LimeWire Smacked Down for Inducing Copyright Infringement–Arista Records v. Lime Group

By Eric Goldman

Arista Records LLC v. Lime Group LLC, 2010 WL 1914816 (S.D.N.Y. May 11, 2010)

This is one of the rare cases where the news reports mostly got it right. Plain and simple, the record labels won a decisive copyright infringement victory against LimeWire, its chairman and its principal investor. There is no way that the defendants can spin this ruling as good news on any front.

However, this case also doesn’t tell us much about the law that we didn’t already know. LimeWire was a bit of an anachronism. It is a P2P file sharing system built in 2000 on the Gnutella platform, and therefore it invites a fairly straightforward application of the Supreme Court’s Grokster ruling.

Furthermore, as I explain to my students, there is “normal” copyright law and then “P2P file sharing” copyright law, and it’s a mistake to think those two legal doctrines are closely related. As this case reinforces, judges will find a way to interpret copyright law to smack down P2P file sharing systems unless those system operators somehow can manage to thread the contributory/vicarious/inducement needle. Given that it had made many of the most damning choices before 2005 (i.e., before the Grokster ruling provided some important clarification), LimeWire really had no chance.

The court’s inducement analysis illustrates its smackdown imperative. The court says “the following factors, taken together, establish that LW intended to encourage infringement by distributing LimeWire: (1) LW’s awareness of substantial infringement by users; (2) LW’s efforts to attract infringing users; (3) LW’s efforts to enable and assist users to commit infringement; (4) LW’s dependence on infringing use for the success of its business; and (5) LW’s failure to mitigate infringing activities.” Deconstructing the language, this is really just a fancy way of saying that LimeWire operated a P2P file sharing system. And the problem is compounded by LimeWire’s venerability. A lot of the evidence of inducement comes from pre-2005 evidence of bad intent, which more “modern” file sharing systems would not have based on their learnings from the Grokster ruling.

On the substantial infringement by users, the court relied on an expert report (challenged by LimeWire, but those challenges were rejected):

Dr. Waterman analyzed a random sample of files available on LimeWire, and determined that 93% of those files were protected or highly likely to be protected by copyright, and thus not authorized for free distribution through LimeWire. (Waterman Report, 2-3.) Dr. Waterman also analyzed the rate at which the sample files were requested for download by LimeWire users. Based on this analysis, he estimated that 98.8% of the files requested for download through LimeWire are copyright protected and not authorized for free distribution.

Thus, like Grokster, there is a certain realpolitik to this decision. The court simply couldn’t ignore a large P2P service that was used so predominately for infringement.

The court also reinforces that a service’s marketing efforts can be used against it. In this case, the court looks at LimeWire’s AdWords keyword advertising campaign and finds that the campaign indicated that LimeWire was trying to compete against other “bad” P2P file sharing services:

From 2002 to 2006, LW conducted a marketing campaign through Google AdWords, whereby Google users who entered certain search queries, such as “replacement napster,” “napster mp3,” “napster download,” “kazaa morpheus,” “mp3 free download,” and dozens of other phrases containing the words “napster,” “kazaa,” or “morpheus,” would see an advertisement leading them to the LimeWire website.

Notice that none of the keywords specifically targeted words that directly confirm a user’s desire to infringe. Instead, the keywords indicate a taint by association–LimeWire signaled that it was competing for the same users as Napster, KaZaA and Morpehus, all systems that have been trashed by other courts.

The court also reinforces (consistent with the discussion in Columbia v. Fung) that a service’s efforts to provide its users with useful organizing metadata will be held against it based a chain of inferences about bad intent:

A number of LimeWire’s genre categories – including “Classic Rock,” “SoundTrack,” and “Top 40” – relate specifically to popular music and inevitably guide users to copyrighted recordings.

One unusual tidbit: the court says that the common law copyright claims (for sound recordings made before 1972) are equally eligible for inducement as the federal copyright claims.

The court also pierces the corporate veil and holds LimeWire’s chairman and its majority investor (the Lime Group, also closely tied to the CEO) liable for LimeWire’s inducement. If you’re looking for a paper topic, I’d love to see some clarification about when courts will pierce the corporate veil in copyright cases and how that compares to corporate veil-piercing in other tort contexts.

While the court treats this as an easy inducement case, the court denies summary judgment on the contributory copyright infringement claim because it needs more facts on the LimeWire’s capacity for substantial non-infringing uses. This is a logical punt given the Supreme Court’s deadlock on this issue in Grokster.

The court rejects LimeWire’s summary judgment on vicarious copyright infringement, saying (among other things) “There is substantial evidence that LW had the right and ability to limit the use of its product for infringing purposes, including by (1) implementing filtering; (2) denying access; and (3) supervising and regulating users.” In other words, LimeWire ran a P2P file sharing system. Note that these 3 elements are true with every online service, but I think the court meant to say that these factors only matter when applying P2P file sharing copyright law, not normal copyright law. Although the plaintiffs didn’t ask for summary judgment on the vicarious claim, it appears the court will entertain the plaintiff’s motion.

As usual in P2P file sharing system cases, the 512 safe harbors were completely irrelevant to the discussion and not even referenced by the court.