Free Peers Incorporated, a company that distributed the BearShare Gnutella application, has reached a settlement with the music industry. According to court records, FreePeers, Inc. will pay a $30 million dollars to the plaintiffs of this case (Capitol Records, Sony-BMG, UMG Recordings, and Warner Music.)
On May 3rd, the plaintiffs filed a complaint against Free Peers, Inc., Vincent Falco (CEO and developer) and Louis Tatta (developer.) The plaintiffs contend that "...massive copyright infringement is the very purpose of the BearShare System and software...Defendants know it; they encourage and contribute to it; and they readily could prevent it - but choose not to."
Faced with the near impossible task of battling on the music industry in the P2P-hostile US courts, Free Peers, Inc. instead opted to negotiate. Free Peers, Inc. could theoretically challenge the complaint; however the current political climate is unlikely to benefit this P2P firm.
On June 26, 2005, the Supreme Court unanimously ruled, “We hold that one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties."
With a firm pro-music industry victory now in place, Free Peers, Inc. and several other P2P firms were the recipient of a September 13, 2005, cease and desist notification from the RIAA. The letter stated,
"We demand that you immediately cease-and-desist from enabling and inducing the infringement of RIAA member sound recordings. If you wish to discuss pre-litigation resolution of these claims against you, please contact us immediately."
It’s not clear whether the $30 million settlement was part of the above proposed negotiation, especially considering the music industry filed a complaint regardless. It’s possible the May 3rd filing was a means to force Free Peers, Inc. into negotiations and a settlement. As part of the settlement reached on May 4th, FreePeers, Inc. will give up all intellectual property rights to the BearShare name. This includes the BearShare source code, all associated domains (over 100), and its massive user base. Who benefits from this blockbuster deal?
The music industry, as it's now $30 million richer. Who else you ask?
P2P old timer, iMesh. Although the assets technically go to a purely administrative subsidiary, iMesh inherits everything related to BearShare; with the exception of its employees. It’s an amazing coup for iMesh, who benefit from being the only authorized P2P service. The P2P company has so far received the best settlement deal from the music industry. iMesh managed to settle at a comparatively low price ($4.1 million), while also being granted the right to continue its existence.