Indie Labels Lose Patience and Sue LimeWire For Millions

An organization which claims to protect the rights of Indie labels across 25 different countries is squeezing what is left of LimeWire for millions of dollars. Merlin BV, which represents more than 12,000 indie labels worldwide, is suing LimeWire and owner Mark Gorton after the company failed to pay compensation following its May 2011 out-of-court settlement with the RIAA.

In the middle of their May jury trial, the company behind the defunct LimeWire client and the RIAA settled their long-running copyright dispute out of court.

Limewire agreed to pay $105 million to compensate the major music labels for damages suffered but allegedly agreed to settle with some Indie labels too. To date the labels say they haven’t received a penny, a situation they intend to remedy through the courts.

The labels are being represented by Netherlands-based Merlin BV, an umbrella organization which protects the rights of its members in 25 countries, representing up to 30% of global music sales.

On July 13th, Merlin filed a “Breach of Contract” lawsuit at the New York Southern District Court against Lime Wire LLC, Lime Group LLC and company owner Mark Gorton.

According to the complaint, in 2008 Merlin agreed not to sue LimeWire, opting to let the RIAA case against the file-sharing service run its course instead. In return, LimeWire is said to have agreed that in the event it settled with the RIAA (it did, for $105m) then Merlin would get a comparable cash payment, adjusted to account for its smaller market share.

But no payment has been forthcoming and having run out of patience Merlin wants its share of the LimeWire spoils, a minimum of $5 million. Merlin is being represented by lawfirm Pryor Cashman.

Separately, last week Attorney General Douglas F. Gansler announced that his Consumer Protection Division had resolved an investigation into the LimeWire software following allegations that some of its users had inadvertently shared personal documents online.

LimeWire accepted responsibility and under the terms of its settlement posted a notice on its homepage warning users of the software that sensitive information may have leaked and that LimeWire should be uninstalled.

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