Kazaa settles with major labels, AllofMP3 faces action and Limewire next in line

September 2006

Internet, record labels

Having been found liable for copyright theft in Australia and following the seminal US Supreme Court decision in MGM v Grokster, Kazza has now reached a global out-of-court settlement with the trade organizations representing the international and US recording industries (IFPI and RIAA) concluding the ongoing legal proceedings brought by the major record companies against the service’s operators in Australia and the United States. Under the terms of the settlement, Kazaa has agreed to pay US$100 million in compensation to the record companies that took the legal action to stop copyright infringement on the Kazaa network.  Kazaa will also introduce filtering technologies ensuring that its users can no longer distribute copyright-infringing files. John Kennedy, chairman and CEO of IFPI said: “Kazaa was an international engine of copyright theft which damaged the whole music sector and hampered our industry’s efforts to grow a legitimate digital business.  It has paid a heavy price for its past activities.  At the same time Kazaa will now be making a transition to a legal model and converting a powerful distribution technology to legitimate use. The settlement follows a landmark ruling in the Federal Court of Australia last year which found the Kazaa operators guilty of authorising widespread copyright infringement and litigation in the US by record companies, music publishers and motion picture studios against Kazaa, Grokster and Streamcast for copyright infringement.  The case against Grokster and Streamcast ultimately reached the U.S. Supreme Court, which in June 2005 unanimously ruled that individuals or companies that promote (“induce”) copyright theft by users of their service can be held responsible for that infringement.  Grokster settled the case with the record labels and motion picture studios in November last year. Whilst the labels have now successfully closed down the original version of Napster, Grokster and now Kazaa, many illegal file sharing sites and software remain. The BPI are now focusing on legal action against Russian based AllofMP3.com which has 14% of the UK ‘legal’ download market – the BPI contends that the site has no right to sell recordings owned by its members. The site contests this. Finally, the RIAA have said that they have taken action against LimeWire, one of the inter net’s most popular peer-to-peer applications, LimeWire. The action follows the RIAA’s September 2005 ‘cease and desist’ letters to seven P2P companies. Lime Wire LLC was believed to be among the recipients. The LimeWire software, estimated by Lime Wire LLC to reside on 1.5% of PCs worldwide, allows users to connect to the Gnutella file-sharing network. It claims to be “the fastest P2P file-sharing program on the planet.” Users can search for files on the computers of other users connected to the network. The suit filed at a New York district court seeks compensatory and punitive damages, accusing LimeWire of being “devoted essentially to the Internet piracy of plaintiffs’ sound recordings”.

Source www.IFPI.org  / The Times 28 August 2006


MGM v Grokster (2005) 04-480 Supreme Court 26 th June 2006 (see Music Law Updates Archive August 2006)

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