Compliance Toolkit

Kazaa's parent takes another legal beating

Tags:
Networks,
Mushroom,
To,
Sharman

Kristyn Maslog-Levis ZDNet Australia

Published: 29 Nov 2004 08:40 GMT

"The Kazaa system is an engine of copyright piracy to a degree of magnitude never before seen," declared the counsel for the music industry, Tony Bannon, during today's commencement of the civil trial against peer-to-peer (P2P) software distributor Sharman Networks.

Bannon told an Australian Federal Court hearing, presided over by Justice Murray Wilcox, in Sydney on Monday that the P2P music file sharing software Kazaa has 100 million users who share around 3 billion unauthorised sound recordings per month.

Major record labels Universal Music Australia, EMI, the merged Sony/BMG, Warner, Festival Mushroom and 25 additional applicants are suing Sharman Networks and associated parties -- including Brilliant Digital Entertainment (BDE), Altnet, Sharman chief executive officer Nikki Hemming and others -- over alleged music copyright infringement made through the Kazaa software.

Sharman has, during the pre-trial phase of the action, said it has no control over what the Kazaa users do with the files and that it is not responsible for the uploading of the songs.

However, Bannon said Sharman Networks was fully aware of how the software was being used and is doing nothing to inhibit the infringement.

"The respondents [Sharman Networks] make that profit by selling advertising space on the computer screens of the users while they are in the very act of infringing copyright. It was their software which they adapted or designed for their purposes and which they keep updating and finessing -- updates which do not make infringements harder but easier. They are perfectly capable of taking steps to inhibit infringing activity," Bannon said.

Bannon also lashed out at the latest version of the Kazaa software, released last week which Sharman says allows users to make free online calls to anywhere in the world. Kazaa v3.0 includes the integration of Skype, which allows voice-over-IP calls using P2P technology.

Bannon said the Kazaa v3.0 is "the robbers' reward" and that it does nothing to inhibit copyright infringers.

"Kazaa version 3 provides delightfully contemporaneous evidence that the respondents give their blessing to the copyright infringing ways of their users. Indeed, they reward them with a new and better product to continue their robbing ways," Bannon said.

Universal Music Australia also raised the issue of the "true ownership" of Sharman Networks. Bannon said there is "ready inference that Kevin Bermeister [Altnet chief executive officer] is in fact the ultimate controller of Sharman."

He added that Sharman Networks' Hemming is "misleading" the public when she claims to fill that the position of chief executive officer.

"Hemming told the press that there were private individual investors behind Sharman. In answers to interrogators ordered by this court, she said that in truth there were no investors and that she was only trying to make the company appear to be substantial. It follows that she made a false public statement that there were investors behind the company. In short, she is not the CEO and the apparent shareholders are not the real controllers," Bannon said.

Bannon said BDE -- the parent company of Altnet -- and Consumer Empowerment BV --which later changed its name to Kazaa BV -- entered into a technology bundle licence agreement in 2001. Kazaa BV and Sharman Networks Limited then entered into a licence agreement in 2002 which recited that Kazaa BV had agreed to sell its business to Sharman.

Sharman Networks counsel is to present its opening statement on Tuesday. The trial is expected to last three weeks.

Kristyn Maslog-Levis reported from Sydnet for ZDNet Australia. For more ZDNet Australia stories, click here.