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Lime Wire file-sharing service to pay record labels $105 million

By Reuters
Thursday, May 12, 2011 22:42 EDT
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NEW YORK – The operators of LimeWire agreed to pay record companies $105 million, ending a federal trial over copyright infringement damages owed by the once popular but now defunct file-sharing service.

The settlement with 13 record companies, including labels owned by Sony Corp, Vivendi SA, Warner Music Group Corp and Citigroup Inc’s EMI Group, followed mediation, and ends nearly five years of litigation.

U.S. District Judge Kimba Wood in Manhattan had ruled last May that LimeWire’s parents, Lime Group and Lime Wire LLC, wrongfully assisted users in pirating digital recordings.

She shut down LimeWire 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.

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

The record labels include Arista, Atlantic, BMG Music, Capitol, Elektra, Interscope, Laface, Motown, Priority, Sony BMG, UMG, Virgin and Warner Brothers.

“We are pleased to have reached a large monetary settlement,” RIAA Chief Executive Mitch Bainwol said in a statement. He called the accord a victory for music providers that “play by the rules.”

Founded in 2000, LimeWire has been a thorn for record companies because millions of fans used it as an easy means to find and download music for free. Its owners have said the service once had more than 50 million monthly users.

LimeWire shut down five years after the U.S. Supreme Court, in a 2005 case involving file-sharing service Grokster Ltd, said companies could be sued for copyright infringement if they distributed services designed to be used for that purpose, even if the devices could also be used lawfully.

Warner Chief Executive Edgar Bronfman testified Wednesday at the trial that he was frustrated that LimeWire did not shut down or convert to a “legal service” after the Grokster ruling. “It’s devastating, frankly.”

In March, Lime Group settled a separate copyright lawsuit by more than 30 music publishers. Terms were not disclosed. [nN08178050] Record companies own copyrights to recordings while publishers can own copyrights to the songs themselves.

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 in New York; Editing by Gary Hill)

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