Amanda Carpenter is a JD Candidate at Osgoode Hall Law School.

Granting summary judgment in favour of the music industry, a US federal court has found peer-to-peer file-sharing service LimeWire liable for copyright infringement. This judgment is yet another in a long line of cases that have established that distributing and maintaining a file-sharing service online where users can download music protected by copyright without authorization constitutes copyright infringement. Perhaps the Napster or Grokster rulings come to mind.

To provide some help with terminology, copyright infringement is either direct or secondary. The direct infringer is the direct actor who is the primary party that violates one of the copyright owner’s exclusive statutory rights.  Secondary liability comes in three forms: contributory infringement, vicarious liability and inducement. Contributory infringement is the act of knowingly contributing to the direct infringement of another. More specifically, it occurs when a person with knowledge or reason to know of the infringing activity causes or materially contributes to the conduct of the direct infringer. It is important to note that for a successful contributory infringement claim there must first be a direct infringement by another person. Vicarious infringement occurs when a company receives direct financial benefit from the infringement by another party and had the right and ability to supervise the infringement activity. Courts have held that vicarious liability requires neither knowledge nor participation in the direct infringement. The theory of copyright infringement inducement holds that one who distributes a device with the goal of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.

In this judgement it was held that direct infringement existed since the evidence established that Lime Wire users infringed the Plaintiffs’ copyrights by sharing unauthorized digital copies of the recordings through Lime Wire.  Next it was found that the evidence established that Lime Wire intentionally encouraged direct infringement by Lime Wire users due to Lime Wire's attempts to attract infringing users, its awareness of substantial infringement by users, its efforts to enable and assist users to commit infringement, its dependence on infringing use for the success of its business, and its failure to mitigate infringing activities. The music industry therefore was entitled to summary judgment on their claim against Lime Wire of inducement of copyright infringement.

The court did not make a summary judgment regarding contributory infringement since, pursuant to the Sony-Betamax rule, it could not determine whether Lime Wire was capable of substantial non-infringing uses, such as for the download of electronic copies of books that are in the public domain or authorized for online distribution. Since there was substantial evidence that Lime Wire had the right and ability to limit the use of its product for infringing purposes and that it had a financial interest in the infringing activity, the Court denied Lime Wire's motion for summary judgment as to the Plaintiffs' claim of vicarious infringement.

This judgment is important since it is estimated that a large percentage of those who download music from a peer-to-peer file-sharing service do so through Lime Wire, and thus many users will find themselves no longer able to download music for free online. The long term effects remain to be seen. The music industry claims that in the long run that not only it will benefit through an increase in profits, but also that users will benefit since those who rely on the proceeds of music sales, such as artists, will as a result be paid sufficiently to encourage them to continue their respective careers.