By Samantha Jervey*

When Walt Disney decided to personally license the image of Mickey Mouse in 1929, he had no idea that he would start a licensing revolution.[fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][1]
disney_thumb.jpgThis deliberate act made by Walt is what ultimately laid the foundation for his company, thus bringing to life what is now known today as Disney Consumer Products. Disney Consumer Products is one of many business divisions that belong to The Walt Disney Company.
[2] In essence, they are in the business of “deliver[ing] innovative and engaging product experiences across thousands of categories from toys and apparel to books and fine art.”[3] That being so, character licensing plays a huge role in Disney’s business dealings, which thanks to Kay Kamen, is an area that the company is well versed in. Kay Kamen joined the Disney team in 1932 when he was appointed to take charge of Disney Licensing.[4] It was then that he set the standard for character licensing within the entertainment industry thereby making it possible for Disney to grow into the world’s largest licensor today.[5] Out of their vast set of properties, Disney owes much of their licensing success to the Disney Princess brand. The brand is a promising niche to marketers, in addition to having mass appeal to consumers, making it an attractive product to licensees all around. Furthermore, analytical licensing charts and merchandise sales trends suggest that the Disney Princess brand will forever be timeless in the eyes of little girls and women alike.

As a large company with such a wide range of licensable properties, Disney is responsible for keeping track of their character database in an orderly and functional fashion. They have done so by dividing their licensing unit into five
dinsey-princesses_thumb.jpg strategic brand priorities, one of which is Disney Princess and Disney Fairies. The Disney Princess brand first appeared as a cohesive collection under Andy Mooney when he was appointed as chairman of DCP in 2000.
[6] In its entirety, the Disney Princess royal court accounts for 11 princess characters that embody a rich legacy and a unique set of inner qualities and values.[7] The elite group includes Ariel, Aurora, Belle, Cinderella, Jasmine, Merida, Mulan, Pocahontas, Rapunzel, Snow White and Tiana, each of whom serves as a role model to young women across the globe.[8] Families today love the traits that these women inspire among their daughters, “such as being spirited, graceful, smart, kind, compassionate, courageous, heroic, adventurous, passionate, confident, and brave.”[9] That being said, the brand is clearly marketed towards a target age group, although it has grown into something bigger than itself. Mary Beech, vice president and general manager of Global Studio Franchise Development, states how Disney is “hitting a key developmental pattern for little girls, ages 2 to 5.”[10] They are doing so through intricate storytelling and top-level character appeal, which in return, is stealing the hearts of little girls.[11] Furthermore, Disney’s understanding of who they are as a brand, along with marketing strategy, has helped to lay a foundation for their licensing success.

Seeing how the brand did not premiere as a cohesive collection until 2000, it did not take long for Disney Princess to conquer the licensing industry. Disney consistently ranks as Number 1 on most lists of global licensing, consistently generating worldwide revenues in the high 26-29 billion dollar range. As a reaffirmation of how well the company had been doing, in 2012, The Licensing Letter released their second annual list of “best-selling licensed entertainment merchandise” based on 2011 retail sales in North America.[12] The list accounted for many classic brands, including Star Wars and Sesame Street, with Disney Princess charting strong at number one.[13] In North American retail sales, the Princess brand made $1.6 billion, while reaching an
Princess_thumb.jpgimpressive $3 billion in global sales.
[14] These numbers were based on the sales of physical consumer goods alone and included “t-shirts, stationary, toys and electronics.”[15] Furthermore, it is important to note that this list did not take into account merchandise manufactured by the property owner, but solely licensed products “that outside manufacturers pay an average royalty of 8.7% of the wholesale cost to produce.”[16] Finally, the numbers also exclude licensing revenue from other powerful Disney brands such as Pooh ($1.09 Billion), Cars ($1.05 Billion), Toy Story ($685 Million), Disney Fairies ($435 Million), nor Disney’s subsidiary, Marvel Comics, which is reported separately and generally garners around 5 billion in worldwide sales, all of which also consistently rank in the top ten.

Disney’s success in licensing relies heavily on the demand of consumers, which is so great that manufacturers have no choice but to license their products in order to create supply. Ira Mayer, publisher and executive editor of the Licensing Letter, believes the reason that the Disney Princess is in such demand is that “there are surprisingly few girl properties like it [sic].”[17] In fact, product licensing is a fraction of Disney’s overall revenue, but that profit is due to its strong brand loyalty.[18] Because Disney’s properties, specifically those licensed by Disney Princess, are in such high demand, the company can afford to license its characters at “an above-average royalty of 15% or higher.”[19] This gives Disney Princess a rare advantage in the entertainment industry due to unrivaled product demand.

