The Australian recording industry has won a landmark victory against online file-trading service Kazaa, ending a long-running court battle and copyright test case with worldwide implications.
The Australian Federal Court has ruled that owners of peer-to-peer sharing software, Kazaa, allowed users to breach copyright regulations by swapping copyrighted songs. In a landmark ruling, the Court has ordered the company to modify its software to prevent future breaches and to apply "maximum pressure" on users to upgrade to the new software.
Justice Murray Wilcox ruled in favour of the applicants - major music labels including Sony, Universal and Warner - which had claimed that Kazaa's Australian parent company, Sharman Networks, had infringed on copyright laws.
However, Justice Wilcox dismissed additional allegations of conspiracy and contravention of the Trade Practices Act as "overstated".
"The more realistic claim is that the respondents authorised users to infringe the applicants' copyright in their sound recordings," Wilcox said.
Wilcox explained that even though the Kazaa Web site contained disclaimers against the sharing of copyright files, it was obvious that such measures were ineffective at preventing copyright infringement by users.
Although Kazaa was not ordered to be shut down, the court ruled that modifications must be introduced to its peer-to-peer (P-to-P) file-sharing software to curtail copyright breaches.
The respondents were ordered to place "maximum pressure" on existing users to upgrade their existing Kazaa software to implement new filters.
The judgment remained cloudy as to whether or not the current Kazaa system would continue to exist for users who don't upgrade, but Music Industry and Piracy Investigations (MIPI) spokesperson, Michael Speck, said: "We are not pursuing individuals. We are pursuing the facilitators."
Six of the 10 respondents: Sharman Networks, LEF Interactive, Altnet, Brilliant Digital Entertainment, Nicola Hemming and Kevin Bermeister, were ordered to pay 90 per cent of the applicant's court costs.
Speck heralded the landmark decision as a "resounding victory for the music industry that will have a worldwide impact."
"It's a great day for anyone who wants to make a living from music," he said.
"The court has made orders that will see the system either legitimised or disappear. Now is the time to go legal or get out of the business."
The dismissal of charges led the lawyers for the Sharman Network to also claim the decision as a win, but a spokesperson added that neither side had obtained a complete victory.
"Sharman Networks is obviously disappointed that we have not been completely successful," said the Sharman spokesperson. "But, we will appeal those parts of the decision where we were not successful and are confident of a win on appeal."
Speck expressed disappointment that Sharman Networks was "not going to accept the umpire's decision."
"It's up to these people now to honestly and decently stop ripping off music and obey the court orders," he said.
A separate hearing will be held to determine damages in the case.