Kazaa Parties, Labels Resume Court Battle Jan. 17

The federal courtroom in Sydney, where expert witnesses have been battling over peer-to-peer network Kazaa since Nov. 29, is quiet until later this month.

NEW YORK -- The federal courtroom in Sydney, where expert witnesses have been battling over peer-to-peer network Kazaa since Nov. 29, is quiet until later this month.

The action, brought by the major labels and 25 other record companies worldwide, seeks to stop unauthorized P2P file sharing and recover compensation for past illegal downloads, estimated by some to be in the billions of dollars.

The suit targets "respondents" Sharman Networks, the Sydney-based owner of Kazaa; LEF Interactive; Altnet, which delivers technology with Kazaa that provides authorized files and advertisements; Altnet-affiliated Brilliant Digital Entertainment; Sharman CEO Nicola Hemming; Altnet CEO Kevin Bermeister and two technology directors.

The suit centers on Sharman's Kazaa Media Desktop, which operates on the company's FastTrack system. While the labels want to prove that the respondents have, or could have, sufficient control over the system to prevent illegal file sharing, Sharman and its affiliated parties claim they cannot prevent infringements because there is no "centralized" control.

In testimony alarming to copyright holders, a Sharman witness, professor Keith Ross, revealed that KMD and FastTrack will continue to spread even if both systems are shut down.

There are many graphical user interfaces (GUIs) that operate FastTrack, he explained, including Kazaa, Grokster, Morpheus and X-Factor. The GUI, combined with FastTrack, becomes a user program that runs on a single computer. All of these programs on users' computers share files with each other, he said.

Unlike Napster, which could be shut down, "FastTrack cannot be shut down by simply pulling the plug on a centralized server farm," Ross said.

Ross said that more than 400 million FastTrack user programs have been downloaded. They would still be present for many years in users' computers, which could keep functioning without an outside server such as KMD, he added.

The "decentralized" architecture of FastTrack is the focus of a separate U.S. action. Operators of Grokster (Grokster Ltd.) and Morpheus (StreamCast) were held not liable for their users' infringements by the Ninth Circuit Court of Appeals in San Francisco. The U.S. Supreme Court on Dec. 10, 2004, agreed to review this decision.

An expert for the labels, Leon Sterling, said he didn't accept the distinction between centralized and decentralized capabilities. He believes that a number of measures, although not 100% effective, could be taken to try to exclude unauthorized files. It was a matter of choice, rather than necessity, to design the FastTrack P2P system without such software tools, he said.

At one point during the trial, Justice Murray Wilcox demanded that Sharman chief technologist Philip Morle take the stand ahead of schedule to explain the system.

The labels' lead barrister, Tony Bannon, questioned Morle about the system's ability to filter pornographic material. This could show an ability to filter unauthorized music files.
The Kazaa Web site states a "no-tolerance policy with respect to child pornography and other obscene material." Its operators retain the right to "permanently bar" users who share such files.

In addition, Sharman executive VP Alan Morris described the company's porn filter when he testified last September before the U.S. Senate judiciary committee, which was tackling issues of child pornography over P2P systems. It is "the most comprehensive and effective password-protected family filter available with any P2P software application," his testimony stated.

Morle said users could distribute child pornography over Kazaa, and he did not know how anyone could be permanently barred.

Bannon also asked Morle to sign on to Kazaa in the courtroom, using a "special command line." This led to those in attendance witnessing a connection to an alleged central server in Denmark, which Morle said he thought had been "phased out." The labels claim there is a "bank of some 20 computers in Denmark" controlling Kazaa.

During the 13-day trial, the parties submitted "hundreds of pages" of documents and sworn affidavits of expert witnesses as evidence. Only a portion of these witnesses provided live testimony.

Attempting to establish the operators' ability to control the network, other music industry experts said user statistics have been collected by Sharman, users' activity could be monitored, and logs could be maintained to trace users' locations.

Sharman offered opinions that the company could control only the user interface-not the underlying network-making it incapable of forcing upgrades or changes on existing users. It also argued that filtering would be ineffective.

The trial is adjourned until Jan. 17, when there will be a hearing on the admissibility of evidence of legal advice given to the Sharman parties about their business and whether it would infringe copyrights.

Closing arguments will be held March 22 and 23.

Additional reporting by Kristyn Maslog-Levis, ZDNet Australia.