8:15 p.m. | Updated
Ending a five-year court battle over music piracy, the major record companies on Thursday settled a copyright infringement lawsuit with LimeWire, a popular file-sharing network, for $105 million, the Recording Industry Association of America announced.
In the suit, filed in 2006, the labels and the R.I.A.A., their trade group, accused LimeWire of running a Web service “devoted essentially” to piracy by allowing users to upload and download songs without permission. LimeWire began in 2000, and the labels contend that Mark Gorton, 44, the site’s creator and a defendant in the case, continued to operate it even after the Supreme Court ruled in 2005 that a similar service, Grokster, could be held liable for infringement.
Although the $105 million settlement is far from the $1.4 billion the labels had sought as a maximum penalty, the companies are hoping that the case will act as a deterrent to further piracy since Mr. Gorton, a former Wall Street trader with millions in personal assets, will also face liability.
“We are pleased to have reached a large monetary settlement following the court’s finding that both LimeWire and its founder Mark Gorton personally liable for copyright infringement,” Mitch Bainwol, the R.I.A.A.’s chairman, said in a statement. “As the court heard during the last two weeks, LimeWire wreaked enormous damage on the music community, helping contribute to thousands of lost jobs and fewer opportunities for aspiring artists.”
Five years ago, Kazaa, another peer-to-peer file-sharing system, settled a suit with the major record companies for $115 million.
In the suit, the labels identified more than 9,000 recordings made since 1972 that had been traded on LimeWire without permission and sought damages of up to $150,000 for each song. Judge Kimba M. Wood of United States District Court in Manhattan ruled a year ago that LimeWire had violated copyright, and when the settlement was reached, the case was in trial to set damages.
In October, Judge Wood ordered that most of the service’s functions be disabled, and the company said it was shutting down on Dec. 31.
LimeWire had argued that illegal file-sharing was not solely responsible for the music industry’s woes, pointing to CD counterfeiting, bankruptcies of music retailers and other problems.
“The record companies know and have known that their problems started well before LimeWire,” Joseph Baio, LimeWire’s lawyer, told the jury in his opening statement at the damages trial.
On Wall Street, Mr. Gorton co-founded a hedge fund that in 2007 had a reported $117 million in assets.
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