How Much Does File-Sharing REALLY Cost Record Companies?
In October, a federal judge ruled for record companies in their lawsuit against Lime Wire, issuing an injunction and delivering tough language on the file-sharing service's copyright infringement.
The case is about to move to a jury trial that will determine what damages are owed by Lime Wire to the labels, but before that happens, record companies are going to experience some pain, thanks to a decision on Tuesday by U.S. Magistrate Judge Debra Freeman.
In the lawsuit, the music companies are seeking more than $1 billion in statutory damages, so Lime Wire asked the judge to make the labels prove lost profits.
In response, the labels offered to show "gross revenue" on the infringing works.
That's not enough, said Lime Wire. The company insisted the plaintiffs should show actual damages, which to it means record companies should be ordered to produce information on costs such as royalty payments on the musical works alleged to have been infringed.
That request didn't go over too well with the plaintiffs, who argued in a letter to the judge last month that it would impose a "crushing burden" on them.
On Tuesday, Judge Freeman said tough noogies, with some interesting language written in the margins of a court-endorsed memo to the parties. She scribbled -- barely legible -- that Lime Wire should enjoy enough discovery to mount a defense on the damages issue. Both Lime Wire and the labels must pick 100 works -- 80 songs and 20 albums -- that each believes to be representative of the damage (real or not) that file-sharing has on the record companies. In addition, 100 more works -- another 80 songs and 20 albums -- will be selected at random.
Every year, studies come out that try to estimate the economic harm of piracy. And annually, these studies are subjected to a good share of skepticism in some quarters. The revealing exercise now underway in the Lime Wire case could turn out to be one that sets the standard for showing actual economic harm from piracy.
We suspected that the important phase of the Lime Wire case had come and gone as the company was inevitably headed for bankruptcy and questions about damages were merely academic. Looks like we were wrong. The case has gotten interesting again.
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