LimeWire is in news for all the wrong reasons again. International independent record indie music right group, Merlin, has filed a $5 million lawsuit against the ex-P2P service LimeWire last week. Merlin claims LimeWire failed to live up to an agreement that it would reach a settlement with the major U.S. music labels. The suit was filed in the US District Court in Manhattan, and argues that LimeWire failed to offer it a deal of $105 million. It had issued a cease and desist order to LimeWire in early September 2008 but didn’t sue them that time, as LimeWire agreed to offer a deal to Merlin in the same line as it offered to Universal, Warner, EMI and Sony. The deal never materialized.

Merlin runs a copyright business for around 12,000 independent music companies in more than 25 countries.

“The Lime Entities did not offer to Merlin and its label members a settlement on the same material terms (adjusted to account for relative market share) as the settlement with the major labels. In fact, the Lime Entities did not make an offer to Merlin at all.” Merlin said in a statement.

Last year eight music publishing companies sued file-sharing site LimeWire for copyright infringement. They include Sony, Warner, EMI, Peermusic, MPL Music Publishing and The Richmond Organization and Bug music. Along the same lines, the Recording Industry Association of American (RIAA) also sued LimeWire for copyright infringement. LimeWire shut down their peer-to-peer file sharing services by October 2010. After their closure, P2P piracy drops overall from 16% in 2007 to 9% in 2010 in the US.

After the settlement with LimeWire, the RIAA is now targeting several others BitTorrent sites including Monova.org, Bitsnoop.com and Limetorrents.com. According to the RIAA, these sites are invading on the copyrights of many artists.

Attorney General Douglas F. Gansler last week revealed that LimeWire’s file sharing program has vulnerabilities and could expose private information, such as Social Security numbers, tax records, private family documents or family videos to hackers.

In a statement, LimeWire urges users to delete the software from their computer.  Under the settlement, LimeWire said they would create future file sharing products taking into consideration of privacy risking features, sensitive file extension checks and pre-sharing warning.