The copyright infringement suit brought by approximately the entire recording industry against Lime Wire is about to come to an end. A trial on the issue of DAMAGES is scheduled to begin on May 2. (Early in the case, the Court disposed of the question of LIABILITY by granting a summary judgment that Lime Wire was guilty of “secondary copyright infringement.”) In preparation for this momentous anti-climax, the Court recently issued three pre-trial decisions.
First, the Court denied the motion of Mr. Mark Gorton, Lime Wire’s founder, to preclude plaintiffs from introducing evidence, at trial, concerning his net worth, sources of income and financial condition. It seems that early in this matter, Mr. Gorton, apparently reading the handwriting on the wall, transferred more than $17 million of his assets to six family limited partnerships. The record companies assert that this was a “fraudulent transfer” and that these funds should be available to satisfy the damages award which they expect to soon receive. The Court gave this one to the plaintiffs, adding that they could also introduce evidence as to the finances of the family members. This last should be the subject of some interesting conversation at the next family gathering.
Next, the Court resolved a dispute between the parties as to whether its findings in the aforementioned summary judgment decision established, as a matter of law, that Defendants’ conduct was “willful.” It was.
Finally, just to put the frosting on the cake, the Court granted a summary judgment that Lime Wire was also guilty of “direct infringement” of the plaintiffs’ copyrights. Lime Wire, in an effort to capture this year’s chutzpah award, argued that, “because the only downloads that Plaintiffs have established were performed by their own investigators, Plaintiffs have not met their burden to show ‘unauthorized copying’ of Plaintiffs’ works.” (emphasis in the original)
The court, unmoved, noted that, “[t]his argument has been uniformly rejected by courts. Courts have consistently relied upon evidence of downloads by a plaintiff’s investigator to establish both unauthorized copying and distribution of a plaintiff’s work.”
As a consolation prize to Lime Wire, the Court indicated that, “[w]hile Plaintiffs’ evidence is sufficient to establish liability for infringement … Plaintiffs retain the burden to show broader downloading by Lime Wire’s users in order to … satisfy the various factors for calculating damages …” Final score in the Pretrial Bowl: Labels – 3, Lime Wire – zip.
It seems virtually certain that the upcoming damages award will far exceed the defendant’s assets. Still, it might set a new world’s record for uncollected receivables.