Would a person walk out of a store and take a CD without having paid for it?  If so, we might not only conclude that they are a shoplifter, but also someone who has committed theft of copyrighted intellectual property.  Many individuals commit the equivalent of the latter kind of theft by the illegal download of a digital file of a recorded song. File sharing software makers such as LimeWire, Napster and Kazaa have made it easy for users to easily commit this offense by a click of a mouse.  However, beware; there are consequences for sites that enable this sort of conduct.

In 2006, The Recording Industry Association of America (“RIAA” or the “association”) filed a lawsuit on behalf of its member music labels against LimeWire, claiming that the music industry had lost a lot of money because LimeWire’s P2P software enabled users to share and make use of 11,000 copyrighted songs without paying a fee. The case was heard by the United States District Court, Southern District of New York. In 2010, the court ruled in favor of RIAA issuing a Permanent Injunction. RIAA, et al. v. Lime Wire, LLC, et al, 06 Civ. 05936 (Oct. 26 2010).  In evaluating whether an injunction was warranted the Court balanced four (4) elements:

1) irreparable injury;

2) whether or not there is an adequate remedy at law;

3) consideration of the balance of  hardships between the parties; and

4) whether the public interest would be disserved by the injunction

Id. at 5.

The Court concluded that RIAA faced irreparable harm because “it is virtually certain that [RIAA] will be entitled to an enormous damage award [] that will far exceed Lime Wire’s ability to pay.” Id. at 6.  Under the Copyright Act, a plaintiff is entitled to statutory damages from $750-$150,000, depending upon the circumstances of the infringement. Id. at 6; See 17 U.S.C. § 504(a)(2)-(c).

The Court found that a permanent injunction in addition to damages was necessary since the compensation for damages would only satisfy past infringement, not future infringement. Id. at 8.  The Court found that LimeWire’s widespread dissemination of its software left RIAA vulnerable to ongoing infringement by users and that this far outweighed any hardship to LimeWire by the injunction. Id. at 8.

Although the Court agreed that LimeWire induced copyright infringement, it did not agree with RIAA’s position on damages.  RIAA believed that it was owed the statutory allotment ($750-$150,000) per download, per song. Id. at 6-7.  That would have amounted to a penalty well beyond LimeWire’s resources. Id. at 6.  Ultimately, in May 2011, LimeWire made its settlement offer, and the case settled for $105 million in damages.

Businesses should take heed to the permanent injunction issued against LimeWire and the subsequent settlement amount of the lawsuit.  The issue of music piracy is serious and the music industry is being all the more active in fighting against copyright infringement.

Comments/Questions: gdn@gdnlaw.com

© 2012 Nissenbaum Law Group, LLC

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