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Lime Wire, squeezed, files countersuit

Peer-to-peer service provider fights back against record companies allegedly seeking to shut it down.

One of the last remaining peer-to-peer havens is fighting to stay alive.

Lime Wire, which was hit with a lawsuit in August by Warner Bros. Records, Virgin Records America, Sony BMG Music Entertainment and other music labels, filed a counterclaim in U.S. District Court in New York on Monday. The software company alleges in court filings that the record companies have engaged in unfair business practices to scare away its users.

Lime Wire develops peer-to-peer technology, which is often used by individuals to create copies of music and distribute it over the Internet. More than a dozen record companies have joined in the lawsuit against Lime Wire, alleging that its technology provides a means for copyright infringement.

In its countersuit, Lime Wire states that the record labels launched their own digital-distribution Web sites and alleges that the labels joined forces to be the sole recipients of any financial benefit.

"Their goal was simple: to destroy any online music distribution service they did not own or control, or force such services to do business with them on exclusive and/or other anticompetitive terms," the countersuit says.

Lime Wire's suit also argues that the record companies combined and conspired to restrain trading in the market for online distribution of recorded music and, as a result, violated sections of the Sherman Act and the Clayton Act.

The Recording Industry Association of America (RIAA), which has lead the legal battle against peer-to-peer companies on behalf of the music labels, maintains that Lime Wire's business is based on copyright infringement.

"While most commercial illicit P2P networks have ultimately abided by the Supreme Court's unanimous decision, Lime Wire is a conspicuous holdout," an RIAA representative said. "A kitchen sink of frivolous charges doesn't change the law, the Supreme Court's ruling or the fact that Lime Wire has built a business based on theft and continues to profit from it."