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Summary:

After a four year battle, the only issue remaining in the record labels’ lawsuit against the Limewire file-sharing network is the battle ove…

After a four year battle, the only issue remaining in the record labels’ lawsuit against the Limewire file-sharing network is the battle over damages. And it’s turning out to be a big fight, with dozens of documents filed in the last week alone. Now, Google (NSDQ: GOOG) and MySpace (NSDQ: NWS) have been sucked into this legal vortex, and those companies are complaining that Limewire is making ridiculous and burdensome document demands to try to justify its damages defense case.

Limewire wants to know all about the deals that the record labels have struck with online services in the past. That’s likely because Limewire wants to show that the actual deals done by the record companies don’t justify their outsize damage demands. The record labels have said in the past that their damage demands against Limewire could be hundreds of millions of dollars, or even top $1 billion. There’s no way Limewire ever made that kind of cash, but the labels are hoping to force founder Mark Gorton, who also owns and manages a hedge fund, to pay up out of his personal fortune.

The deals that labels have struck with online services like Google and MySpace are, without a doubt, far cheaper than the damages the labels are asking for; Limewire will use the value of the deals to argue they are more realistic valuations of what the record labels’ copyrighted songs are worth.

In order to prove its case for low damages, Limewire filed motions in December to force Google and MySpace to hand over documents regarding any copyright licenses they struck with the 13 plaintiffs, which include all four major record labels and several smaller labels. (That would likely include deals struck allowing YouTube to feature music videos, or MySpace to host many artists’ songs, for example.)

Now Google and MySpace have handed over copies of all their licenses and the prices they paid-but Limewire still wants more. The internet companies are peeved that Limewire actually wants to see all the letters and emails that even talked about those licenses. In a joint motion, Google and MySpace argue that request will result in an expensive hunt for documents that are either irrelevant or privileged communications with their lawyers. Similar objections were also filed by a smaller company, iMesh.

Today, Limewire filed responses to the internet companies’ objections, saying in essence that it really needs those documents-and it needs them before a March 14 deadline, at which point it has to have its list of exhibits ready for its damages trial. “Google’s stonewalling has gone on for months,” Limewire’s lawyers complain.

  1. “The record labels have said in the past that their damage demands against Limewire could be hundreds of millions of dollars, or even top $1 billion. There’s no way Limewire ever made that kind of cash”

    wait, what? Damages are not determined based on what the criminal made, but on how much the poor souls that were grifted lost. Tallying up the market value of all the songs ever pirated on Limewire would be not just a billion, but BILLIONS.

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  2. Thanks for your comment. But your suggestion that copyright damages are based on what the copyright holder lost isn’t quite right. Copyright damages are statutory damages, they can be $150,000 per work willfully infringed even if the copyright owner lost nothing and wasn’t hurt at all. Damages can be much higher than what the copyright holder lost (if they lost anything — and the amount of real damage done by piracy is actually hard to prove.)

    The point I was trying to make is that whatever the damage demands are, they’re far more than Limewire made. It’s just an explanation of why the labels are going after Mark Gorton and related entities.

    When it comes to calculating damages in this case, I think the bottom line is that the judge is going to have a lot of flexibility to decide.

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  3. Apples and oranges – Google and Myspace made deals for streaming media, not the distribution of discrete copies of songs. Their deals are irrelevant.

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