LimeWire turns the tables

IDG News Service - Peer-to-peer file-sharing software developer LimeWire LLC has countersued the biggest record companies, charging them with anticompetitive behavior.

The suit, filed Monday in the U.S. District Court for the Southern District of New York, follows the closing of most of the popular file-sharing Web sites due to lawsuits initiated by record companies. It also comes on the heels of a suit filed by 13 record companies against LimeWire, accusing the developer of music piracy and demanding damages that could amount to $476 million.

LimeWire now charges the record companies with colluding to create a monopoly over the digital distribution of copyrighted music. The record companies "have engaged in these unfair business practices for the specific purpose of eliminating sources of decentralized peer-to-peer file sharing and acquiring a monopoly over digital distribution of commercially valuable copyrighted music and movie content," the lawsuit reads.

The alleged unfair business practices include collusion among the record companies to price their licensing rates such that independent music sellers can't afford to stay in business, LimeWire said.

LimeWire added that a since-changed policy at the record companies of requiring licensees to negotiate only with certain companies that represent a group of record labels resulted in artificially high licensing fees.

LimeWire also charges the record companies with trying to extend their monopoly by forcing music distributors to work only with their affiliated filtering system supplier. LimeWire says it developed a filtering application to prevent illegal downloading and encourage legal content purchasing. But the record companies refused to give the developer access to the metadata that uniquely identifies each song in order for the filtering system to work, LimeWire claims.

Instead, LimeWire alleges the record companies encouraged LimeWire to use their preferred supplier for a peer-to-peer filtering system, iMesh Inc. While LimeWire concedes that iMesh is not owned by the record companies, it alleges the supplier is controlled by the record companies. A top executive at iMesh is a former leader of the Recording Industry Association of America (RIAA) and iMesh is the only RIAA-sanctioned business of its kind in the U.S., according to LimeWire.

LimeWire is asking for a jury trial. The record companies named in the suit include Arista Records LLC, Atlantic Recording Corp., BMG Music, Capital Records Inc., Electra Entertainment Group Inc., Interscope Records, Laface Records LLC, Motown Record Company L.P., Priority Records LLC, Sony BMG Entertainment, UMG Recordings Inc., Virgin Records America Inc. and Warner Bros. Records Inc.

The suit follows some high-profile settlements by other leading peer-to-peer networks. In July, Kazaa agreed to pay at least $100 million to four record companies and an additional amount to motion picture companies to settle lawsuits. Earlier this month, eDonkey agreed to pay $30 million to settle similar suits.

EDonkey's founder last year predicted that all U.S. peer-to-peer companies would cease to exist because they wouldn't have the resources to defend themselves against the record companies after a Supreme Court ruling against Grokster Ltd. That ruling vaguely said that peer-to-peer software developers may be liable for illegal use of their software.