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Kazaa's File-Sharing is Ruled Illegal Australian Court Says Company Violates Music Copyrights

Posted on: Tuesday, 6 September 2005, 09:00 CDT

An Australian court ruled on Monday that the popular file- sharing network Kazaa violates Australian music copyrights and ordered the company to modify its software to help prevent copyright infringement.

Murray Wilcox, a federal judge in Sydney, wrote in a summary of his judgment that the owners of Kazaa had "long known that the Kazaa system is widely used for the sharing of copyright files."

The ruling brought an end to an 18-month legal battle between the recording industry and the Australia-based owners of Kazaa, though they plan to appeal. The ruling also complemented a United States Supreme Court ruling in June that Internet file-sharing companies like Kazaa could be held liable for copyright piracy. While the ruling in Australia was based solely on that country's copyright laws, the order to modify its software could have a broader impact, as Kazaa has users worldwide. In the United States, the Recording Industry Association of America, the trade group for the major labels, hailed the ruling. "This decision reflects a growing international chorus: those who promote theft can be held accountable no matter how they may attempt to escape responsibility," the association said. "A corrupt business strategy of attempting to hide 'offshore' is not off limits to the enforcement of rights by creators or law enforcement."

The suit, led by the Australian unit of the Universal Music Group, sued Kazaa's owners, a Sydney-based company called Sharman Networks, and nine other parties including Sharman's chief executive, Nicola Hemming, saying the site enabled users to commit millions of copyright violations daily and cost the industry millions of dollars. Damages will be determined at a later hearing.

While he conceded that it would probably be impossible for Kazaa to completely prevent copyright violations by its users, Wilcox ordered Kazaa to alter its software so that its search function would not display files with names matching a list of copyrighted music to be supplied by the industry. Wilcox rejected allegations by the industry that Kazaa had itself violated copyright laws and engaged in conspiracy to violate Australian anti-monopoly laws.

Kazaa was the popular successor to Napster, the file-sharing network that in 1999 began allowing users to trade files over a central computer server. Started in early 2001 in the Netherlands, Kazaa kept on going when lawsuits forced Napster to shut down in July that year. By 2004, Kazaa boasted that 317 million people had downloaded its software.

Kazaa's software is free. The company makes money instead by selling advertisements that appear when the software is used. Unlike Napster, Kazaa users connect to each other directly without going through a central server, a peer-to-peer, or P2P, connection. They can then download files from the other users and opt to share files on their own computer with other Kazaa users. The company encourages users to share their own files by offering reward points that can be traded for music files or used to enter contests.

Faced with legal action in early 2002, Kazaa shut down and was bought by privately held Sharman, which revived the service from its new home in Australia. After its successful attack on Napster, the recording industry pursued another file-sharing service, Grokster, culminating with the Supreme Court ruling in June that the company was liable because, as part of its business, it offered advice to customers on how to engage in illegal file-sharing. Though the music and film industries hail legal results like these as major victories, some analysts point out that legal action against one file-sharing network merely pushes determined copyright violators to other networks. Last week, CacheLogic, a British research firm, found that the most popular file-sharing network, BitTorrent, had lost its place to another, eDonkey, amid the crackdown on piracy. "This is almost assuredly a result of the increased legal action towards the once-ignored BitTorrent a game of P2P hide-and-seek," CacheLogic's chief technology officer, Andrew Parker, told Reuters. Kazaa's lawyers argued that the company's software was no different in function from a photocopier or tape recorder and that Kazaa bore no responsibility for how its software was used by those who downloaded it.

Kazaa's Web site does not specifically advise users on how to share copyrighted music, and avoids referring directly to music files at all. Kazaa users can share any type of files, music or otherwise. The site admonishes users in an end-user license agreement not to violate copyrights.

But in a summary of the case explaining his ruling, Wilcox said that most of the files swapped using Kazaa were copyrighted music and that Kazaa was aware of it but had done too little to discourage it. The company's boilerplate admonitions were inadequate, he said, and Kazaa had failed to undertake technical measures to curtail copyright violations using its software. Instead, it had declared on its Web site a "Kazaa Revolution" against the record companies. And while stopping short of advocating copyright piracy, Wilcox said, "the effect of this Web page would be to encourage visitors to think it 'cool' to defy the record companies by ignoring copyright constraints."

Denis Handlin, chairman of the Australian Record Industry Association, welcomed the decision. "This decision represents another important step in the industry's commitment towards creating a commercially viable legitimate online music business," he said in a written statement. "Unauthorized file sharing is theft and today's decision makes that abundantly clear."

Source: International Herald Tribune

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