The opinion is a blow to Lime Wire, one of the few remaining peer-to-peer file-sharing software developers that stayed in business following the Supreme Court ruling against Grokster in 2005.
In her decision, Judge Kimba Wood of the U.S. District Court for the Southern District of New York said it was clear that Lime Wire intended to encourage copyright infringement. The company was aware of substantial infringement by users, it worked to attract infringing users, it depended on infringing users for the success of its business and it failed to mitigate infringement, she said.
She also said that Mark Gorton, chairman and former CEO of Lime Wire, induced users to infringe copyright materials.
The opinion was issued following requests for summary judgments on various issues by Lime Wire, as well as by the 13 record companies that brought the case initially.
Judge Wood's opinion did not discuss possible penalties against Lime Wire or Gorton. The court plans a status conference about the case for June 1.
"By finding Lime Wire's CEO personally liable, in addition to his company, the court has sent a clear signal to those who think they can devise and profit from a piracy scheme that will escape accountability," the Recording Industry Association of America said in a statement.
Lime Wire did not respond to a request for comment.
Lime Wire was one of the few P-to-P providers that continued to operate after the Supreme Court issued a vague ruling against Grokster, one of the largest file-sharing operations, that said P-to-P software developers may be liable for illegal use of their software. Following that ruling, other file-sharing software providers either went out of business or changed their business strategies. Some ended up settling with the record labels. Kazaa settled for US$100 million and eDonkey at least $30 million.