In addition to having high consumer value, the Disney Princess brand is more successful than most due to its adaptability in the market place. In truth, Disney Princess could probably license their properties in any market and still be successful, although the biggest licensing opportunities currently lie in the field of merchandise. Out of their assortment of licensed products, the brand encompasses, though is not limited to “toys, apparel, accessories, home décor, Kellydress_thumb.jpg consumer electronics, school supplies, and personal care.”[20] In addition to those lucrative products, they have found a niche within the wedding industry, such as with licensee Kirstie Kelly, who recently created a bridal collection inspired by the Disney Princess brand.[21] In fact, the company derives most of its product ideas from three core categories: dolls, role play, and books.[22] In Beech’s opinion, these three things are what have inspired growth into new markets, such as “live events and products for adults.”[23] Having this type of awareness and understanding of what consumers want has definitely helped Disney Princess stand out among their peers. They know exactly who their buyers are, along with what they are looking for in a product, and that is “style, sparkle and storytelling.”[24] In short, Disney Princess is not limited by age or expectation in the licensing world.

It is important to note that when you are a company as big as Disney, it is vital that you keep a watchful eye on the use of your properties to ensure their reputation. This is a lesson Disney learned the hard way in 2010 when they went to court to file a copyright and trademark infringement claim. In Disney Enterprises, Inc. v. Away Discount, Disney caught their Defendant in the act of making and selling unlicensed merchandise.[25] Though the relevant facts in the instant case were brief, the Plaintiff, Disney, did indeed “own the exclusive rights to a number of trademarks and copyrights” that the Defendants were found violating.[26] The properties that were infringed included Disney’s Disney Princess, Winnie the Pooh, as well as a number of other big licensing names for Disney.[27] What this illustrates is that Disney keeps a watchful eye on suspicious behavior involving their copyrights and trademarks. As one of the biggest licensors in the world, it is a necessity to do so. While recovering monies lost is always important, it more important to maintain the reputable brand name of your characters, which is something that Disney is avidly passionate about. After all, it would be a shame for an infringer to forfeit the magic and persona of the Disney Princess brand that many girls have grown to love worldwide.

In conclusion, Disney’s Disney Princess brand is well deserving of the title as the entertainment industry’s top merchandise licensor. They have poured much time and energy into establishing themselves as a reputable name and it is crazy to think that it all started with Walt licensing the image of Mickey Mouse himself. Since Andy Mooney’s decision to group the ladies under a brand umbrella, Disney Princess has reached success far beyond anyone’s imagination. There are no limits when it comes to licensing opportunities with these girls, which is what makes them such a rare and hot commodity. With every t-shirt, bedspread, doll, or wedding dress, Disney Princess leaves a magical imprint on the hearts of their consumers. That being so, come 10 to 20 years from now, the beautiful stories and lessons left behind by these princesses will live on far beyond their inception.

Sam_thumb.jpg

 *Samantha Jervey is a student at Belmont University majoring in Entertainment Industry Studies with a minor in dance.   This article was written as an assignment in Mr. Shrum’s Entertainment Law & Licensing class.  Her passions include music, writing, learning, and helping others. Having attended high school at Governor’s School for the Arts in Norfolk, Virginia, Samantha is dedicated to promoting the value of arts in education. She spends most of her time in the Nashville community looking for new ways to support and grow her knowledge of the entertainment industry.

 

 

 

 

 


 

[1] Disney Consumer Products, “About Us.” Accessed March 14, 2014. https://www.disneyconsumerproducts.com/Home/display.jsp?contentId=dcp_home_ourbusinesses_company_overview_us

[2] Ibid.

[3] Ibid.

[4] Ibid.

[5] Ibid.

[6] Disney Princess Power. (2009). License! Global, 12(4), 40.

[7] Disney Consumer Products, “About Us.” Accessed March 14, 2014. https://www.disneyconsumerproducts.com/Home/display.jsp?contentId=dcp_home_ourbusinesses_company_overview_us

[8] Ibid.

[9] Ibid.

[10] Disney Princess Power. (2009). License! Global, 12(4), 40.

[11] Ibid.

[12] Jenna Goudreau, Forbes, last modified September 17, 2012, http://www.forbes.com.

