In the wake of a Supreme Court ruling that effectively rendered it illegal, peer-to-peer (P2P) file-sharing network Grokster has settled its lawsuit with the Recording Industry Association of America (RIAA), the industry trade group said today.

Grokster has agreed to shut down its service and cease distribution of its software, indicating that it intends to launch its own legal, industry-supported alternative, as iMesh did recently and others like Mashboxx plan to do.

The company posted a message on its Web site saying, "There are legal services for downloading music and movies. This service is not one of them. Grokster hopes to have a safe and legal service available soon."

RIAA chairman and CEO Mitch Bainwol said in a statement that the settlement closes a significant chapter in the story of digital music.

"At the end of the day, this is about our ability to invest in new music," he said. "An online marketplace populated by legitimate services allows us to do just that."

In June, the US Supreme Court ruled in MGM v. Grokster that Grokster and StreamCast Network Inc.'s Morpheus could be held liable for copyright violation for acts taken in the course of marketing file-sharing software.

That ruling set off a wave of activity by the RIAA, which sent cease-and-desist letters to several other P2P services and cited the Grokster ruling. As a result, once-popular WinMX shut down, and another, eDonkey, said it would do so or roll out a legal alternative.

In an effort to go legit, Grokster reportedly entered into talks to be acquired by Mashboxx LLC, an upstart that is attempting to establish a legal peer-to-peer music company. Mashboxx is cofounded by former Grokster president Wayne Rosso.

The reported talks, the shutdowns, and the planned legal alternatives are all indications that the heavy-handed legal tactics of the RIAA appear to be swinging the battle against music piracy in its favor--at least for now.