The RIAA says its member companies have reached a settlement in their copyright-infringement lawsuit against peer-to-peer network iMesh.

NEW YORK -- The RIAA says its member companies have reached a settlement in their copyright-infringement lawsuit against peer-to-peer network iMesh.

The trade group says iMesh has agreed to settle the claims for $4.1 million.

The RIAA filed the suit in September 2003 in U.S. District Court for the Southern District of New York. It claimed that Israel-based iMesh had facilitated in the copying of "millions, if not billions," of copyrighted recordings, adding that "massive copyright infringement is the raison d'etre of the iMesh system and service."

As part of the settlement, iMesh has agreed to shift to an online business that abides by U.S. copyright laws. The company says it will launch a new network next year that will provide consumers with "a unique way to find and share their favorite music and movies online in a Spyware-free, fun and safe environment while maintaining the community and technology aspects of peer-to-peer."

"Entering into this agreement with key players within the entertainment industry to put the lawsuit behind us will allow us the opportunity to migrate to a business model that will continue to provide users with the P2P experience that they have come to expect from iMesh," says Ofer Shabtai, COO of the digital company. "iMesh plans to transform the way consumers share media online, and we are excited about the prospect of working together with the entertainment industry as we usher in this new era of P2P file sharing."

RIAA chairman/CEO Mitch Bainwol says in a statement, "Peer-to-peer technologies hold real promise. This settlement with iMesh is an opportunity to demonstrate that promise in the legitimate marketplace. The constructive approach of iMesh stands in stark contrast to other file-sharing businesses who thumb their noses at Congress, continue to offload liability onto users, and dupe America's kids into breaking the law."

iMesh was represented in the litigation by Jeffrey Kimmel and Jeffrey Schreiber at New York's Meister Seelig and Fein LLP.