....Under the copyright law of most countries, people who use software like KaZaA to download copyrighted material from each other would almost certainly be liable for infringement. The conflict is over whether distributing
software that makes it easy for people to break the law is itself a copyright violation.

"The question is whether there is liability in making it possible to infringe," said Jane C. Ginsburg, a professor at Columbia University who teaches international copyright law. "If there are genuine markets for the software in different countries, it could be very difficult to figure out which law to apply."

....Although a vast majority of files exchanged with the software appear to be copyrighted works, people also use it to trade material that is not subject to copyright restrictions. For that reason, critics have said that banning it would unnecessarily restrict speech and technological innovation. They say Hollywood is simply trying to avoid the daunting process of pursuing individual users, and a potential public relations backlash from suing its own customers.

But the entertainment industry has so far prevailed in all of its legal actions against companies based in the United States that they have accused of contributing to infringement. Napster, Aimster and Audiogalaxy have either
shut down or altered their services. Sharman's assertion that it cannot change its software to screen out copyrighted material, entertainment lawyers suggest, has more to do with the advertising revenue it would lose once people could no longer download popular music and movies than with technological reality.

....Nikki Hemming, the chief executive of Sharman, which is based in Sydney, Australia, is scheduled to meet with the entertainment industry's lawyers soon to give a deposition, though at the request of her lawyers, the meeting will
probably take place in Canada. Niklas Zennstrom and Janis Friis, who developed the software, are being sought in Europe. And according to a lawyer for the record industry, the programmers in Estonia who once possessed a copy of the program's source code told a judge there last week that they no longer had it, but they would not say where it was. Simple, isn't it?

For more on Kazaa, see here, here, here, and here.