LimeWire was found liable of copyright infringement Tuesday in a decision that threatens to financially devastate the New York company behind the file sharing application.

In a 4-year-old case brought by The Recording Industry Association of America, U.S. District Judge Kimba M. Wood ruled that LimeWire's users commit a "substantial amount of copyright infringement" (.pdf) and that the Lime Group, the company behind the application, "has not taken meaningful steps to mitigate infringement."

The RIAA was seeking up to $150,000 per copyright violation, though the final damages in the lawsuit have not yet been determined. The lawsuit claimed at least 93 percent of LimeWire's file sharing traffic was unauthorized copyright material.

Limewire claims "50 million unique monthly users." Its website says its "software is downloaded hundreds of thousands of times every day and boasts millions of active users at any given moment."

It was the first case targeting a file sharing software maker following the 2005 Grokster decision, in which the U.S. Supreme Court cleared the way for lawsuits targeting companies that induced or encouraged file sharing piracy.

Before the RIAA filed suit, the record label's trade group urged LimeWire to license its material or shut down.

"LimeWire is one of the largest remaining commercial peer-to-peer services," Mitch Bainwol, the RIAA's chairman, said in a statement. "Unlike other P2P services that negotiated licenses, imposed filters or otherwise chose to discontinue their illegal conduct following the Supreme Court's decision in the Grokster case, LimeWire instead thumbed its nose at the law and creators."

George Searle, LimeWire's chief executive, said in a statement that the company "remains committed to developing innovative products and services for the end-user and to working with the entire music industry, including the major labels, to achieve this mission."

Searle was not immediately available for comment.

Judge Wood scheduled a June 1 hearing to determine how to proceed.

Photo: Gubatron/Flickr

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