[13] Jenna Goudreau, Forbes, last modified September 17, 2012, http://www.forbes.com.

[14] Ibid.

[15] Ibid.

[16] Ibid.

[17] Ibid.

[18] Ibid.

[19] Ibid.

[20] Disney Princess Power. (2009). License! Global, 12(4), 40.

[21] Disney Princess Power. (2009). License! Global, 12(4), 40.

[22] Ibid.

[23] Ibid.

[24] Ibid.

[25] 2010 U.S. Dist. LEXIS 86119. LexisNexis Academic. Web. Date Accessed: 2014/03/23.

[26] Ibid.

[27] Ibid.

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NBC Universal recently hired a company called Envisional to study counterfeiting activity over the Internet. The results of this study – despite the fact that it is industry funded – are literally astonishing: 24% of all global Internet traffic involves digital theft!  Stated another way, one in every four people surfing the Internet are stealing intellectual property, i.e., illegally downloading either copyrighted or trademarked materials.  According to the International Federation of the Phonographic Industry, 95% of the music downloaded from the Internet is downloaded illegally!  Imagine how our society would react if one out of every four people in retail malls were carrying out stolen merchandise on a daily basis, or if 95% of the product leaving the mall was stolen.  It would be chaos.

Ring of FrodoNow consider whether these people who so quickly download a song or a movie on the Internet without paying for it would also walk up to an artist selling their painting in the park and steal one of their painting.  I firmly believe the answer to that question is a resounding no!  But why? What is different about the world wide web, i.e. cyberspace, that gives these consumers the feeling that they are entitled to download music and movies through mechanisms like BitTorrent without compensating those who created such product?  What are these people thinking?

I think the answer can be found in the writings of Plato.  In the second book of his Republic, Plato’s student, Glaucon, poses the illustration of the “Ring of Gyges.”  In the story, Gyges is a shepherd who finds a magical ring in a chasm created by a lightning storm.  The ring gives him a cloak of invisibility.  Using his newfound power, Gyges seduces the Queen of Lydia, murders the King, and takes the throne, gaining power, wealth and fame.  In the Republic, Glaucon argues that given a similar opportunity, any person, whether or not they were previously just or unjust, would use the power to commit as many crimes as necessary to get what they want [fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][Book II, 359d].    Glaucon was responding to Socrates’ refutation of arguments put forth by Thrasymachus in Book I of the Repbulic, i.e., that “justice is nothing but the advantage of the stronger”  [Book I, 338c].

I believe Glaucon’s experiment in thought informs us as to why someone who would not normally steal a tangible object in the physical world is nonetheless more than willing to download music or movies, intangible objects, on the Internet for free: because the fear of being punished or getting caught is eliminated in the evanescent world of Cyberspace.  The Internet, like Gyge’s ring, confers upon its users a seeming cloak of indivisibility as it were.  As one astute commentator surmised in response to an interview with Alice in Chain’s lead singer, Sean Kinney, “The real reason people steal music is that they CAN and very easily.”  That this is a truth is evident from the plethora of “how to” guides on the Internet, teaching people “How not to get caught.” There you have it in a nutshell.   All of the commentary about how the record industry has been thieves and how the RIAA unjustly goes after the defenseless people, these are mere justifications for actions people otherwise know in their hearts are wrong.

It’s important to read Plato’s response to his student to understand fully, as Plato did not agree with Glaucon.  Plato’s argument in the remaining portion of the Republic is that the just man would not be tempted by this cloak of invisibility to commit crimes.  Rather, the just man understands that crime itself makes a person unhappy and that he is better off to remain just.   I frequently discuss this issue with my college students at Belmont University when teaching a course on Copyright Law.  One of my students made the following observation, which confirms Plato’s conclusion.  She said:

I do not follow the rules because I am scared of the RIAA busting me for illegal downloading. I follow the rules because I have respect for the people who wrote and recorded the songs, and even more, because I want to work in the music industry.

Another relevant opinion is offered in the excellent blog article found on arbiteronline entitled Illegal downloading: The real cost of ‘free’ music.” In that article, a student at Boise state, Ammon Roberts, is quoted as saying:

“I don’t do it because I don’t feel it’s right.  If I were making the music, I’d be upset if people were downloading it for free.”

For these two students, following the rules is not about whether or not they’ll be caught, it’s about doing the right thing.  It’s about honoring, i.e. compensating, the people who created the music. 03-20-invisible_full_600 This illustrates Plato’s point precisely:  a just person understands that even with a cloak of invisibility, doing the right thing makes a person happy or, in the words of Roberts, makes the person “feel right.”

