Out-Law News 2 min. read

Kazaa owner loses Australian copyright battle


Sharman Networks, distributor of the software behind peer-to-peer service Kazaa today lost a copyright battle with the music industry, when an Australian court found that it was acting illegally in allowing users to breach music copyright.

"Today's judgment shows that Kazaa – one of the biggest engines of copyright theft and the biggest brand in music piracy worldwide – is illegal,” said John Kennedy, Chairman and CEO of industry group, the International Federation of Phonographic Industries.

“This is a milestone in the fight against internet piracy worldwide. Today there is a resounding signal to other unauthorised file-swapping networks: they should adapt their systems and go legitimate now," he added.

Kazaa was once the most popular file-swapping service, allowing users to download its peer-to-peer software and use it to access the music, images and movie files stored in other users' computers – all free of charge and mostly in breach of copyright.

It has now been overtaken in popularity terms by sites running software such as BitTorrent, but Kazaa is still a major player in the P2P community.

Sharman Networks, which is headquartered in Australia but registered in the Pacific island of Vanuatu, has been accused of knowingly allowing the exchange of copyrighted digital material on its network, and cases have been brought against it by recording industries in Australia, the US and the Netherlands.

The Australian action charged the company, Sharman License Holdings, the firm's CEO Nikki Hemming, Altnet, which bundles software with Kazaa, and others, with copyright infringement.

Today, Judge Murray Wilcox of the Australian Federal Court upheld the charge in part, finding that while the 10 defendants did not breach copyright themselves, six of them, including Sharman Networks, Nikki Hemming and Altnet, acted illegally in allowing users to swap digital files in breach of copyright.

“I have no doubt that, at all material times, each of the respondents was aware that a major use of the Kazaa system was the transmission of copyright material,” he wrote.

According to Judge Wilcox, the measures taken by the Kazaa website to prevent illegal file-sharing – such as website warnings, and a provision in the end user licence agreement – were clearly ineffective.

Nor had the firm taken any steps to implement technical measures, such as keyword filtering, which might reduce the sharing.

The Judge was also concerned that a “Kazaa Revolution” campaign sponsored by the firm could give the impression to young people that it was “cool” to oppose the music industry by file-swapping in breach of copyright.

Judge Wilcox granted an injunction in favour of the Australian music industry, delayed for two months so that Kazaa’s owners could add filters to the software that should help to limit illegal file-sharing.

Welcoming the judgment, Australia’s Music Industry spokesman Michael Speck said:

“This judgment is one of the most important achievements in the fight against music piracy anywhere. The court’s decision confirms that people cannot build a business on stealing the creative work of others and profiting from it.”

The question of damages has still to be determined, but according to reports, Sharman Networks is already planning an appeal.

The decision follows a US Supreme Court ruling only two months ago that Streamcast Networks Inc, the company behind the Morpheus file-sharing software, and rival Grokster Ltd could be sued for copyright infringement carried out by users of the software, because they had intended it to be used for that purpose.

According to the IFPI’s John Kennedy, "Within the space of ten weeks, two courts in different continents and hemispheres have given a huge boost to the efforts by music and technology companies to forge a legal online music business”.

The IFPI is calling on similar networks around the world to stop infringing copyright or face the legal consequences.

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