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RIAA wins big in LimeWire lawsuit

In a decision that could mean sweeping changes to file sharing in the United States, a federal court has found the company that operates file-sharing service LimeWire liable for copyright infringement, according to court records reviewed by CNET.

Full Story after the jump...

U.S. District Judge Kimba Wood, for the Southern District of New York, on Tuesday granted summary judgment in favor of the music industry's claims that Lime Group, parent of LimeWire software maker Lime Wire, and founder Mark Gorton committed copyright infringement, engaged in unfair competition, and induced copyright infringement. "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," Wood said in her 59-page decision. "And that [Lime Wire] assisted users in committing infringement."

The court decision could represent the biggest threat to online file sharing in years. According to a survey by the NPD Group, LimeWire users account for 58 percent of the people who said they downloaded music from a peer-to-peer service last year. At CNET's, the LimeWire software has been downloaded more than 200 million times. In the last week along, the software was downloaded nearly 340,000 times.

Wood's ruling could at the very least mean a shift in the downloading habits of millions. The logical next step by the Recording Industry Association of America, the trade group representing the four largest recording companies, is to get a preliminary injunction and force Lime Wire to cease LimeWire's file-sharing functionality.

LimeWire responded predictably with strong opposition to the judge's decision and said it looks forward to a scheduled June 1 status conference with Wood. "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," it said in a statement. What may spell serious trouble for creators of music and video Web sites in the future is Wood's decision to hold Gorton personally liable. If the ruling stands, it could set a precedent that might dissuade other entrepreneurs from challenging the entertainment sector's copyrights when developing new technology.

The RIAA has said it is entitled to the maximum statutory damages, which is $150,000 for each registered work that was infringed. The number of infringing works they could try to claim is likely in the millions. The RIAA first filed suit against Lime Group in August 2006 and a month later the company filed a countersuit, claiming the top labels engaged in unfair business practices designed to scare away Lime Wire's users.