Lime Wire Founder Gorton to Testify Next Week in Copyright-Damages Trial

Lime Wire LLC founder Mark Gorton is set to testify May 9 in a trial to determine how much he will have to pay the music recording industry for infringing copyrights.

Music labels owned by Warner Music Group Corp. (WMG), Sony Corp. (6758) Vivendi SA (VIV) and Citigroup Inc. (C) are seeking hundreds of millions of dollars from Gorton after U.S. District Judge Kimba Wood ruled last May that Lime Wire induced the infringement of thousands of songs through its peer-to-peer file-sharing software on the Internet. The court ordered Lime Wire to shut its music service last year.

“The harm that Lime Wire has caused is truly staggering,” Glenn Pomerantz, a lawyer representing 13 labels, told a jury of eight women and one man in his opening statement on May 3. “Mark Gorton used other people’s property to make money for himself.”

Pomerantz told the jury the record industry’s revenue fell 52 percent from 2000, the year Lime Wire was founded, to 2010. Gorton’s lawyers will try to show that other factors were responsible for the drop besides peer-to-peer, or P2P, file- sharing.

“The record companies know and have known that their problems started well before Lime Wire,” Joseph Baio, a lawyer representing Lime Wire and Gorton, said in his opening statement to the jury.’

Past Comments

Baio cited the record companies’ own past comments that he said showed factors other than file-sharing were more to blame for the plunge in revenue. These included counterfeit and copied CDs, the economic recession, bankruptcies of music wholesalers and retailers, the maturation of the CD market, competition from other forms of entertainment such as video games, and the industry’s own inability to exploit the new technologies.

The record labels haven’t made public how much they’re seeking from Gorton. The companies will try to get statutory damages under federal copyright law for 9,561 recordings released since 1972, according to court papers. If they seek maximum statutory damages of $150,000 for each recording, that could result in a $1.4 billion award. Other damages on pre-1972 recordings will also be sought, the companies said in court filings.

“We will ask you to consider whether Mark Gorton’s state of mind justifies the high end of the range,” Pomerantz said to the jurors.

Baio said the labels deserved far less. Gorton made only about $6 million from the songs the record companies have listed as infringed, the lawyer said. Lime Wire, which provided free software for file sharing, made money by selling a faster, premium version of the program.

The case is Arista Records LLC v. Lime Wire LLC, 06-05936, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Don Jeffrey in New York at djeffrey1@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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