It’s not all good news for the labels as Limewire’s defence is thrown out

January 2008

Record labels, internet

A US federal judge has thrown out Limewire’s defences to the action brought against it by the Recording Industry Association of American on behalf of its label members with Judge Lynch dismissing all claims yesterday by the P2P file-sharing network. LimeWire had claimed that the record industry illegally blocked its attempts to build a legitimate digital music service. The 13 RIAA labels named in the complaint, including the four majors, were accused of price-fixing, hacking LimeWire users, falsely claiming that Lime Wire promotes child pornography, and pressuring artists not to deal with P2P networks – but the judge agreed with the record industry that Limewire had no case saying “the allegations made over child pornography are not a matter for the federal antitrust court”. More worryingly for the labels, Judge Lynch did make some comments on price fixing and was of the opinion that cartel-like behaviour “may have harmed competition generally” although held that Limewire failed to show it specifically had suffered, as allegations under the Sherman Act required (the Sherman Act is the cornerstone of US antitrust laws). The Judge also found that the labels licensing schemes had harmed Limewire saying “[The] mandatory [hash] licensing regime inflicted direct and concrete antitrust injury on Lime Wire by raising its costs and thus impeding its ability, and the ability of other P2P retailers utilizing hash-based filtering technology, to operate as effective competitors in the digital distribution market … … accordingly, LimeWire has established antitrust standing to challenge counter-defendants’ mandatory licensing scheme“. But it seems Limewire’s claim failed to go further and failed to “plausibly suggest the existence of a conspiracy,” Lynch wrote. Limewire’s claim that the RIAA tried to create a “shared monopoly” was dismissed for lack of evidence. Judge Lynch ruled that Limewire cannot appeal the antitrust rulings.

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