Hollywood Studios Follow RIAA's Lead By Suing LimeWire

Here is why it probably wasn't the best idea in the world for LimeWire to settle up with record companies. Last year, the once-popular, now-dead file-sharing company paid $105 million to put an end to five years of heated litigation. So case closed, right? Not exactly. Now, big Hollywood studios are demanding compensation for their troubles as well in a new federal copyright lawsuit that claims massive infringements of such works as Harry Potter, South Park, Desperate Housewives, and more.

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If you'll remember, LimeWire didn't bend easily to copyright allegations. At least, not at first. The company, founded in 2000 by successful financial trader Mark Gorton, put up quite a fight during the preliminary phases of litigation. LimeWire demanded that the record giants prove their damages -- each and every one -- and also attempted to subpoena third parties such as Amazon.com to hand over internal documents about dealings with the music industry.

Then, last May, on the eve of a trial, LimeWire struck a surprising settlement with the record industry, agreeing to put an end to the fight in a $105 million deal.

Was Hollywood jealous?

Twentieth Century Fox, Viacom, Comedy Partners, Disney, Paramount Pictures, and Warner Bros. have now filed a new lawsuit against LimeWire that cites a federal judge's May 2010 summary judgment decision in the music case,  which determined that LimeWire “intentionally encouraged direct infringement” by LimeWire users and that the LimeWire software was used “overwhelmingly for infringement.”

U.S. federal judge Kimba Wood followed up that decision the following October with an injunction that pretty much became the death penalty for LimeWire. The company quickly shuttered its file-sharing operations.

LimeWire fought off plaintiffs for a few months after the injunction was issued, but then made a couple of deals, taking care of music publishers with one settlement before bowing to record labels in the other.

Since then, LimeWire has been facing off against others demanding a cut. Even before Hollywood's latest lawsuit against the company, indie record labels held open their wallets, saying they too deserved $105 million.

Hollywood studios now want some action too, although the newest plaintiffs haven't put a price tag on LimeWire's alleged misdeeds. Instead, a judge is being asked to look beyond music and examine how the file-sharing platform was used to illegally trade movies and TV shows too.

"The scope of copyright infringement that occurred through LimeWire was staggering," the complaint says. "Millions of users copied billions of files using LimeWire, and each time a user copied a file, that user obtained a permanent copy of copyrighted work without paying a penny to its owner."

E-mail: eriqgardner@yahoo.com

Twitter: @eriqgardner