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RIAA v. LimeWire: The Counterclaim

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LimeWire, one of the last commercial P2P holdouts in the RIAA’s ongoing war against file sharing networks, has answered the RIAA’s complaint and counterclaimed against the RIAA on a number of grounds.  The counterclaim itself is interesting for a number of reasons.  For one thing, it clearly describes what LimeWire believes is the reason for the recording industry’s feverish pursuit of applications, which enable their users to trade files regardless of their status under copyright law.

The counterclaim states that the recording industry had a business model based primarily on the manufacture and distribution of physical media, such as CDs.  This goes a long way to explain why the recording industry has not only fought against file sharing, but also against CD-Rs, iPods, time shifting satellite radio products, and anything else that might mess with that business model.

The counterclaim also highlights the difference between a true P2P application like LimeWire and services such as first-to-fall Napster and others that use a centralized server to facilitate searching and communication between users.  This could be the single most important distinction in these "inducement to infringement" cases that the RIAA has brought against P2P applications.  In the first instance, with applications like Napster, where there is a centralized server, there is every opportunity for the hosting company to learn of its patrons infringing uses, and further, to stop infringement.

In a true P2P environment, where there is no centralized server, and as such, limited involvement or oversight of the originating company, this element of knowledge as to exactly what their users are sharing is gone.  This is why the RIAA is suing primarily on “inducement to infringement” grounds (i.e. “psssst, hey, kid, check this out… if you push this red button, you can get the latest Usher for free. While you’re doing that, can I interest you in some Cialis?”).

Here’s where it gets interesting: LimeWire states the impetus for the Industry’s push to shut down P2P services as, "[T]o 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." (See Arista Records, et al. v. LimeWire, Deft’s Answer and Counterclaims, p. 18.)

LimeWire states in the complaint that they did this by “unlawfully” extending their exclusive rights in the sound recordings they produced, in order to “cartelize” the network for the online distribution of music.

This particular piece of the claim will probably fail, although it is a clever argument.  The problem is that the Industry is more than welcome to decide to whom they license their intellectual property for distribution.  If they wanted to refuse to license their music online at all, they would technically be within their rights as copyright holders.  However, LimeWire makes what I think is a better case in their next point, arguing that the industry has engaged in price fixing measures by developing “MusicNet” and “Pressplay” as the sole means for online distribution of all four major labels, preventing price competition between these companies.

The counterclaim also mentions various class actions, and investigations by the New York Attorney General and others, CD price fixing (already admitted), and handing out payola money to radio stations for airplay (also admitted).

The major problem with LimeWire’s counterclaim, frankly, is I don’t see how they’re a proper Plaintiff.  In order to sue somebody in our country, you need to be someone who has actually been damaged in some way by the wrongful conduct.  In other words, just because you see something really wrong going down, it doesn’t mean you can take it to court, unless you personally are affected.

LimeWire tries to establish they attempted to compete with the major labels in online distribution.  They mention a plan they had in place for distributing copyrighted digital rights managed files, through their “Magnetmix” initiative.  They state that this would have allowed for copyright owners to be compensated and there would have been a “hash based filter” discouraging users from illegally downloading copyrighted content.  They then accuse the major labels of “declining to participate” for anticompetitive and wrongful purposes.

I’m rooting for LimeWire.  Just as I don’t think the industry had any right going after iPods or VCRs, I don’t believe the makers of an open ended technology that allows for decentralized file sharing, should be shut down because some of its users choose to use the technology for infringing purposes.  But, unfortunately, the problem is far more subtle.  It is not the technology itself under attack, but the commercial gains made as a direct result of users’ infringing use.

The argument stands that LimeWire induced users to use the service to download copyrighted materials, and benefited financially by the use through the placement of ads throughout the service.  If someone created a P2P network with no financial purpose at all, for example, Utorrent, or some other app, maybe with a built in search function, then there would be no ground for the industry to sue.

Like I said, I’d like LimeWire to win this case because their service truly is decentralized, and I believe a loss here would have a further chilling effect on the technology. But I think it’s a long shot.  It's pretty well known that people downloading Lime Wire to collect music sans payment drives people to the service, and directly benefits LimeWire financially.

As long as this is the case, they’ll have an uphill battle.  Nonetheless, the LimeWire counterclaim is a powerful indictment, and while it’s a little dry (no more than this article), serves as a great read to bring us up to date, on the “story so far” in the world of the RIAA vs. the People.  It’ll be one to watch.

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  • clan garriock

    actually various groups such as the sierra club, earthfirst, aclu, greenpeace, etc prevail in lawsuits all the time where they cannot show actual harm was caused them or may be caused. Yet even when they can not prove prevailing interest, courts still grant them standing.