The Internet is also very much the Land of Oz.  In addition to this cloak of invisibility endowed on us by the Internet, it also deceives us with illusions of anonymity – not so much that the user is anonymous, as that’s merely another form of invisibility – but in the sense that it’s difficult to know who’s behind the curtain.   As Trent Reznor said in an interview, “there is a perception that you don’t pay for music when your hear it . . . on MySpace.”  Because of its sheer vastness and its mysteriousness, Cyberspace gives people false perceptions that their actions on the Internet do not affect real people.   This, in turn, creates an illusion that “resistance is futile.”  Everyone is doing it, so I can too.  In other words, Cyberspace alters our reality in that it makes the real people behind the music an amorphous, anonymous entity.  The result is that it’s much easier to steal from an amorphous, anonymous entity – the man behind the curtain – than it is from a struggling songwriter, particularly when all your friends are doing it.

I truly believe that most of the people who are illegally downloading music from the Internet have no idea who they are affecting or how widespread the effect is.  Most of these people would not even think about walking up on stage after a singer/songwriter in a nightclub takes a break and stealing his guitar, but that very same person doesn’t think twice of taking that same singer/songwriter’s song from the Internet.  They wouldn’t steal the filmmaker’s camera, but downloading the movie doesn’t phase their consciousness.  In fact, many who contribute to the  dialog would argue that these two thefts are not analogous.  But one analysis conducted by the Institute for Policy Innovation states otherwise.  The report indicated that music piracy causes $12.5 billion of economic losses every year.  It further concluded that 71,060 U.S. jobs are lost, with a total loss of $2.7 billion in workers’ earnings.  Such reports abound throughout the industry, yet many of the people guilty of illegal download continue to view these reports as industry-driven and, therefore, skewed.  Take this comment by blogger Michael Arrington as an example:

Eventually the reality of the Internet will force the laws to change, too. One way or another the music labels will eventually surrender, and recorded music will be free.  Until it is, I refuse to feel guilty for downloading and sharing music. Every time I listen to a song, or share it with a friend, I’m doing the labels a favor. One that eventually I should be paid for. Until that day comes, don’t even think about trying to tell me that I’m doing something ethically wrong when it’s considered quite legal, with the labels’ blessing, in China.

resistanceBut what this illusion of anonymity, and such misguided opinions, miss is the fact that very real people – not amorphous masses – are being affected.  And the effect is devastating.  I have clients who are songwriters who are no longer creating art because they are forced to take odd jobs to support their families.  The performance royalties they used to receive from ASCAP, BMI or SESAC are down by half or more from a few years ago.  Their mechanical royalty checks are virtually non-existent.  They simply cannot afford to create simply for the sake of creation.  And now, working sometimes two jobs, they don’t have the time to create.  What will become of the art of songwriting if Mr. Arrington has his way and all recorded music is free?  I believe we will not have the quality of music in this country that we have enjoyed throughout the last millennium.  In this instance, I do not believe that resistance is futile.

Now, getting back to Plato and the Ring of Gyges, in answer to Glaucon, Plato would say that the root of all trouble is unlimited desire.   How true is that in this world of Cyberspace, in this world of rampant illegal downloading.  The wheels really fell off the wagon when the RIAA sued Diamond Multimedia, bringing the MP3 into society’s field of view.  Then, Napster exploded and almost everyone found that almost every song they ever loved was available for free.  It’s as if they were Harrison Ford and discovered the treasure room in an unknown, ancient tomb: everything your heart desires is within your grasp.  It’s yours for the taking.  With its cloak of invisibility and its illusion of anonymity, what the Internet has done, in short, is to return the power – i.e., the control – back to the people.  Everyone is now a creater, a publisher, and distributor.  No one needs the conglomerates anymore – the people have the power.  But, as Lord Acton said, beware:  “Power tends to corrupt, and absolute power corrupts absolutely.”  With power, therefore, comes responsibility.   Unfortunately for the music industry, the power is currently being abused and will, ultimately, mean the end of the recording industry as it existed through the 20th century unless the creators regain that power.

