In a quite astonishing lawsuit, Universal Music could be demanding hundreds of millions in damages from Grooveshark's music streaming service. Claims in the lawsuit lay waste to Grooveshark's insistence that they enjoy 'safe harbor' under the DMCA, stating categorically that bosses and other workers at the company, from the CEO down, personally uploaded many thousands of infringing tracks to the service.

On October 13th, Digital Music News (DMN) published an article titled “King Crimson Can’t Get Their Music Off of Grooveshark” which documented a heated email exchange between King Crimson guitarist Robert Fripp and supporters, and Grooveshark.

The conclusion drawn by Fripp was that getting unauthorized music taken down from Grooveshark is next to impossible, and that even when music is taken down, it simply reappears. Grooveshark SVP Paul Geller eventually acknowledged mistakes had been made, but also criticized Fripp’s attempts at “doctoring” details of discussions between the band and the company concerning the takedowns.

But on the same day, October 17th, a comment claiming to come from a Grooveshark employee appeared on DMN with alleged details of how the company operates.

“We are assigned a predetermined ammount [sic] of weekly uploads to the system and get a small extra bonus if we manage to go above that (not easy). The assignments are assumed as direct orders from the top to the bottom, we don’t just volunteer to ‘enhance’ the Grooveshark database,” the posting began.

“All search results are monitored and when something is tagged as ‘not available’, it get’s [sic] queued up to our lists for upload. You have to visualize the database in two general sections: ‘known’ stuff and ‘undiscovered/indie/underground’. The ‘known’ stuff is taken care internally by uploads. Only for the ‘undiscovered’ stuff are the users involved as explained in some posts above,” it added.

If the previous paragraphs weren’t enough, then came the killer.

“Practically speaking, there is not much need for users to upload a major label album since we already take care of this on a daily basis.”

According to a CNET report, UMG have taken a keen interest in the anonymous post, going as far as to cite it in a freshly-filed lawsuit that contains claims which if proven true, have the potential to destroy Grooveshark at a stroke.

“[The business records of Escape Media Group, Grooveshark’s parent company] establish unequivocally that the sound recordings illegally copied by Escape’s executives and employees include thousands of well known sound recordings owned by UMG,” write Universal’s lawyers in the complaint filed in the U.S. District Court in Manhattan.

Of course, if Grooveshark’s employees have indeed been uploading music to the service, the company’s DMCA ‘safe harbor’ protection is dead in the water. But anonymous Internet postings aside, just how sure are UMG that Grooveshark staff really did upload infringing material? Apparently, very sure indeed.

Last year, Universal filed a complaint in New York County Court against Escape Media Group containing claims that Grooveshark was providing “free access to UMG’s pre-1972 recordings.” As part of that process Universal was forced to hand over a database containing details on music uploads to the Grooveshark system. Items in there clearly piqued the interest of UMG.

The new complaint filed yesterday states that Grooveshark CEO Samuel Tarantino personally uploaded at least 1,791 copyrighted songs to the Grooveshark system, Senior Vice President Paul Geller 3,453, and Vice President Benjamin Westermann-Clark more than 4,600 illicit tracks.

Although it is unclear how many of these are covered by UMG copyrights, in total the label says that more than 100,000 tracks were illegally uploaded by Grooveshark employees. At $150,000 per infringement, by anyone’s calculations that is a staggering amount of money.

This has been a bad week for Grooveshark. Earlier, anti-piracy group RettighedsAlliancen, who are better known by their former name Antipiratgruppen, revealed they had sent an urgent demand to the Danish “bailiff court” (known locally as Fogedretten) to have the country’s ISPs block the site.