A federal judge has thrown out a lawsuit filed by popular file sharing site Lime Wire against a group of major music labels.

The peer-to-peer (P2P) site had claimed that it had been harmed by the action of these record labels and filed an antitrust suit.

However, the Associated Press (AP) has reported that District Judge Gerard E Lynch ruled in New York on Monday (December 3rd) that Lime Wire's claims "fail to allege an adverse effect on competition market-wide".

The judge also dismissed claims brought under state laws "without prejudice". This means that the New York-based Lime Group could still pursue the case in state courts.

Lime Wire was set up in 2000 and has since developed "innovative, sophisticated applications of file sharing technology". The system uses the Gnutella network to allow users to share files quickly and efficiently.

The company claimed that record labels sought to monopolize the online distribution of music. It added that these firms refused to grant licenses for their work in a bid to put Lime Wire out of business.

However, Judge Lynch found that Lime Wire had not proved that the actions of the record labels were "anything other than independent decision-making by each company to refrain from doing business" with it, the AP reports.

In addition, the file sharing site completely failed to prove that it had been harmed by alleged price fixing on the part of the record labels.

Neither Lime Wire nor the Recording Industry Association of America - which represents the record labels - commented on the rulings.

Recently, Lime Wire was in the public eye after a man from Seattle was arrested when he allegedly used the file sharing site to commit identity theft.

It was claimed that Gregory Thomas Kopiloff searched for terms such as "federal tax return" and "credit report" on the P2P site and was able to download these from people who had not protected their files.

With this data, Mr Kopiloff identified credit-worthy victims and opened false accounts in their names. He used these accounts to fraudulently purchase at least $73,000 worth of goods - including things like iPods and laptop computers.

Lime Wire is also facing a copyright infringement lawsuit, brought last year by the four major recording companies, the AP reports.

Record labels owned by Universal, Warner, EMI and Sony BMG claim that the file sharing site facilitates the illegal download and distribution of music and movies.

The case is still pending, but it is thought to be the first piracy lawsuit brought against a distributor of file-sharing software after the Supreme Court ruled that these sorts of companies helped users engage in illegal activities and should face prosecution.

In related news, manufacturer Apple recently agreed to pay Burst.com $10 million in exchange for protection from current and future lawsuits.

Under the terms of the deal, the streaming media firm will allow the iPod manufacturer to use most of its patent portfolio. Much of this is used to compress and send data across a network.

The agreement ended a bitter dispute which began in 2004 when Burst claimed that some of its systems were used in the iPod and iTunes.