The amount of control Kazaa owner Sharman Networks has over its peer-to-peer service and the reasons the company is based in Australia are shaping up to be the focus of a trial that began yesterday (N

The amount of control Kazaa owner Sharman Networks has over its peer-to-peer service and the reasons the company is based in Australia are shaping up to be the focus of a trial that began yesterday (Nov. 29) in Sydney, in a case brought by record labels.

In his opening address today in Australian federal court, the labels' lead barrister, Tony Bannon, pointed out that Kazaa's operators claim they cannot prevent copyright infringement, even though they say they reserve the right to permanently bar access to their services to users distributing child pornography or other obscene material.

Sharman claims that its technology is not sophisticated enough for it to filter music being downloaded, the company's lead barrister Anthony Meagher told the court during his opening address. Further, he said, no more than 2% of people using Kazaa are located in Australia. The "vast majority of Kazaa users are based in the U.S., where the distribution of Kazaa software and similar file-sharing software is perfectly legal," he claimed.

The U.S. Ninth Circuit Court of Appeals in San Francisco held Aug. 19 that P2P distributors Grokster and StreamCast were not liable for copyright infringement by users of their decentralized versions of P2P software. A petition seeking review of this decision by the U.S. Supreme Court and the lower court case against Sharman are pending.

After the parties in the case spent several hours on technical explanations of the software, Justice Murray Wilcox called on them to focus on three claims raised by the labels for the duration of the trial: that the system gathers information on usage patterns but is not capable of storing that information; that it is possible to reconfigure the system so the respondents can track users who are sharing unlicensed music; and that it is possible to utilize filters to disallow unlicensed music file sharing.

The labels, expected to call 48 witnesses, begin presenting evidence tomorrow (Dec. 1).

Thirty labels sued Sydney-based Sharman and its CEO Nicola Hemming; Sharman partner Altnet and its CEO Kevin Bermeister; two technologists and various affiliated companies for copyright infringement, misrepresentation and unlawful practices. They want to prevent further unlawful file sharing and recover damages for past infringements.


Additional reporting by Kristyn Maslog-Levis, ZDNet Australia