Digital Legal Top Stories

LimeWire founder settles out of court for $105 million

By | Published on Friday 13 May 2011


Well, that’s disappointing. The trial to work out just how much money LimeWire and its founder Mark Gorton should hand over to the record labels ended abruptly yesterday when Gorton agreed to settle out of court for $105 million.

As previously reported, LimeWire shut up shop late last year after US judge Kimba Wood ruled that the technology company was liable for the copyright infringement its P2P file-sharing software enabled. The record industry then sued for $1.4 billion in damages, which was still rather a lot less than some initially expected (partly due to restrictions put in place by Wood), but still a phenomenal sum of money. Wood also ruled that Gorton was personally liable for any damages awarded if LimeWire itself wasn’t able to pay (which it wasn’t).

Kicking things off last week, reps for the US record industry said that file-sharing, and in particular LimeWire, was “largely to blame” for the 52% decline in music sales that have occurred in the last ten years. But according to CNET, Gorton’s legal people argued that that statement was very misleading. A multitude of things had contributed to the slump in record sales, he argued, citing emails and public statements from record industry execs that admitted the late nineties CD ripping phenomenon and the music companies’ own failure to capitalise on the opportunities presented by the internet at the start of the last decade were also to blame.

Gorton then took to the stand on Monday and told the court: “I was wrong. I didn’t think our behaviour was inducing [copyright infringement] but I understand that a court has found otherwise”.

The Recording Industry Association Of America’s argument, of course, was that Gorton didn’t get anything “wrong”, he knew exactly what was going on, ie that LimeWire was liable for copyright infringement, but that he ploughed on anyway because of the profits he could make.

Upon the announcement of the settlement chairman and CEO of the RIAA Mitch Bainwol told reporters: “We are pleased to have reached a large monetary settlement following the court’s finding that both LimeWire and its founder Mark Gorton were personally liable for copyright infringement. LimeWire wreaked enormous damage on the music community, helping contribute to thousands of lost jobs and fewer opportunities for aspiring artists”.

He added: “The significant settlement underscores the Supreme Court’s unanimous ruling in the Grokster case: designing and operating services to profit from the theft of the world’s greatest music comes with a stiff price”.