Kazaa Case Virtually Spans Globe

Amy Harmon tries to untangle the worldwide knot in today’s NY Times:

Having vanquished the music swapping service Napster in court, the entertainment industry is facing a formidable obstacle in pursuing its major successor, KaZaA: geography.

Sharman Networks, the distributor of the program, is incorporated in the South Pacific island nation of Vanuatu and managed from Australia. Its computer servers are in Denmark and the source code for its software was last seen
in Estonia.

KaZaA’s original developers, who still control the underlying technology, are thought to be living in the Netherlands – although entertainment lawyers seeking to have them charged with violating United States copyright law have been unable to find them.

What KaZaA has in the United States are users – millions of them – downloading copyrighted music, television shows and movies 24 hours a day.

How effective are United States laws against a company that enters the country only virtually? The answer is about to unfold in a Los Angeles courtroom.

A group of recording and motion picture companies has asked a federal judge to find the custodians of KaZaA liable for contributing to copyright infringement and financially benefiting from it. If the group wins, it plans to demand
an immediate injunction. Sharman would then have to stop distributing KaZaA or alter the program to block copyrighted material, which it says is not possible because of how its technology works.

Sharman asked the court last week to dismiss the case, asserting that because the company has no assets or significant business dealings in the United States, the court has no jurisdiction over it. Moreover, the company said, because the Internet does not recognize territorial boundaries, anything Sharman does with KaZaA at the behest of a judge in Los Angeles would affect 60 million users in
over 150 countries. Arguments are scheduled for Nov. 18.

“What they’re asking is for a court to export the strictures of U.S. copyright law worldwide,” said Roderick G. Dorman, a lawyer for Sharman. “That’s not permitted. These are questions of sovereignty that legislatures and diplomats need to decide.”

Legal experts say the Los Angeles judge, Stephen V. Wilson of Federal District Court, may well decide his court has jurisdiction over Sharman because Americans download software from its Web site and the company makes money from showing them advertisements.

….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.