LimeWire to Hollywood: Want $100 Million? Not So Fast

Limewire Logo - H 2012

Limewire Logo - H 2012

There's no such thing as a free lunch, especially one that might cost the caterers $100 million.

When 20th Century Fox, Viacom, Comedy Partners, Disney, Paramount, and Warner Bros. collectively sued LimeWire in February, they may have been hoping that the ill-fated file-sharing network would pay them to go away.

After all, in May 2011, LimeWire settled up with the big record labels to the tune of $105 million.

STORY: Hollywood Studios Follow RIAA's Lead By Suing LimeWire

But in the Arista case, LimeWire put up a fight -- at least for a while -- attempting to get big record labels to prove lost profits. On the verge of damages trial, there was a settlement.

Earlier this month, the big film and TV studios made a motion for partial summary judgement in their own legal fight against LimeWire.

On Tuesday, LimeWire answered, indicating that at least for now, it intends to make the movie industry prove that LimeWire facilitated copyright infringement.

According to the movie studios, there can be no question of this.

In a memorandum supporting its motion, the studios point out that in the Arista case, Judge Kimba Wood was pretty firm about LimeWire's liability, ruling in May 2010 that there was "overwhelming evidence that [the defendants] engaged in purposeful conduct that fostered [copyright] infringement" through the distribution of a P2P file sharing software.

The movie studios think that should add up to a nice, quick win in their own case.

"Under well-settled principles of collateral estoppel, Plaintiffs in this case now seek to hold the same LW Defendants liable for the same conduct adjudicated in the Arista case," they say.

LimeWire has an answer for that.

"Any findings pertaining to [defendants'] conduct or intent in promoting or encouraging use of the LimeWire Software in the Arista Records litigation, relate to conduct or intent in periods that predate 2009-2010," says the latest court filing by LimeWire.

STORY: LimeWire Founder Mark Gorton Fails In Attempt To Hide His Wealth

Because of statute of limitations, the movie companies only have claims back to the last three years. And so, LimeWire adds, "The LimeWire software program promoted in 2009-2010 was drastically different than that in years prior because of significant changes to LimeWire's business intended to reduce or eliminate infringing uses of its software and network."

Whether that's true or not remains to be seen. LimeWire is a popular legal target nowadays not only because it was a popular P2P platform back in the day, but also because it was founded by Mark Gorton, who was a very successful financial trader on Wall Street before he founded the Lime Group. He's got money, as proven by the $105 million settlement with the RIAA. Does he have liability and a willingness to settle up with the MPAA too?

LimeWire says in its new court papers that during the 2009-2010 period at issue in the litigation, "Gorton did not hold any position at LimeWire, and had no role in the day-to-day operations of the company."

Instead, the defendants say an "entirely new management team primarily comprised of entertainment industry veterans" took control of LimeWire in its late period in order to attempt to negotiate license deals with copyright holders and eliminate infringing uses of the software. The team allegedly attempted to negotiate deals with Disney, Lionsgate, Sony, iTunes and others.

Thus, the defense seems to be that the LimeWire of the disputed period was vastly different than the LimeWire of yore.

Maybe the company is erecting the best possible posture in advance of settlement discussions. A judge's forthcoming summary judgement decision will determine how hard Hollywood is going to have to sweat to earn its keep.

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