RIAA, Lime Wire to meet in courtroom showdown

The music industry wants a federal court to order Lime Wire managers to stop streaming advertisements and collecting ad revenue, and to cease offering software upgrades, according to court documents.

U.S. District Judge Kimba Wood could deliver a knockout blow to Lime Wire on Monday morning if she agrees to grant the music industry's request--filed with the court on Friday--for a permanent injunction against the controversial file-sharing service. The top record companies accused LimeWire violating copyright law in a complaint filed August 2006.

Bleak is the only way to describe Lime Wire's future after Wood granted summary judgment for the Recording Industry Association of America last month. The judge found Lime Group, parent of LimeWire software maker Lime Wire, and founder Mark Gorton liable of copyright infringement, a decision that could conceivably cost the companies and Gorton as much as a billion dollars. Already, Wood's ruling has apparently spooked at least one of Lime Wire's partners. CNET's Download.com, which had seen users download the software more than 150 million times in two years, stopped offering LimeWire sometime within the past two weeks.

"In light of the recent Lime Wire decision," said a CNET spokeswoman, "(CNET has) deactivated the (LimeWire) link on Download.com."

Gorton and Lime Group have defied the music industry--all the while pocketing millions of dollars from the service. Now, legal experts say Lime Wire has run out of moves. The only question at this point is not whether Wood will deliver the coup de grace, but when.

The RIAA wrote in its filing: "Stopping further distribution of the LimeWire Client...is only the first step toward curtailing the irreparable harm to Plaintiffs."

Wood may decide she needs more time to consider how to proceed or she may choose to issue a temporary restraining order while the case is decided. The labels drew up an order that they'd like to see Wood issue. Court records show that the RIAA wants Lime Wire to return to court in two weeks to:

•  prove that its distribution, sales, and advertising have stopped,

•  identify what's been done to stop the ongoing rampant infringement,

•  show exactly how those steps have stifled infringing activity, and provide "a report that identifies how many songs currently charting on Billboard Magazine's Top 200 list are still available for download."

Lime Wire managers will likely argue that granting such an injunction would be an injustice.

"We're preparing for all scenariosa Lime Wire representative said in a statement Sunday. "During this time, we're remaining focused on our future plans and dedicated to the development of a music service that benefits artists, music consumers and the industry."

This is most likely spin by the Lime Group. The chances that managers can convince the labels to enter into an agreement now are almost nonexistent. To do that, Gorton and Lime Group would have to send the RIAA a very large check, and that's just for starters, according to multiple music industry insiders.

The truth is Lime Wire has no negotiating power. The judge has handed all the cards to the RIAA.

Why would the record companies choose now to help Lime Wire turn itself into a legal service, when users may not embrace a legal version. For the labels, it might be less riskier to just try and squeeze damages out of Gorton and Lime Wire.

Regardless of what happens, the record companies said in their filing that they don't think they'll ever be justly compensated for the music pirated via LimeWire.

"Lime Wire has attempted to secrete assets into Mark Gorton-controlled 'family partnerships' with the intention of shielding those assets from a judgment award in this case," the RIAA wrote to Wood. "Nevertheless, even if (the RIAA) can unearth the assets Lime Wire has buried in an effort to protect them from judgment, Lime Wire has provided no evidence that it could satisfy a damages award of hundreds of millions of dollars."

To support it's claims that Lime Wire owes possibly billions of dollars in damages, the RIAA cited several previous copyright cases, including Universal Music Group v. MP3.com.

In 2000, the court found MP3.com (which has since been acquired by CBS, parent company of CNET) liable for willful copyright infringement. In that decision, the court awarded damages of $25,000 per infringing work for 2,100 songs belonging to only one of the top four record companies.

According to the RIAA's filing, the total judgment in that case was $53.4 million. The RIAA suggested Friday that all four of the record companies may be entitled to $150,000 per infringing work.

As for preventing LimeWire users from using the software to pirate more music, RIAA managers know they can't stop them. They know that if LimeWire is scuttled, many users will just jump to some other file-sharing tool. The hope is, however, that more LimeWire users will throw their hands up and choose to acquire songs from iTunes, Amazon, or some other legal music service.

Note to readers: CNET will be filing updates from Kimba Wood's courtroom on Monday.