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Tue, Nov 30, 2004 - Page 12 News List

Record labels take Kazaa to court

PIRACY ISSUES Lawyers for record labels in Australia are arguing that Kazaa's owners should be found liable for breach of copyright and loss of earnings


Lawyers for Australia's recording industry branded the popular Kazaa computer file-swapping network "an engine of copyright piracy to a degree of magnitude never before seen" as they launched a court battle yesterday to shut down its illegal activities.

Kazaa's owners claim the network's 100 million worldwide users download 3 billion files each month, said lawyer Tony Bannon, who is representing Australia's six major record labels.

Network users freely exchange songs, movies and television programs without paying royalties to the copyright owners.

During the first day of the trial yesterday, lawyers showed federal court judge Murray Wilcox how the system worked by logging onto Kazaa and searching for songs by artists including Australian singer Delta Goodrem and British punk band The Sex Pistols. While they were logged on, the site showed that 2.1 million users were online swapping 1.17 billion files.

The record company lawyers will try to have Kazaa's owners declared liable for copyright breach and loss of earnings in the civil case. If they succeed, a case next year would likely set the damages the owners have to pay.

The 10 defendants include Kazaa's owners, Sharman Networks Ltd, Sharman License Holdings and Sharman's Sydney-based chief executive officer, Nikki Hemming.

Sharman Networks will insist that while they urge users not to commit music piracy, they have no control over what people do with the popular "peer-to-peer" software the network provides.

But at the start of a three-week trial in Sydney yesterday, Bannon dismissed Sharman's defense, saying Kazaa's owners provide software that helps users filter certain files from the network -- such as those that could contain viruses or pornography -- but they don't provide software to filter out files containing copyrighted material.

File-sharing cases

* The current case against Kazaa was filed by Australian recording industry players who would likely seek damages if Kazaa is found to be liable

* Two courts in California cleared Grokster Inc and StreamCast Networks of liability, but this is being appealed

* Kazaa won another case in the Netherlands, which cleared it of liability for copyright infringement

In fact, Bannon said, the large volume of traffic in pirated files is key to revenue generation for Kazaa's owners -- the more people are file-swapping, the more they can attract paying advertisers to their Web site.

He also said that Kazaa software sent lists of popular files to all users' computers -- meaning the service's owners must be able to identify them. Other software identified the type of music files being exchanged. That combination should allow Kazaa's backers to cut off their service to anybody using the network to exchange copyrighted material, Bannon said.

Attorneys for Kazaa's owners are expected to give their opening statement today.

Members of the entertainment industry have already sued other file-sharing services in the US. Two federal courts in California have cleared Grokster Ltd and StreamCast Networks Inc of liability, but the industry has appealed to the US Supreme Court.

Sharman is named in a similar suit pending in a lower court.

Analysts say the US cases likely will not affect the Sydney trial, but all the cases share the principle that a software developer is not directly responsible for its users' activities -- just as Xerox cannot be blamed for copying done on its machines.

Kazaa already has one major court victory under its belt, with the Dutch Supreme Court ruling in December last year that the network's Netherlands division cannot be held liable for copyright infringement.

A possible difference in the Australian case is the recording industry's invocation of a rarely used law that lets litigants gather evidence in civil copyright cases. Investigators earlier this year seized evidence in raids on Kazaa-linked companies and individuals.

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