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LimeWire to Pay Record Companies $105 Million Settlement

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By Cynthia Hsu, Esq. on May 17, 2011 9:45 AM

The RIAA has scored another win against internet music piracy, this time against P2P file sharing software maker LimeWire. The LimeWire settlement totaled $105 million, but was far less than the trillions of dollars of damages that the RIAA attorneys had previously sought.

The settlement deal was made after a court had ordered an injunction against LimeWire last October. LimeWire was supposed to shut down its P2P file sharing service and wait for a jury to deliberate on the total amount of damages it owed to the RIAA.

The RIAA attorneys had originally sought $150,000 for each download of 11,000 songs in the RIAA lawsuit, reports Computerworld Magazine. However, a federal judge ruled that these damages would be too high.

The original damages would have amounted to "more money than the entire music industry has made since Edison's invention of the phonograph in 1877," said Judge Wood in the U.S. District Court, Southern District of New York.

However, despite the absurdity of the original damages claim, Judge Wood ruled in favor of the RIAA in issuing the injunction, balancing three elements: (1) irreparable injury, (2) whether or not there is an adequate remedy at law, and (3) balancing hardships. Injunctions are meant to be a substitute for monetary damages when monetary damages would be infeasible, or would not compensate for the harm done.

Wood found that the plaintiffs would suffer irreparable harm since "LimeWire will most likely be liable for more damages than it will ever be able to pay." Wood also found that the plaintiffs had no adequate remedy of law, meaning that no amount of money could actually compensate the plaintiffs for the damages they are suffering. Lastly, the judge found that the balance of hardships was in the plaintiff's favor.

Whether or not the settlement actually has an effect on music piracy is up in the air. "I don't think it has slowed piracy down an iota," said Eric Johnson, professor of operations management at Dartmouth College's Tuck School of business, to Computerworld Magazine.

The RIAA has prevailed against other P2P file sharing software makers such as Napster, Grokster and Kazaa. However, many users are turning to other alternatives - that are still alive and healthy - such as Bittorrent sites. In fact, an open source tool called Frostwire, is still up and running. It is based on the same open source tool that LimeWire was based on, reports Computerworld Magazine.

For now, the RIAA is celebrating the LimeWire settlement. But, the RIAA has a tough battle ahead if they plan on eliminating all sources of illegal music downloads.

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