So what does this mean for those of us who have chosen to make our living in the world of creation?  Does it mean the end of our industry?  Does it mean an end to copyright law as it exists?  If we examine the origins of copyright – i.e., the protection of an original idea expressed in a tangible format – as passed down to us from our forefathers, we find a concept on which we can continue to build.  In the now famous Radiohead experiment in which Reznor and crew allowed consumers to pay what and only if they wanted to, 18% of the consumers chose to do so!  That to me, is an encouraging statistic, and one that confirms a believe in the viability of creating art.  At least one in five people, even with the cloak of anonymity provided by the Ring of Gyges of this era, i.e., Cyberspace, chose to pay the creators for their creation.  Take that Glaucon!  Take that Arrington!  What does that say for our society?  It says that there are people who still chose to do the right thing, even when the tide of conformity rises above their heads.

The bottom line is that it really doesn’t matter what laws are passed by society, there will always be a certain percentage of people who will chose to steal, take and plunder, whether it be because they are more powerful or because they are cloaked with invisibility or shielded by anonymity.  But – and here is the important thing – there will also always be a segment of society that recognizes the idea that Thomas Hobbes first advanced hundreds of years ago, i.e., the idea of “giving to every man his own.”    If a man bakes a loaf of bread, is it not his right to trade that to the artist for whose painting he wishes to barter?  This idea was later incorporated by our Forefathers into Article I, Section 8, Clause 8 of the U.S. Constitution, which gives Congress the authority “[to] promote the progress of science and useful arts, by securing for limited times to Authors and Inventors the exclusive rights to their respective Writings and Discoveries.”  Without this Constitutional right, a creator has no hope of protecting his or her property against plunder.  And as long as a segment of society believes this proposition to be beneficial to society as a whole, it will hopefully continue to motivate creators to create, and so profit from their creations, despite the efforts of those who choose to destroy it under a cloak of invisibility and unjustly take for themselves the kingdom of Lydia.

Quotations from Republic are taken from the W.H.D. Rouse translation, Great Dialogues of Plato, Mentor Books, 1956, a quoted in this fine article on the topic.

 


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My belated Father’s Day gift this year was a brand, spanking new iPhone 4 32mb!  So, now that I’ve been using it for about two weeks, I decided to share my thoughts and insights, particularly since I’ve previously blogged about my love/hate relationship with Apple and the predecessor phones.  I am a staunch Windows 7 user, and have my doubts about the seriousness of anyone who uses the Apple operating system!  Just kidding really.

Without a doubt, the first thing you notice about the new iPhone is the superior clarity of tiphone4mainbigfront he 960×640 screen. It’s brighter, fonts are clearer, pictures more vibrant and, overall, it’s simply much more impressive.  Don’t’ take my word for it, hold one up next to your old iPhone and you’ll see the difference instantly.  The 480×320 screen on the older phones appear almost muddy by comparison.  Apple doubled the pixels per inch, and it shows.  They also increased the contract ratio to 800:1.  In the end, the resolution upgrade alone is worth the price of admission!

The next design element I noticed was the shape.  The new iPhone 4 is very distinct from its predecessors in its very UN-zen-like feel, stepping toward a more “slate” type approach.  That can be either a good or bad choice, depending upon your perspective, and how much you liked the original Zen-like design.  I personally really liked the “Zen Stone” feel of the original, with it’s rounded back and corners.  My previous model was the white 3g (oh, sorry Apple, I probably shouldn’t mention the “white” right now huh?).  That said, the new shape and feel have grown on me and I actually like the new aesthetics, although it did take some adjustments in my holding style.  The new model is much starker, with metal edges, creating an almost industrial feel (the very same edges that give the iPhone 4 it’s trademark reception problems).  The phone is more slender than its predecessors as well, which gives the misleading appearance of a smaller screen.  It’s not – actually they are identical in size at 89 mm.  The edges also give the appearance that the 4 is thicker than its ancestory.  Again, it’s not.  It’s actually shaved thinner – 2 mm to be precise!

Putting aside the incredible screen, the next real beauty of this new model is the software revisions.  Many of my faithful readers will recall my constant berating of Apple about the lack of multi-tasking, something the very first Palm Pilots could pull off with ease.  So, how many years and version upgrades have we been through?  Having poked at the giant enough, I will state unequivocally that Apple’s implementation of this mission critical component is very well done.  Two clicks on the home button and up pops a menu at the bottom showing all running applications and allowing you to move between them.  One can, for example, read a book and take notes, or time a runner and jot down the time.  I know, these seem like simple, ordinary tasks, but try that on an older iPhone!  One feature of multitasking that would be an improvement in future version, however, is the ability to shutdown all applications without having to individually close them.  After several hours of use, the multiple applications begin to pile up and exhaust valuable resources.  But, that caveat expressed, I am SO happy to have multi-tasking on my iPhone.  I was beginning to miss those days with my Palm.

