July 15, 2011 1:06pm PT by Eriq Gardner
Indie Record Labels Claim Being Cut Out of LimeWire Settlement
Last May, LimeWire settled a massive copyright infringement lawsuit brought by major record labels by agreeing to pay $105 million to settle claims. But what about smaller record labels? Will they see any money?
On Wednesday, Merlin BV, a Netherlands-based firm that represents the interests of more than 12,000 indie record companies including those that manage the music of such bands as Vampire Weekend, Arcade Fire and The National, filed a federal lawsuit in New York against LimeWire.
According to the complaint, Merlin and its members originally agreed not to pursue legal action against LimeWire. Instead, the indie music community allowed the RIAA to pursue its own higher-profile case against LimeWire. In return, Merlin allegedly got written assurance from LimeWire that in the event of a settlement, Merlin would also be offered a settlement agreement on the same "material terms" as the one with major labels.
After LimeWire agreed to pay $105 million to the majors, Merlin wanted a $105 million offer too.
"When confonted with their obligation to make such an Offer, the Lime Entitites simply refused, positing untenable arguments that find no support in the parties' agreement," says Merlin in its beach-of-contract lawsuit against LimeWire.