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LimeWire Battle Not Over Yet
May 13, 2010
Thomas Mennecke
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The story of LimeWire roughly coincides with the advent of Gnutella. A long time ago in P2P land, few file-sharing networks coexisted with Napster. This changed in 2000, as the legal climate against Napster deteriorated. Because of its centrally located indexing servers, it was relatively easy for the RIAA at the time to eliminate this network. Although the music industry had destroyed Napster, it had not destroyed the thirst for digital music. The power vacuum left behind allowed other networks to prosper.

Quite by accident, Gnutella would become one of the most popular alternatives to Napster. News briefly appeared on Slashdot regarding its release. At the time, it was a Nullsoft project developed by Justin Frankle. Nullsoft's parent company, AOL, quickly caught wind of the project and had the project killed on sight.

But in the few hours that Gnutella was available, it was downloaded, dissected, and reversed engineered. News quickly spread throughout the file-sharing community, and within days, the Gnutella network was seeing a steady rise in popularity and users. But this rise came at a significant price. The version of Gnutella available at the time (version .56) was still very buggy and the network was not ready to accommodate the massive scale of users it was seeing.

Gnutella had a lot of potential despite its limitations. Unlike Napster, there were no centralized indexing servers. The removal of that weakness meant that it was immune from attack by the RIAA or other pro-copyright organizations. Yet Gnutella at the time still needed serious work in order to provide reliable communications for the masses. That opened the door for multiple investors and developers to take over the reigns.

The first non-Nullsoft developer was Toadnode, followed quickly by BearShare and LimeWire. Within a few short months, BearShare and LimeWire were feverishly working on rebuilding the Gnutella community and quickly became popular file-sharing clients. Working together, BearShare and LimeWire became the forefront developers of the Gnutella network, coordinating their efforts with the community via the Gnutella Forums.

Introducing concepts such as superpeers (or decentralized indexing servers) and drastically improving the protocol, the massive load of that Gnutella's population place on the network was gradually alleviated and the network became a viable alternative to Napster. LimeWire was easily the most popular Gnutella network in the early to middle part of the 2000s.

In the middle part of last decade, the RIAA began firing up their anti-piracy campaign. It started with monetary demands against Kazaa users and spread, to a lesser extent, to Gnutella users. The RIAA was buoyed by their courtroom victory in June of 2005 in the famous Supreme Court case MGM vs Grokster. Although it was not a specific ruling against Grokster, the court in a unanimous decision remanded the case back to the lower courts, stating that Grokster could be sued for copyright infringement.

This decision had a ripple effect throughout the commercial P2P industry. In September of 2005, the RIAA sent cease and desist letters to most of the major developers. 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.

LimeWire was one of the few developers who resisted the RIAA's demand - the other exception was Ares Galaxy who decided to release the source code of their product rather than surrender. As a result, LimeWire was sued by the RIAA in August of 2006, nearly a year after the cease and desist warning.

Here's the funny thing that transpired between 2006 and 2010. During that time, legacy P2P networks like Gnutella, eDonkey2000, FastTrack, etc, went into a steady decline. The consistent barrage of poor quality files, lawsuits, and obsolescence began to take their toll. LimeWire remained relatively popular, however BitTorrent and the demand for large files became the dominant player.

Gnutella today is nothing like it once was. Replaced by BitTorrent and streaming audio sites, Gnutella is more historic than practical at this point. Yet the legal battle surrounding LimeWire may finally offer some closure as to the legality of P2P development.

On Tuesday, the US District Court in New York ruled against LimeWire. In a scathing summary judgment, the court found that LimeWire was liable for copyright infringement. It came to that conclusion for reasons that are very similar to previous P2P lawsuits.

The court found that LimeWire had financially benefited from alleged piracy on the network, noting "From 2004 to 2006, LW’s annual revenue grew from nearly $6 million to an estimated $20 million."

The court also found that LimeWire tech support actively helped customers infringe, stating "In many instances, LimeWire users requested assistance in sharing and downloading digital music files, most of which were copyrighted. In response, LW employees offered technical information about the system’s functionality, thereby helping users obtain unauthorized copies of recordings."

There were several strange revelations in summary judgment. Did you know that former LimeWire developer Greg Bildson switched sides to the music industry in order to avoid civil prosecution? LimeWire tried to have his statements to the music industry stricken, however this request was, for the most part, denied.

"On July 22, 2008, Bildson’s attorney, Michael Page...contacted Plaintiffs to make a settlement proposal, whereby Plaintiffs would drop the claims against Bildson in exchange for Bildson providing Plaintiffs with factual information about...LimeWire and paying a nominal settlement amount."

Did you know Mark Gorton, owner of LimWire, suggested that Vincent Falco, former CTO of BearShare, invest in LimeWire FLP to avoid losing his personal assets?

"Plaintiffs have submitted a declaration from Vincent Falco, former Chief Executive Officer of a company that also distributed P2P software. In his declaration, Falco states that Gorton told him that Gorton had 'created a family limited partnership...[and] put his personal assets in to [it] that the record companies could not get his money if they sued him and won.'"

Despite the damning evidence against them, LimeWire doesn’t seem ready to give up quite yet. In a statement made by LimeWire CEO George Searle:

LimeWire strongly opposes the Court’s recent decision. 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. We look forward to our June 1 meeting with Judge Wood.”

With many appeals left and the coffers still full, LimeWire may be around for some time to come. Although Gnutella is losing relevancy, the importance of this case is not, and stands a good chance of finally deciding how P2P developers can behave inside US law.

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