The largest copyright infringement case in Australian history began today (Nov. 29), as Sydney-based Sharman Networks and others involved with peer-to-peer software company Kazaa face 30 record-compan

The largest copyright infringement case in Australian history began today (Nov. 29), as Sydney-based Sharman Networks and others involved with peer-to-peer software company Kazaa face 30 record-company "applicants" from Australia, North America and Europe.

"Not only do the respondents know that their 100 million users are infringing the applicants' sound recording copyright, they proclaim it loudly to anyone who cares to listen," the labels' lead barrister, Tony Bannon, said during his opening address in the Sydney federal court. "It is a badge of honor for the respondents. They paint themselves as the defenders of the interests of fans of music.

"It is a charade," he added. "[Their] motives are not altruistic. On the contrary, the respondents trade off the copyright infringing activities of its users. [They] promote themselves to advertisers as having access to a vast audience. The vast audience only exists because of the rampant copyright infringing activity."

The labels hope to stop illegal file sharing and to recover compensation for past infringements, says Michael Speck, GM of the Music Industry Piracy Investigations unit of the Australian Record Industry Assn.

The suit targets Sharman; LEF Interactive; Altnet, which delivers so-called "piggyback" technology with Kazaa; Altnet-affiliated Brilliant Digital Entertainment; Sharman CEO Nicola Hemming; Altnet CEO Kevin Bermeister; and two technology directors.

Bannon told the court that Brilliant (parent company of Altnet) and Consumer Empowerment BV (which later changed its name to Kazaa BV) entered into a technology bundle license agreement in 2001. Kazaa and Sharman in 2002 entered into a license agreement that stated that Kazaa BV had agreed to sell its business to Sharman.

Unlike the suit pending against Sharman and LEF in U.S. District Court in Los Angeles for secondary copyright infringement, this action widens the potential net around Kazaa-affiliated companies and individuals by asserting additional claims for misrepresentation to the public, unconscionable conduct and civil conspiracy to inflict harm.

The music and technology industries are watching the case closely. Many observers wish to learn what will be revealed from evidence seized during the Feb. 6 surprise raids on the tech companies, their key executives, universities and several Internet service providers.

Of particular interest is the bundling of Altnet software with Kazaa and whether it shows that the tech companies can control file-sharing and, therefore, prevent users from infringing copyrights; whether the tech companies promote unlawful sharing to sell advertisements; the profits made by Sharman, Altnet and Brilliant; and the true owners of Sharman.

If not subject to a protective order in Australia, this evidence could be used by the labels, motion-picture studios, songwriters and publishers in their U.S. case against Sharman, says attorney Michael Elkin, national chair of commercial litigation for Thelen Reid & Priest in New York.

Over 50 lawyers are involved in the case before Justice Murray Wilcox. Counsel for Sharman Networks will present its opening address tomorrow (Nov. 30). The trial is expected to last three weeks.


Additional reporting by Kristyn Maslog-Levis, ZDNet Australia.

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