Game over for Morpheus, it seems, with a U.S. Judge ruling that the file sharing app does indeed encourage piracy. Primarily, the Judge made the claim that StreamCast didn't make any real effort to halt piracy and, in fact, relied on piracy to keep their business alive. Saying they are “disappointed”, StreamCast offered an alternative point of view:

"Morpheus is an innovative, multiuse program with legal uses that are overwhelming. In the meantime, Morpheus will continue to discourage users from infringing upon copyrighted works," the company said.
Likely they won't stop fighting, though it does point to Morpheus potentially being shut down or being forced to pull a Napster.