In 2010, music-sharing website Limewire shut down amid allegations that it facilitated copyright infringement. Subsequently, a lawsuit brought by more than 30 music publishers was filed and settled under confidential terms. However, Limewire is still facing a lawsuit brought by 13 record companies, including Atlantic, Elektra, Interscope, Motown, Sony BMG, Virgin, and Warner Brothers, which is set for trial in May. (Music publishers and recording companies are able to pursue separate copyright-infringement claims based on the fact that they hold different rights -- the copyright in the composition for the former and the copyright in the actual sound recording for the latter.)

Limewire was designed to allow free file-sharing among its members, and the record labels have claimed more than $1 billion in damages as a result of those activities. In a summary judgment ruling last May, the company was found to have induced copyright infringement and unfair competition. However, discovery pertaining to the plaintiffs’ damages is ongoing, and Limewire is seeking to prove that the labels’ damages claims are inaccurate and exaggerated.

File-sharing sites have been heavily scrutinized for posting copyrighted content, and many have faced copyright-infringement claims. Owners of web sites whose users engage in file-sharing need to be aware of their potential for exposure to copyright-related claims and should take steps to prevent illegal distribution of copyrighted or pirated materials using their services.