At the Music 2.0 conference in LA two months ago, Michael Weiss, CEO of StreamCast, said he was confident his company's Morpheus peer-to-peer (P2P) service would be one of the few file-swapping services to go legit and survive.

The road to legitimacy got a bit more circuitous today.

Weiss told the Associated Press today that negotiations between StreamCast and the entertainment industry to settle a five-year copyright battle have failed, and the company now plans to fight the case in court again.

"I am really disappointed that we weren't able to reach settlement terms with the plaintiffs," Weiss said. "Now we want our day in court."

The AP reported that StreamCast plans to file a motion with US District Judge Stephen Wilson in Los Angeles, seeking a jury trial and responding to a demand for summary judgment by the Hollywood movie studios and recording industry plaintiffs.

The company could face an uphill battle given the US Supreme Court's decision last June in MGM v. Grokster, a case in which StreamCast and Morpheus were codefendants. The court found that file-sharing services could be held liable for copyright violations that occur on their networks.

The landmark decision incited the Recording Industry Association of America (RIAA) to send cease-and-desist letters to seven file-sharing software companies, warning them to shut down or prepare to face lawsuits.

Some companies, like those behind i2Hub and WinMX, shut down, while others like iMesh agreed to go legit with industry support, and subscription-based legal services. Others, namely eDonkey and LimeWire, have hinted that they are ready to go legit and are in talks to do so, but nothing has been finalized.

Australia-based Sharman Networks, operator of P2P giant Kazaa, is in a pickle of its own in federal court in Australia.

Grokster, the other defendant in the MGM v. Grokster case, settled with the RIAA and plans to relaunch as a legal service in conjunction with Mashboxx, the long-awaited legal P2P service headed by former Grokster chief Wayne Rosso.

Weiss told the AP that negotiations with the entertainment companies were "really quite close" before breaking down.

"It really wasn't a matter of money," he said. "It was something that turned what looked to be a full-on partnership into a one-sided, unworkable deal. What happened [is] this outside law firm that mucked this whole thing up ... seeking revenge, retaliation and retribution."

StreamCast will now seek to take its battle back to the US District Court where it started several years ago, with the Supreme Court's expanded definition of copyright liability changing the current legal landscape.

Wilson ruled in 2003 that the file-sharing service operators were not liable for illegal file-sharing conducted on its networks. An appeals court upheld that ruling, before the Supreme Court expanded the liability in June of last year.