This morning, we reported on a lawsuit directed at music streaming site Grooveshark by Universal Music Group, one of the top record labels.

In the lawsuit, Universal claims that top executives at Grooveshark, including the CEO, have uploaded 100,000 tracks to its database illegally.

Grooveshark has fired back, saying Universal is mischaracterizing information it found in a comment on a blog post:

We have reviewed the Complaint that Universal Music Group filed last Friday against Grooveshark in U.S. District Court in Manhattan. Universal’s claims rest almost entirely on an anonymous, blatantly false internet blog comment and Universal’s gross mischaracterization of information that Grooveshark itself provided to Universal. 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 welcomes the opportunity to present the facts to the Court and has full confidence that it will prevail in the litigation.

Regards,
Marshall Custer
Grooveshark
General Counsel

The anonymous blog comment that Grooveshark is referring to is this one, found on the Digital Music News blog:

We are assigned a predetermined amount 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, we don’t just volunteer to ‘enhance’ the Grooveshark database.

Since the quote is anonymous, you have to come to your own conclusion on whether it comes from an inside source, perhaps a former or current Grooveshark employee, or was planted to make the service look bad.

Regardless of the he-said, she-said, if Universal can prove that the executive team uploaded tracks illegally to its own service, the music streaming will surely die for Grooveshark.

Universal contends that CEO Samuel Tarantin uploaded more than 1,791 copyrighted songs, SVP Paul Geller 3,453 songs and VP Benjamin Westermann-Clark 4,600 songs, respectively.

As Grooveshark’s General Counsel points out, the company is prepared to fight the court battle and leave the press out of it. Considering that this remark was made to the press, it’s not a good start for Grooveshark’s plan of defense. We’ll keep an eye on this story for you as it continues. I’ve reached out to the company but haven’t gotten a response as of publishing this piece.

UPDATE: Grooveshark responded to me with its initial statement.

According to TIME, music streaming service Grooveshark may have just met a bigger competitor than Spotify. That competitor would be Universal Music Group, who has sued Grooveshark over illegal uploads on the service. One hundred thousand of them, to be exact.

Universal is one of the big music labels, and has the ability to make or break the streaming market that includes companies like Rdio, MOG, Spotify, and Grooveshark.

The lawsuit by Universal requests maximum damages of up to $150,000 for each song uploaded to the service without its permission. The label even names Grooveshark CEO specifically as an uploader. Apparently the leader of the company put at least 1,791 Universal songs on Grooveshark without letting them know first.

While it’s impossible that Grooveshark could pay-out over $15 billion dollars if found guilty of each offense, it’s more likely that the service will be forced to shut down entirely. We’ve heard of artists removing music from streaming services, but this is the first time a major label has gone after one of them in such a big way over music it didn’t approve.

Universal is seeking a permanent injunction against Grooveshark, which could make even its latest re-design a waste of time. Grooveshark’s VP of external affairs, Paul Geller, said to CNet that the company has not seen the complaint yet, and won’t comment until that happens.

Crime doesn’t pay. Or stream.

This is the most joy forwarded emails have brought me in years.