Another one of my expressly desired features that did NOT appear on this new model is the week view in the calendar.  It might sound like a petty request, but in the business world, many people rely on the week view for advance planning and scheduling.  And please, don’t tell me about the “List” view – a more useless apparatus I have never witnessed – it is simply not a replacement for the week view!  Ironically, Apple HAS implemented the weekview feature on its enigmatic iPad.  I was so put out when I found this.  “So, why can’t I have it too?” I asked The “Genius” at the store.  She tells me it is planned for a future version, but I don’t know if I trust The Genius.  Apple’s sin is further amplified by the fact that because of its proprietary philosophy it will not allow third party software designers to access the code to their precious default programs, so no one can even design a work around!  Pocket Informant has a beautiful weekview in its application, but you are relegated to using Google Calendar, not the Apple default.  So, this complicates issues with Exchange servers and is not a good work around.  Ok, so enough of my bitching, let’s get back to the many things I LIKE about the 4!

Let’s talk folders!  Another sadly missing item was rectified by the new operating system by the addition of the foldering system.  Now, instead of 10 or so unorganized pages containing a hodge podge of programs, I have one main screen with my most utilized programs, and a page and one half of folders!  An organizational system in a Personal Information Manager, imagine that!  It’s truly great.

There are, of course, many other wonder additions on the iPhone 4 – the 5 mp camera and front facing camera, video conferencing, gyroscope, etc. —  but these are my initial thoughts.

Over the next few months, I will be sharing some of my favorite applications on the iPhone with you, but suffice it to say that the new iPhone is working out quite nicely.  I highly recommend an upgrade if you’re considering it and/or are waivering.  There is a a good comparison at Wikipedia.

The U. S. District Court for the Southern District of New York ruled against LimeWire and its parent company, Lime Group, finding them liable for inducement of copyright infringement based on the use of their service by subscribers.

U.S. District Judge Kimba Wood issued the 59-page decision Wednesday, siding with the 13 record companies that sued Lime Wire LLC and founder and Chairman Mark Gorton through the RIAA claiming copyright infringement and unfair competition.lime_220x147

In finding the company liable, Wood opined that LimeWire had optimized its application to “ensure that users can download digital recordings, the majority of which are protected by copyright,” and that the company actively “assists users in committing infringement.”  Wood also found that the defendants knew their technology was being used to download copyrighted tunes and took no “meaningful steps” to prevent the infringement. In addition, Lime Wire marketed its software to people “predisposed to committing infringement” and assisted those people, the judge ruled.

Major labels, as represented by the RIAA, were predictably thrilled with the outcome.  “This definitive ruling is an extraordinary victory for the entire creative community.  The court made clear that LimeWire was liable for inducing widespread copyright theft,” RIAA chairman and CEO Mitch Bainwol relayed.

Lime Wire Chief Executive George Searle issued a statement saying the company “strongly opposed the court’s recent decision.”  The statement continued:

“Lime Wire 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 said.

Searle did not say whether Limewire would appeal the ruling.

The Recording Industry Association of America proclaimed the decision was “an important milestone” in the battle against online copyright infringement, because Gorton was found personally liable, in addition to the company of which mitch-bainwol-riaa he was the chairman.  Personal liability against a corporate director is rare.

“The court has sent a clear signal to those who think they can devise and profit from a piracy scheme that will escape accountability,” Mitch Bainwol, chairman and chief executive of the RIAA, said in a statement.

LimeWire, launched in 2000, is one of the largest remaining commercial peer-to-peer services left on the Web. The company claims to have more than 50 million monthly users.  The company has managed to defend itself against major label legal action for years.

In issuing her opinion, Wood relied heavily on the 2005 Grokster ruling, in which the Supreme Court said that a file-sharing service was liable when customers were induced to use it for swapping songs and movies illegally.  The test established by the Supreme Court in MGM v. Grokster for provider liability is whether the company actively induced users to commit infringing activities.  While LimeWire argued that it did not, Judge Wood noted that the company actively  “markets LimeWire to users predisposed to committing infringement.”

The record companies that sued Lime Wire included Arista, Atlantic, BMG Music, Capital, Elektra, Interscope, LaFace, Motown, Priority, Sony BMG, UMG, Virgin and Warner Brothers.