RIAA Blasts ‘Meritless’ Lime Wire Counterclaims

Lime Wire counterclaims mention “overlapping [music] markets,” often interchanging “online” and “digital,” and allege anticompetitive behavior in a subset of those, with all markets poorly defined, RIAA said. “It is unclear whether the alleged markets… include all paid music downloads, music streaming, subscription services, the free downloads allegedly offered by [Lime Wire] or some combination of the foregoing” -- making its Sherman Act claims inherently invalid, according to RIAA. The company doesn’t allege members’ share of any of those markets, or name label “affiliates” it claims to compete against.

Lime Wire makes concessions -- that labels mostly have divested themselves of joint ventures that verged on anticompetitive behavior and that they have licensed music to unaffiliated entities, the filing said. The company doesn’t allege it’s ever sought licenses for online distribution, or that it asked for the labels’ “hashes” to uniquely identify digital files, a prerequisite for its hash filter’s antipiracy function, RIAA said.

To show antitrust standing, Lime Wire must prove it was harmed -- a glaring lapse in its counterclaims, RIAA said. Lime Wire, for example, didn’t say it was “denied alternate filtering technology used by others,” that RIAA licensed hashes to others, or that Lime Wire couldn’t get hashes elsewhere. Saying labels “sought to harm” the company is “not enough,” the filing said. Joint ventures Pressplay and MusicNet similarly caused no harm to Lime Wire, which didn’t identify itself as a “retailer,” “consumer,” “composer” or “performer” allegedly harmed by the joint ventures, RIAA said. Lime Wire itself denies it distributes content through its P2P client, and doesn’t charge for its MagnetMix download portal, so how can it be a competitor of the labels’ unnamed “affiliates,” RIAA asked.

Most of Lime Wire’s allegations are “entirely conclusory,” alleging no facts on harm to competition, RIAA said. Where the company explicitly says it was harmed by labels’ behavior, it’s referring to alleged activity directed toward Lime Wire’s “infringing activity” -- looking at its users’ files and disrupting users’ P2P activity -- which “could not constitute harm to competition,” the filing said. Even using technology to prevent “unauthorized” use of copyrighted works falls short of harm to market competition.

The charge of “conspiracy” among labels to restrain trade similarly lacks factual backing -- such as detailing when the “conspiracy” began, the “co-conspirators” and “affiliates” of the labels and how the conspiracy was “formed and enforced,” such as communication among labels, the filing said. Alleged refusal to do business with Lime Wire could have resulted from “independent decisionmaking by each copyright holder,” seeing the company as “a notorious vehicle for massive copyright infringement,” RIAA said.

Lime Wire’s “shared monopoly” theory “has been soundly and repeatedly rejected” in the 2nd U.S. Appeals Court, N.Y., which has jurisdiction over the N.Y. district court, as well as in the 3rd Circuit (Philadelphia), 9th (San Francisco) and 11th (Atlanta), the filing said. Neither does the company allege any “dangerous probability of monopolization,” as required for a Sherman Act claim, RIAA said. -- Greg Piper

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A letter from AOL, affirming only that a file-sharing defendant owned an Internet access account, has no bearing on a U.S. Dist. Court, Brooklyn, judge’s decision to let a case proceed. Counsel for Rae Schwartz in Elektra v. Schwartz filed a motion asking the court to reconsider its Dec. 4 order, which said a letter from AOL to RIAA -- confirming that Schwartz’s account was used to download and distribute songs -- provided “good faith basis” for the infringement suit. The AOL letter said nothing of file-sharing, only that Schwartz owned the account, so the RIAA’s “factually incorrect representation” undermines the order’s basis, defense attorney Ray Beckerman said. RIAA implicitly agreed in an opposition filing, but said the file-sharing claim was backed by its 3rd-party investigator, MediaSentry, which traced the IP address later confirmed as Schwartz’s to distribution of about 500 files. Judge David Trager said the defense “seems to have ignored” the order’s allowing the defense to file a motion for summary judgment, though it would be “premature.”