A company that created and distributed a peer-to-peer file-sharing program that was used to distribute unauthorized copies of copyrighted music files on a "massive scale" is secondarily liable for acts of direct infringement on the part of the users of the program, a district court ruled. The court found that inducement of infringement was established by evidence that the company knew of the users' infringement, purposefully marketed the software to infringers, profited by selling advertising space on its system and by selling an upgraded version of its program, and failed to implement technologies and measures aimed at mitigating infringement. The court found that foregoing evidence also established that the company had the right and ability to limit the use of its program for infringement and had failed to do so, and thus the company also was vicariously liable for the users' infringement. The court also ruled that the chief executive officer of the company was personally liable for infringement by the company because he directed and benefitted from the company's infringing activities, and had personal knowledge of the infringement. The court declined to grant summary judgment on the issue of contributory infringement, however, due to a lack of evidence on the issue of substantial non-infringing uses for the program.

Arista Records LLC v. Lime Group LLC, 2010 U.S. Dist. LEXIS 46638 (S.D.N.Y. May 11, 2010) Download PDF