Another P2P Falls to Litigation

Earlier in 2010, one of the last remaining P2P companies, Limewire, was found “vicariously liable” for copyright infringement (full text here).  And finally, last week, a court issued a permanent injunction against LimeWire to stop all functions that allow users to download content through their service.  It is the end of a four year litigation battle filed by RIAA on behalf of 8 major music publishers. A ruling to determine the level of damages is due in January 2011.

I thought this was a good opportunity to review the various levels of liability we have covered in class. 

Limewire was sued under a secondary liability theory.  To recover on a claim based on secondary liability, a plaintiff first must establish direct infringement by the relevant third party, i.e. the party that received the infringement-enabling device.  To establish direct infringement, a plaintiff must show that (1) the plaintiff owns the copyright or copyrights at issue; and (2) the third party infringed the copyrights by unauthorized copying or distribution.

 Secondary liability arises when one party is held legally responsible for the actions of another party. There are generally two kinds of copyright secondary liability: vicarious liability and contributory liability.

Limewire (and its founder Mark Gorton) were found to be vicariously liable for copyright infringement.  Vicarious liability does not require that the secondary infringer knew or even should have known about the infringement.  A party is liable for vicarious infringement if the party: 1) has the right and ability to control the infringer’s acts and 2) receives a direct financial benefit from the infringement.  Again, no knowledge or participation necessary

What happened in the LimeWire case is similar to the outcome in the 2005 dispute between MGM and P2P software Grokster. In the Grokster case, the inducement test was used to establish secondary liability for P2P systems.  The Supreme Court in Grokster held 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.”

Limewire was also held to this standard.  LimeWire’s operators had induced infringement by its users in the following ways:

  • LimeWire’s awareness of substantial infringement by users
  • LimeWire’s efforts to attract infringing users
  • LimeWire’s efforts to enable and assist users to commit infringement
  • LimeWire’s dependence on infringing use for the success of its business; and
  • LimeWire’s failure to mitigate infringing activities

The service may resurrect itself at some point in the future. A spokesperson for the company stated it will be “working with the music industry.”  Either way, this might be a big judgment in January that Limewire will not be able to escapes from.

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