Arista Records LLC et al v. Lime Wire LLC et al

Filing 155

MEMORANDUM OF LAW in Opposition re: 101 MOTION for Summary Judgment (Tertiary)., 108 MOTION for Summary Judgment (Vicarious).. Document filed by Capitol Records, Inc., Elektra Entertainment Group, Inc., Interscope Records, Laface Records LLC, Motown Record Company, L.P., Arista Records LLC, Priority Records LLC, Sony BMG Music Entertainment, UMG Recordings, Inc., Virgin Records America, Inc., Warner Bros. Records Inc., Atlantic Recording Corporation, BMG Music. (Forrest, Katherine)

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REDACTED VERSION COMPLETE VERSION FILED UNDER SEAL UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ARISTA RECORDS LLC; ATLANTIC RECORDING CORPORATION; BMG MUSIC; CAPITOL RECORDS, INC.; ELEKTRA ENTERTAINMENT GROUP INC.; INTERSCOPE RECORDS; LAFACE RECORDS LLC; MOTOWN RECORD COMPANY, L.P.; PRIORITY RECORDS LLC; SONY BMG MUSIC ENTERTAINMENT; UMG RECORDINGS, INC.; VIRGIN RECORDS AMERICA, INC.; and WARNER BROS. RECORDS INC., Plaintiffs, v. LIME WIRE LLC; LIME GROUP LLC; MARK GORTON; GREG BILDSON; and M.J.G. LIME WIRE FAMILY LIMITED PARTNERSHIP, Defendants. 06 Civ. 5936 (GEL) ECF CASE PLAINTIFFS' MEMORANDUM IN OPPOSITION TO DEFENDANTS' MOTIONS FOR SUMMARY JUDGMENT Katherine B. Forrest Teena-Ann V. Sankoorikal Joanne M. Gentile CRAVATH, SWAINE & MOORE LLP 825 Eighth Avenue New York, NY 10019 (212) 474-1000 Attorneys for Plaintiffs Arista Records LLC; Atlantic Recording Corporation; BMG Music; Capitol Records LLC; Elektra Entertainment Group Inc.; Interscope Records; LaFace Records LLC; Motown Record Company, L.P.; Priority Records LLC; Sony BMG Music Entertainment;UMG Recordings, Inc.; Virgin Records America, Inc.; and Warner Bros. Records Inc. September 26, 2008 plaintiffs' 56.1 Statement (Pis. 7/18/08 SOF tf 97-102), which Lime Wire does not dispute. (See LW Mem. at 38.) As to showing infringing copying and distribution, plaintiffs have submitted evidence of such infringement in support of their motion. Plaintiffs have produced to defendants the hard drive with the downloaded sound recordings mentioned above. In addition, screenshots from LimeWire's website show that identical copies, with the identical hashes, of the 30 songs at issue at this stage in this litigation (Pis. 7/18/08 SOF, Exh. A) are available for download from multiple users via LimeWire. (Id. ffl 103,119-22; see also Pis. (Gorton) Add'l SOF U 711.) Since plaintiffs' motion was filed, plaintiffs have obtained even further evidence of direct infringement. Plaintiffs' sound recordings have again been downloaded using LimeWire.29 (Pis. (Gorton) Add'l SOF f 712.) Further, multiple LimeWire users have shared identical copies30 of plaintiffs' copyrighted sound recordings. (Pis. 7/18/08 SOF ffl[ 121-123; Pis. (Gorton) Add'l SOF 1712.) Moreover, plaintiffs have obtained judgments against 704, and settled claims against 3,722 LimeWire software users for infringement. Among the judgments against LimeWire users are judgments based upon infringement of at least eleven of plaintiffs' thirty sound recordings at issue at this stage of the litigation. (Pis. (Gorton) Add'l SOF \ 714-715; see also Pis. 7/18/08 SOF, Exh. A.) Once again, Bildson confirms what the evidence shows, REDACTED Distribution liability evidence is often based on sales, uploads or downloads during litigation. See e.g., Microsoft Corp. v. Rechanik, 249 F. App'x 476,478 (7th Cir. 2007); U2 Home Entertainment, Inc. v. Fu Shun Wang, 482 F. Supp. 2d 314,317-18 (E.D.N.Y. 2007); Interscope Records v. Leadbetter, No. C05-1149,2007 WL 1217705, at *4 (W.D. Wash. Apr. 23,2007). Files were identified as identical based on their 32 character SHA-1 hash (see Declaration of Thomas Sehested (Vol. X) f 5; see also Pis. 7/18/08 SOF f 122), since the probability of two files having the same SHA-1 hash (the hash used by LimeWire) through any means other than directly copying that file is 2A63 or one in 9.22337204 x 10A18. (See Sehested Decl. f 5 n.l.) 30 32 VL GORTON AND THE MJG LW FLP'S MOTION FOR SUMMARY JUDGMENT ON THE FRAUDULENT CONVEYANCE CLAIM FAILS Under N.Y. Debtor & Creditor Law 276 (McKinney 2008) ("Section 276"), a conveyance made with "actual intent... to hinder, delay or defraud either present or future creditors" is fraudulent Here, plaintiffs allege that Gorton redirected Lime Wire LLC distributions from defendant Lime Group to the MJG LW FLP, where plaintiffs, in the event of a judgment, could not reach them. (FACtlf 116-117.) REDACTED At the time that the amended complaint was filed, plaintiffs were relying on a sworn declaration from Vincent Falco, former Chief Executive Officer of Free Peers. Inc., a company that distributed the peer-to-peer software application BearShare. (Pis. 7/18/08 SOF f 41(c)). In that sworn declaration, Falco recounted that: "[s]hortly after [Falco] received [his] 'cease and desist5 letter [from the RIAA after Grokster was decided], [he] spoke with Mark Gorton. Mark mentioned to [him] that he had also received a 'cease and desist' letter. [Falco] told [Mark] that [he] was worried that if the record companies sued Bearshare, [he] might lose a lot of [his] own money. Gorton told [him] that he was not worried about being sued. He said that he had created a family limited partnership. He put his personal assets in to the family limited partnership so that the record companies could not get his money if they sued him and won. Gorton said that [Falco] should do the same, but [he] didn't." (Ex. 10 at15.)31 Several months later, Gorton himself was deposed and, under oath, confirmed Falco's testimony in relevant part. Gorton testified that he had been "highly concerned about being sued" and that "one of the benefits... [of the MJG LW FLP] was that it did help protect [his] assets in the event of a legal judgment against [him] personally." (Pis. 7/18/08 SOF IfJ 27-31.) Bildson corroborates 31 See also Falco Tr. 158:13 -159:20 (testifying to same conversation with Gorton). 34

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