File-sharing company to pay $30 million for copyright infringement

LOS ANGELES (AP) ?” The operators of the BearShare online file-sharing service have agreed to pay $30 million to avoid potential copyright infringement lawsuits from the recording industry, according to court documents filed Thursday.

Free Peers Inc., which distributed the BearShare software, also agreed to close up shop and not operate any unlicensed online music services.

A federal judge must still give final approval to the terms of the settlement.

Free Peers was one of seven file-swapping software companies to receive letters from the recording industry last fall warning them to shut down or prepare to face lawsuits.

Since then, the operators behind i2Hub and WinMX shut down. The Grokster file-sharing service, which was sued by a coalition of Hollywood film studios and recording companies in 2001, agreed last fall to pay $50 million to settle that copyright infringement case.

The operators of four file-sharing services – Warez P2P, Limewire, eDonkey and Soulseek – have yet to shut down or settle.

The firms behind two other major file-sharing services, Kazaa and Morpheus, are defendants in a copyright infringement case pending in U.S. District Court in Los Angeles.

As part of the BearShare settlement, Free Peers agreed to sell their technology, rights to the BearShare domain name and data on users of the software to a subsidiary of iMesh Inc., which used to distribute file-swapping software until 2004.

The New York-based company reached a $4.1 million settlement with the recording industry and relaunched last year as a licensed music service.

The company said it had been in talks to acquire BearShare “for a while,” but declined to disclose financial terms of the deal or how it plans to use the BearShare assets.

Calls left after hours to the Miami-based attorney for Free Peers was not immediately returned Thursday.

In a statement, the Recording Industry Association of America, which represents the major recording companies, credited last year’s Supreme Court ruling in a file-swapping case for paving the way for the settlement.

The high court’s decision opened online file-sharing companies to potential liability, ruling that if they were found to intentionally induce or encourage the theft of copyrighted works, they could be held liable.