Universal Music sues Grooveshark, seeks over $17 billion in damages

First it was Napster, then Limewire, then torrents and websites like The Pirate Bay.

Now the music industry is targeting Grooveshark, one of the most popular music streaming websites on the Internet, for copyright infringement.

Universal Music Group, the biggest of the record label groups, has filed a lawsuit against Grooveshark claiming it owes them over $17 billion.

The amount is based on an estimated number of “bulk upload” infringements where Grooveshark employees were encouraged to send large numbers of music files (some of them allegedly pirated) to the Grooveshark servers, with bonuses being given to the most productive uploaders. Universal is claiming $150,000 in damages per transaction, according to Digital Music News.

Digital Music News said the lawsuit stemmed from an anonymous blog post by a purported Grooveshark employee saying, ”We are assigned a predetermined number 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.”

Grooveshark has been plagued with legal problems lately, mostly due to content being user-uploaded rather than officially submitted by record labels and bands.

Earlier this year, Grooveshark drew the ire of prog rock band King Crimson and its frontman Robert Fripp for hosting their material without authorization. Grooveshark replied it had a license agreement with EMI and, by default, with King Crimson, which was technically incorrect.

In actuality, EMI is the former licence holder of King Crimson and Fripp’s music via subsidiary Virgin. Its licence expired in 2003 and did not include digital rights. EMI was the only major label to have given Grooveshark any kind of clearance, but now that EMI has been swallowed under the Universal/Vivendi umbrella, another storm is brewing.

Grooveshark, which launched in 2007 by advertising itself as a “radio” service, has claimed it is protected under the U.S. Digital Millennium Copyright Act in the past and says the latest accusation is “blatantly false.”

“While Universal has deliberately engaged the media prior to serving a copy of the Complaint on Grooveshark, Grooveshark intends to fight this battle before the Court, not in the press,” Grooveshark general counsel Marshall Custer told Digital Music News in a statement. ”Grooveshark welcomes the opportunity to present the facts to the Court and has full confidence that it will prevail in the litigation.”