The international music industry claimed a landmark legal victory in its battle against peer-to-peer file-sharing networks today (Sept. 9) when a Taiwan court convicted the Kuro service of criminal co

The international music industry claimed a landmark legal victory in its battle against peer-to-peer file-sharing networks today (Sept. 9) when a Taiwan court convicted the Kuro service of criminal copyright infringement.

The Taipei District Court sentenced three Kuro executives and a user to prison terms in what the IFPI says is the first-ever criminal conviction of a P2P service.

Kuro CEO James Chen and his brother GM Victor Chen were sentenced to three years in prison, while chairman Chen Shou-teng was sentenced to two years. A fine of NT$3 million ($90,000) was also imposed. In addition, a user, Chen Jia-hui, was given a four-month sentence, suspended for three years.

Taipei prosecutors filed the case in August 2003 on behalf of IFPI Taiwan and major record companies. Kuro's P2P service in Taiwan charges its 400,000 subscribers a monthly rate of NT$99 ($3) per month for use of its P2P software and servers.

Friday's verdict does not overrule the decision by Taiwan's Shihlin District Court in June this year which found executives of the similar P2P service EZPeer not guilty of illegal copying of music. The two divergent rulings by courts of equal status leave the legality of P2P technology vague, with one being found guilty and another not guilty.

"We are not excited about today's verdict but hope this delayed justice may bring a ray of hope to Taiwan's music industry," said Robin Lee, CEO of IFPI
Taiwan.

Lauri Rechardt, IFPI director of licensing and litigation, said the conviction was “good news for artist and the music industry,” adding that it “sends a strong message that profiteering from infringement will not be tolerated.” IFPI Taiwan has urged Kuro to immediately cease its unauthorized activities.

Executives hit back at the IFPI after the ruling, saying their service does not flout the law and that they've offered to share revenue with music companies.

"IFPI just wants to sue, they don't want to co-operate," Kuro CEO James Chen said after the verdict was announced.

Kuro's parent company Fashion Now last year posted profit of NT$265 million ($8 million) from revenue of just NT$321 million ($9 million).

The Kuro executives are expected to appeal the ruling and remain free on bond.