Judge Throws Out LimeWire's 'Antitrust' Lawsuit Against Record Companies

LOS ANGELES – A federal judge on Monday threw out an antitrust lawsuit that the operator of the LimeWire online file-sharing service filed against a coalition of major record labels.

U.S. District Judge Gerard E. Lynch in New York ruled that Lime Group LLC failed to make its case that it has been harmed by the recording companies' business practices, and he granted the companies' motion to dismiss the claims.

Lynch also dismissed several claims brought under state laws "without prejudice," which gives New York-based Lime Group the option to pursue the claims in state court.

In his 45-page ruling, Lynch wrote that the vast majority of Lime Group's claims "fail to allege an adverse effect on competition market-wide."

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LimeWire allows computer users to make files on their PCs available to a multitude of other computer users all connected to each other, a method known as peer-to-peer file-sharing.

Lime Group had claimed the record labels sought to monopolize the online distribution of music and refused to license their works to the company in an effort to put it out of business.

The firm contended it sought to reach an agreement with the labels so that it could field a licensed music service, but the record labels refused to broker a deal, insisting it use a filtering system approved by the labels or reach an agreement with iMesh Inc., a rival file-sharing service that has been operating with the blessing of record labels since settling a copyright infringement case in 2004.

Lynch concluded Lime Group didn't show any facts to suggest the record companies' actions were "anything other than independent decision-making by each company to refrain from doing business" with Lime Wire.

Lime Group had also contended the recording companies had fixed prices for online music, but Lynch concluded that the firm failed to establish it had been harmed by any alleged price fixing.

Lynch also rejected claims by Lime Group that the record labels had engaged in unfair business practices, including hacking the firm's file-sharing network and claiming it promotes child pornography, on the grounds that the alleged actions were not anticompetitive.

The Recording Industry Association of America, the record labels' trade association, declined comment.

A phone call placed after hours to Lime Group was not immediately returned.

Lime Group's lawsuit was a counterclaim to a copyright infringement lawsuit brought last year against by record labels owned by the four major recording companies: Vivendi's Universal Music Group, Warner Music Group Corp., Britain's EMI Group PLC, and Sony BMG Music Entertainment, a joint venture of Sony Corp. and Bertelsmann AG.

That case, which is still pending, was the first piracy lawsuit brought against a distributor of file-sharing software after the U.S. Supreme Court ruled in 2005 that technology companies could be sued for copyright infringement on the grounds they encouraged customers to steal music and movies over the Internet.