LimeWire & Its CEO Found Liable for Copyright Infringement

Thirteen record labels that filed suit against LimeWire for copyright infringement prevailed today on a motion for summary judgment.  Judge Kimba Wood of the Southern District of New York held that LimeWire, a peer-to-peer network that permits users to trade content over the Internet, and its CEO Mark Gorton, are liable for various forms of secondary liability for copyright infringement.

To prevail on a claim for secondary liability, such as inducement, contributory infringement or vicarious liability, a plaintiff must first demonstrate the existence of direct infringement.  Relying upon deposition testimony and affidavits of expert witnesses, as well as certain documentation and hard drives containing copyrighted materials, Judge Wood determined that direct infringement by LimeWire users was clearly established.

Judge Wood then turned to the question of whether LimeWire may be liable for inducing copyright infringement, a distinct cause of action confirmed by the US Supreme Court in its 2005 decision in Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005).  Judge Wood explained that inducement requires proof “that the defendant (1) engaged in purposeful conduct that encouraged copyright infringement, with (2) the intent to encourage such infringement.”   She went on to find that LimeWire intended to encourage infringement by distributing LimeWire because of its “(1) awareness of substantial infringement by users; (2) efforts to attract infringing users; (3) efforts to enable and assist users to commit infringement; (4) dependence on infringing use for the success of its business; and (5) failure to mitigate infringing activities.”  The opinion details her evidentiary findings.

Notably, Judge Wood declined to hold that LimeWire was liable for contributory infringement because the Court could not determine from the evidence whether the service was capable of substantial non-infringing uses.  See Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984) (the Sony-Betamax case).

The Court also could not conclude as a matter of law whether LimeWire could be vicariously liable for the direct infringement of its users, which requires proof of obtaining “profit[s] from direct infringement while declining to exercise a right to stop or limit it.”

Some of the plaintiffs’ claims related to sound recordings that were made prior to 1972, which are not protectable under the Copyright Act but which are protectable under common law.  Because the elements of a claim to establish infringement under New York common law are the same as those required to establish liability for claims under federal law, the Court ruled in favor of the plaintiffs as to the pre-1972 claims for infringement.

Lastly, Judge Wood found that Mark Gorton, the CEO and sole director of LimeWire, was personally liable for inducement of copyright infringement because he had the ability to supervise and benefited from the infringing activity.  This is a pronouncement of vicarious liability, rather than inducement of infringement.

On a side note, I was particularly impressed by Judge Wood’s handling of the evidentiary objections and motions filed by the parties.  Her analysis and rulings are exemplary of how judges ought to handle such objections in summary judgment proceedings.