A federal judge this week threw out an antitrust suit LimeWire parent Lime Group filed against several major record labels. Lime Group claimed that recording industry officials had conspired with each other to shut LimeWire out of the legal download business. The company said the record labels sought to monopolize the online distribution of music and refused to license their works to the company.
Its lawyers claimed that label representatives refused to make a deal that would have established a legally licensed download service, and also that they engaged in hacking of the LimeWire network. After the case was filed, the record labels filed a motion to have it dismissed, which the judge granted, saying that the file-sharing company had failed to “allege an adverse effect on competition market-wide.” In other words, it couldn’t legally prove that the labels had done any damage.
The judge also dismissed several claims brought under state laws “without prejudice,” which gives New York-based Lime Group the option to pursue the claims in state court.
Lime Group also said it wanted to reach an agreement with labels so it could start a licensed music service, but they refused to make a deal. The record labels insisted Lime Group use a filtering system approved by the labels or reach an agreement with iMesh Inc, a rival file-sharing service that has been operating with the approval of record labels since settling a copyright infringement case in 2004.
The judge said Lime Group didn’t show any hard facts that suggested the record labels’ actions were malicious. Companies have a right to refuse to do business with another company, and the record labels were simply exercising that right.
Lime Group had also claimed the recording companies had fixed prices for online music, but the judge concluded that the firm failed to establish it had been harmed by any alleged price fixing.
Another claim was that the labels had engaged in unfair business practices by hacking Lime Group’s file-sharing network and claiming it promotes child pornography. This, too, was rejected by the judge because the “alleged actions were not anticompetitive.”
Lime Group was sued last year by Vivendi’s Universal Music Group, Warner Music Group, Britain’s EMI Group and Sony BMG Music Entertainment.
That case, which is still pending, was the first piracy lawsuit brought against a distributor of file-sharing software after the US Supreme Court ruled in 2005 that technology companies could be sued for copyright infringement on the grounds they encouraged customers to steal music and movies over the Internet.
Judging from the outcome of Lime Group’s countersuit, it’s not likely LimeWire will have the blessing of record labels to go legit anytime soon.