Under US laws, companies or individuals can be sued in a certain
state provided they have "substantial contacts" with that state, or
if their conduct was intentionally aimed at the state's
residents.
The entertainment industry decided to sue Sharman Networks in
California, claiming that KaZaa software has been downloaded by
millions of the state's residents, and that many music and film
companies whose copyrights have been infringed, are based
there.
Sharman Networks asked the court to dismiss the lawsuit. The
company, which is headquartered in Australia and operates from the
Pacific island of Vanuatu, claimed that it had no substantial
business contacts with the US and therefore it could not be sued
there.
The company denied that it is trying to avoid legal action
against it, claiming that copyright owners can bring their case
before an Australian court.
The Los Angeles court, however, sided with the entertainment
industry's arguments. It ruled that the lawsuit can proceed in
California, reasoning that the company engages in "a significant
amount of contact" with California residents, and that most digital
copyright owners allegedly affected by the company's activities are
based in the state.
The ruling contrasts a December 2002 decision of the California
Supreme Court, which said that a Texas resident accused of
distributing DVD-cracking software over the internet could not be
sued in California, because he did not specifically targeted
Californian internet users.
