The company says it will comply with a court injunction to turn off “the searching, downloading, uploading, file trading and/or file distribution functionality, and/or all functionality” of its software, which remains one of the most popular methods of finding free–and illegal–music on the Web.

That means the company will stop offering downloads of its software, which you could still get on its site as of late Tuesday afternoon. And it also means that the company will disable the software that’s already been downloaded, according to people familiar with LimeWire’s plans.

I don’t know if LimeWire intends to cripple its client via a “kill switch” or some other method, but as of 20 minutes ago it hadn’t gone into effect–I was able to locate and download a version of the Clash’s “I Fought the Law” within a minute of booting up LimeWire’s software. (UPDATE for the technically minded, via a person familiar with the company’s plans: “They’ve taken down the relay severs on the Gnutella network which the Limewire client uses to figure out which other p2p clients have what info on them.” This should render existing clients effectively useless as anything other than a media player within the next nine hours, I’m told.)

LimeWire‘s client has been downloaded “hundreds of millions” of times, and is still responsible for the “vast majority” of usage on the Gnutella trading network, says Eric Garland, who runs the BigChampagne media tracking service. The company’s moves won’t affect other open source clients that run on the same Gnutella network, like FrostWire.

Meanwhile, LimeWire’s parent company, Lime Group, is prepping a new music service that it says will be legal, and should be due out in a month.

But the utility of that service depends on the participation of the big music labels, and at least for now the labels are still trying to extract a big piece of Lime Group’s hide. Court hearings in the damages phase of Lime Group’s hire are scheduled to resume in January. And this statement by industry trade group RIAA makes it clear that the labels aren’t feeling conciliatory:

“For the better part of the last decade, Limewire and Gorton have violated the law. The court has now signed an injunction that will start to unwind the massive piracy machine that Limewire and Gorton used to enrich themselves immensely. In January, the court will conduct a trial to determine the appropriate level of damages necessary to compensate the record companies for the billions and billions of illegal downloads that occurred through the Limewire system.”

Today’s announcement comes after Lime and the labels spent weeks trying to negotiate an out-of-court settlement; Federal District Court judge Kimba Wood actually handed down the injunction in August.

Here’s LimeWire CEO George Searle’s description of events, via  blog post:

As of today, we are required to stop distribution and support of LimeWire’s P2P file-sharing service as a result of a court-ordered injunction.

Naturally, we’re disappointed with this turn of events. We are extremely proud of our pioneering history and have, for years, worked hard to bridge the gap between technology and content rights holders. However, at this time, we have no option but to cease further distribution and support of our software.

It’s a sad occasion for our team, and for you–the hundreds of millions of people who have used LimeWire to discover new things.

While we have enabled open sharing and discovery for the past decade, LimeWire is mostly the product of the people who used it. You made LimeWire. Thank you for letting us being part of that. Your support and enthusiasm has fueled everything that we do.

During this challenging time, we are excited about the future. The injunction applies only to the LimeWire product. Our company remains open for business.

We remain deeply committed to working with the music industry and making the act of loving music more fulfilling for everyone – including artists, songwriters, publishers, labels, and of course music fans.Our team of technologists and music enthusiasts are creating a completely new music service that puts you back at the center of your digital music experience.

We’ll be sharing more details about our new service and look forward to bringing it to you in the future.

And here’s a LimeWire PR rep’s description of what’s going on:

As a result of a court ordered injunction, we are required to disable “the searching, downloading, uploading, file trading and/or file distribution functionality, and/or all functionality” of LimeWire’s P2P file-sharing software.

Please note LimeWire’s official statement on this legal development is as follows:

“While this is not our ideal path, we hope to work with the music industry in moving forward.  We look forward to embracing necessary changes and collaborating with the entire music industry in the future.”  – LimeWire Spokesperson.

An important point of clarification, LimeWire is not “shutting down”, in specific regarding our software, we are compelled to use our best efforts cease support and distribution of the file-sharing software, along with increased filtering.  And, that is what we are doing.

At the time, Napster had some 20 million users worldwide and was essentially the de-facto file-sharing standard. Had the RIAA labels agreed to the alliance, they might have turned peer-to-peer distribution into a new and powerful business model, one with low distribution and marketing costs and a fast developing user base. But they didn’t. They chose another route.

Big mistake. Along came Gnutella. And increased broadband penetration and cheaper storage. Along came Kazaa. And then came BitTorrent. And, well, look at the industry now.

Given such history, it’s difficult to look at the recording industry’s plan to have a monthly fee added to consumers’ internet-service bills and not shake your head in wonderment.

Portfolio.com reports that Edgar Bronfman Jr.’s Warner Music Group (TWX) has indeed hired veteran industry consultant Jim Griffin (no relation to Peter, right?) to quarterback a plan under which consumers pay an Internet-access surcharge of $5 a month for the collective right to freely share music. Those fees would be pooled and divvied up among artists and their labels.

“Ideally, music will feel free,” says Griffin. “Even if you pay a flat fee for it, at the moment you use it there are no financial considerations. It’s already been paid for.”

Ah- charge everyone for all music. So it is Monetization Without Representation. OK. But what gives the music industry the right to tax all broadband users because it suspects some of them might illegally share its content? And if the music industry deserves that right, then doesn’t the film industry deserve it as well? And the publishing industry? And any other industry that might benefit from such a tax?

As David Barrett, engineering manager for peer-to-peer networks at Web content-delivery giant Akamai (AKAM), notes Griffin’s plan is problematic. And desperate.

Said Barrett:, “It’s too late to charge people for what they’re already getting for free. This is just taxation of a basic, universal service that already exists, for the benefit a distant power that actively harasses the people being taxed without offering them any meaningful representation.”

At the time, Napster had some 20 million users worldwide and was essentially the de-facto file-sharing standard. Had the RIAA labels agreed to the alliance, they might have turned peer-to-peer distribution into a new and powerful business model, one with low distribution and marketing costs and a fast developing user base. But they didn’t. They chose another route.

Big mistake. Along came Gnutella. And increased broadband penetration and cheaper storage. Along came Kazaa. And then came BitTorrent. And, well, look at the industry now.

Given such history, it’s difficult to look at the recording industry’s plan to have a monthly fee added to consumers’ internet-service bills and not shake your head in wonderment.

Portfolio.com reports that Edgar Bronfman Jr.’s Warner Music Group (TWX) has indeed hired veteran industry consultant Jim Griffin (no relation to Peter, right?) to quarterback a plan under which consumers pay an Internet-access surcharge of $5 a month for the collective right to freely share music. Those fees would be pooled and divvied up among artists and their labels.

“Ideally, music will feel free,” says Griffin. “Even if you pay a flat fee for it, at the moment you use it there are no financial considerations. It’s already been paid for.”

Ah- charge everyone for all music. So it is Monetization Without Representation. OK. But what gives the music industry the right to tax all broadband users because it suspects some of them might illegally share its content? And if the music industry deserves that right, then doesn’t the film industry deserve it as well? And the publishing industry? And any other industry that might benefit from such a tax?

As David Barrett, engineering manager for peer-to-peer networks at Web content-delivery giant Akamai (AKAM), notes Griffin’s plan is problematic. And desperate.

Said Barrett:, “It’s too late to charge people for what they’re already getting for free. This is just taxation of a basic, universal service that already exists, for the benefit a distant power that actively harasses the people being taxed without offering them any meaningful representation.”