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LimeWire Counter Sues the RIAA
September 25, 2006
Thomas Mennecke
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The entertainment industry has been relatively successful in dismantling the corporate P2P scene. What were once free P2P networks have slowly migrated into a vision more acceptable to the entertainment industry. Although this tactic has proven successful against corporate P2P companies and isolating technological progress in the United States, file-sharing progress has instead morphed underground and overseas.

Overseas development has kept eMule, Ares Galaxy, various BitTorrent clients and trackers afloat. Open source has also kept one US based P2P client afloat – a pesky, thorn-in-the-side Gnutella client named LimeWire.

Like most US based P2P clients or network providers, LimeWire was given a choice by the entertainment industry, settle or face annihilation. Most commercial P2P developers had little choice. Faced with the insurmountable impossibility of matching the entertainment industry’s vast litigation capabilities, each one slowly capitulated. BearShare settled for $30 million; Grokster for $50 million; MetaMachine for $30 million; Sharman Networks for $100 million; and iMesh, who settled for the bargain price of $4.1 million.

The exceptions have been few. BitTorrent, Inc. continues work under a magical umbrella which keeps them safe from the entertainment industry; while StreamCast struggles to stay alive in the courts. But the P2P heavy weight LimeWire, which controls a majority share of the Gnutella network, is the only open commercial developer which has maintained an overwhelming presence in the file-sharing world.

This has been no small feat. StreamCast’s Morpheus almost stole the P2P crown, but suffered a tremendous popularity fall due to its banishment from FastTrack and its recent legal setback. Other P2P networks/clients such as ScourExchange, AudioGalaxy, BearShare and eDonkey have come and gone. Unable to face the costly prospect of a prolonged legal fight, LimeWire’s ilk have been reduced to historical footnotes.

LimeWire has avoided a similar fate for various reasons. Perhaps most importantly, its open source nature has prevented this client from crumbling to dust. By drawing on the open source movement, LimeWire has ensured its survival by sharing its source code with whoever wishes to examine it. The open source community has contributed greatly to this project; with valuable assets such as programmers, conceptual innovators, and of course, input from the community.

These assets have been instrumental in the survival of file-sharing networks such as BitTorrent, Ares Galaxy, Gnutella, and eDonkey2000.

While open source is helpful for a P2P network’s survival, it doesn’t guarantee the survival of a commercial P2P developer – unless you're under the LimeGroup umbrella.

LimeGroup is an umbrella company which runs several businesses. These businesses include Tower Research Capital, Lime Brokerage, LimeWire, and Lime Capital Management. Lime Group is a wealthy company with offices in New York and Boston, and appears fearless at the prospect of taking on the music industry.

LimeWire’s Mark Gorton and Greg Bildson filed a counter claim today, alleging the music industry "...incurred antitrust violations, consumer fraud, and other misconduct." The RIAA sued LimeWire in early August for not complying with its September 13, 2005, cease and desist notification.

“[The RIAA’s] goal was simple: to destroy any online music distribution service they did not own or control, or force such services to do business with them on exclusive and/or other anticompetitive terms so as to limit and ultimately control the distribution and pricing of digital music, all to the detriment of consumers.”

Most of LimeWire’s counterclaim denied or did not claim knowledge of a vast majority of the music industry’s allegations. LimeWire’s complaint stated it was extremely difficult to negotiate with the music industry, which LimeWire felt took an uncooperative position. If LimeWire wanted to comply, it would have to conform to a standard similar to iMesh – which in LimeWire’s opinion is and was uncompetitive. Indeed, LimeWire’s counterclaim becomes hostile against iMesh, claiming it has an unusually close working relationship with the RIAA.

“While from all outward appearances iMesh is not controlled by the RIAA and Counter-Defendants, dealings with iMesh by LimeWre and other P2P companies demonstrate, in reality, that this is not the case [paragraph 40]…

“…iMesh’s and the RIAA’s goal is to have these P2P companies concede, under the thread of expensive litigation, to sell their assets for essentially nothing, with the promise of a “get out of jail free card” from the RIAA. In turn, the P2P company must simply turn-over its userbase (which is the single largest asset typically) to imesh so they can then force a conversion to the iMesh platform which, in turn,will lead to huge profits to iMesh and, of course, the Major Labels.”

With LimeWire’s 4 million plus userbase, even a small conversion of users would equal a substantial reward. Although few doubt the seriousness of the upcoming legal proceedings, and by the tone of the complaint (which demands a trial by jury), LimeWire still managed to squeeze in a tad of humor.

From paragraph 41 of the RIAA’s complaint:

“Once installed, LimeWire is easy for the user to launch and run. Indeed, to increase the number of users who are actually running LimeWire at any given time — and thereby increase the number of Plaintiffs' sound recordings on the network that are available for users to download — Defendants have designed LimeWire to automatically launch upon startup of the user's computer (unless the user specifically designates otherwise).”

To which LimeWire responds:

“Defendants admit the allegations of the first sentence of paragraph 41 of the Complaint. Defendants deny the remaining allegations of paragraph 41 of the Complaint but admit that the LimeWire software application can automatically launch upon start up of a user’s computer for Windows versions only, unless the user designates otherwise.”

This story is filed in these Slyck News categories
P2P Clients :: LimeWire
Legal/Courtroom :: Other Lawsuits

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