Limewire Mired in Monopolizing Morass of Music Merchants.

In a well-drafted, but issue driven counterclaim, the owners of LimeWire software threw a battery of antitrust accusations against the major distributors of popular music.  After being sued for copyright infringement, LimeWire countered that the music business is a conspiratorial cartel that acts “with a vengeance,” in Arista Records, et al v. Lime Wire, 06CV5936 (S.D.N.Y.).

The defense of the infringement case suggests that LimeWire developed its software using annotated copies of the Napster and Grokster decisions.  It’s antitrust counterclaim may have been structured around annotations to those and other RIAA cases.

LimeWire avers it lacks the file “directory” resident on its servers, which was a resident evil that snared Napster.  The counterclaim notes a clickwrap agreement by which new users “agree not to use the application to infringe the copyrights of others.”  That hopes to distance LimeWire from the software promoted by Grokster and other P2P systems.  It acknowledges that after clicking, “those persons make use of LimeWire in the manner that they alone choose.”  Sort of like a choice teens make after clicking the ‘I am 18’ on other web sites. 

The LimeWire counterclaim condenses most of the history, and some sound bites from, many prior efforts to ‘take on’ the music industry in court.  Still, it seems short on the details of the antitrust violations.  Usually, a civil antitrust complaint should read like a criminal indictment, identifying the combination, the contract, detailing the conspiracy, the object, the overt acts, etc.  This one indicts more so with criticism of the ‘old business’ model, and with information and belief.  The first problem may be providing an initial disclosure that supports the litany of legal theories – if it gets that far.

The alleged badness – to “attack [new] technology with a vengeance,” “prevent the exploitation of new technology,” “plan to dominate the market for online recorded music distribution,” use “anticompetitive [&] unduly restrictive licensing,” “pool their copyrights,” foment “price-fixing among horizontal competitors,” “concerted refusal to deal,” “boycott,” “collusively employing anti-piracy methods,” – all of these run head-on into the music companies’ exclusive right to distribute, which 17 U.S.C. §106(3) guarantees to all copyright owners.

Copyright cases so often ask who’s copy, what copy, how copied, but so many cases today hinge on the right of distribution.  §106(3) enables all manner of vertical, horizontal, exclusive, non-exclusive, exclusionary, etc., distribution arrangements.  The distribution right goes far, and beyond that point, the law of copyright yields in respect to the law of contracts and licenses. 

While I enjoyed reading the LimeWire counterclaim, and find intellectual interest in its challenge to the music business, I think it faces a tough pull to surmount the copyright owners §106(3) rights.  Copyright law is read textually from the Act, and applied equitably to be fair to the copyright owner.  That leaves little in the scale of justice for a defendant accused of facilitating large-scale copyright infringement.  As I’ve been told, your legal arguments are great, but if it’s you against the whole world, I’d bet that the world wins.