Intellectual Property Attorney Lynn Alstadt Quoted on P2P Liability in Electronic Commerce & Law Report

Lynn J. Alstadt, a shareholder in the Intellectual Property Section of Buchanan Ingersoll & Rooney's Pittsburgh office, was quoted in an article published in the May 19, 2010, edition of the Electronic Commerce & Law Report — a BNA publication. The article, titled "LimeWire Held Liable for Inducing Its Users' Many Copyright Infringements," reported on the case of Arista Records LLC v. Lime Group LLC, which determined that "[p]eer-to-peer file sharing program LimeWire is secondarily liable for its users' copyright infringement of thousands of protected songs."

As explained in the article, "The court granted the copyright owner plaintiffs' summary judgment motion against LimeWire on the issue of inducement of copyright infringement. LimeWire's knowledge of and involvement in its users' infringing downloads, its promotion and encouragement of infringing activity, and its failure to adopt technological measures to prevent infringement all supported the court's conclusion that LimeWire should be held responsible for its users many acts of infringement via the peer-to-peer file-sharing service. The court also granted summary judgment on common law copyright infringement and unfair competition."

The article went on to compare the ruling to a similar case, Metro-Goldwyn-Mayer Studios Inc. v. Grokster. "The United States Supreme Court established inducement to infringe copyright as an independent cause of action in Metro-Goldwyn-Mayer Studios Inc. v. Grokster. … The Grokster court ruled that a file-sharing program similar in many ways to LimeWire had in fact induced the copyright violations of its users by distributing a device — in this case, a P2P application — with the "object of promoting its use to infringe copyright, as shown by a clear expression or other affirmative steps taken to foster infringement," explained the article.

Also noted in the article was the fact that "LimeWire's corporate director, Mark Gorton, and its primary investor, a Gorton-owned company called Lime Group, could also be held individually liable for LimeWire's infringement."

Alstadt weighed in on the decision saying the overall outcome of the case was not surprising, in light of Grokster and the factual similarities between that case and the one at issue here. Neither was the court's extension of liability to Gorton surprising, Alstadt said. "Because LimeWire was essentially a one man operation it was not unusual that the court pierced the corporate veil and found the CEO of the company personally liable," Alstadt told BNA.

But the court's extension of liability also to LimeWire's primary investor was a bit more unusual, Alstadt said, and he wondered if the court's reasoning here may influence P2P liability cases moving forward.

"The fact that there was common ownership of LimeWire and Lime Group and there was testimony that the Lime Group was set up to shield income generated by the LimeWire P2P file sharing program are the factors that appeared to be the motivation for extending liability," Alstadt said. "It was somewhat unusual for the court to extend liability to LimeWire's majority investor," Alstadt said. "It will be interesting to see if other courts will pierce the corporate veil in other cases to extend liability to investors."