soon after the injunction was ordered, a report appeared on TorrentFreak about the availability of LimeWire Pirate Edition (LPE), a new, improved LimeWire client released by "a secret dev team." The RIAA quickly complained to the judge that LimeWire was not complying with the injunction, and alleged that the LPE developer was a current or former LimeWire employee. The court ordered the LPE website shut down and allowed limited discovery to obtain the identity of the primary developer. LimeWire denied affiliation with the developer, who likewise denied being affiliated with Lime Wire LLC. The developer, who initially said his motivation was for working on the software was "to make RIAA lawyers cry into their breakfast cereal," voluntarily shuttered the LPE website rather than lose anonymity by contesting the court order.
Limitations on damages The court maintained jurisdiction in order to provide a final ruling on LimeWire's liability and damages to determine the appropriate level necessary to compensate the record companies.