Australian Labels, Kazaa Await Calif. Ruling

Australian record labels and Sydney-based SharmanNetworks--owner of the Kazaa P2P file-sharing service--are anxiously waiting to the decisions of three appeal court judges some 7,500 miles away.

SYDNEY--Australian record labels and Sydney-based SharmanNetworks--owner of the Kazaa P2P file-sharing service--are anxiously waiting to the decisions of three appeal court judges some 7,500 miles away.

Australian Federal Court Judge Murray Wilcox in Sydney has told the two sides in a potential civil case over copyright infringement that he will reserve judgment over whether proceedings should go ahead until the Court of Appeals in Pasadena, Calif., rules on arguments from music publishers and film studios who want to reverse a 2003 Los Angeles federal court ruling on file-sharing liability.

The U.S. judgment being appealed in Pasadena had cleared Internet companies Grokster and StreamCast of liability for users who swap files using their software. Sharman was a co-defendant in the initial lawsuits.

DUBIOUS ALIBI

Wilcox has expressed reservations over the content of initial submissions by Australian labels which resulted in his granting their Music Industry Piracy Investigation (MIPI) unit a search order to raid various Sharman/Kazaa-associated premises on Feb. 6.

"I don't have a feeling that I was told lies or misled," he explained during a Feb. 20 hearing, "but I do have a feeling there was a lot more to the story that I wasn't told."

MIPI is funded by the Australian affiliates of Universal Music, Sony Music, EMI Music, Warner Music, and BMG, plus leading independent Festival Mushroom Records.

RAID IN SYDNEY

MIPI GM Michael Speck says he believes the body has enough evidence for Justice Wilcox to agree to initiate copyright infringement proceedings against Kazaa. "Their time has come," he says.

Lawyers representing Sharman have been fighting the threatened lawsuit since the Feb. 6 raids took place. They occurred simultaneously on 12 premises in three Australian states, and involved some 60 lawyers and MIPI investigators.

Among premises searched were Sharman Networks' offices in Sydney, and the homes in that city of CEO Nikki Hemming and IT director Philip Morle.

Also raided was the Sydney office of Los Angeles-based digital rights management group Brilliant Digital Entertainment. The latter is a partner with Stockholm, Sweden-based P2P company Joltid in joint venture Altnet, which has corporate headquarters in Woodland Hills, Calif. Altnet makes legally licensed music available via Kazaa. The Sydney home of Altnet managing director Kevin Bermeister was also raided.

MIPI seized files from several Internet service providers and from the premises of the University of Queensland, the University of New South Wales and Monash University during the raids. None of those bodies face any legal action, but MIPI contend their computer systems contained information linking Kazaa to copyright infringement.

Sharman's lawyers had asked the Federal Court in Sydney Feb. 10 to rule that evidence collected in the raids be ruled inadmissible, on the grounds that the Court had no authority to grant MIPI the search order. Justice Wilcox then postponed the hearing until Feb. 20, to allow time for the evidence to be assessed.

At the Feb. 20 hearing, Justice Wilcox told MIPI and Sharman to return at an as-yet unspecified date in March to present him with more detailed submissions on their relative positions. He added that he would not decide whether there is a case to proceed with until the result of the U.S. appeal is known.

During the hearing, the judge said that, when granting the search order to MIPI, he had acted under an impression given in MIPI's submission that Sharman Networks was a "fly-by-night" operator. He also said he was not told that Sharman was cooperating in the U.S. appeal by providing over 40,000 documents to that court.

Counsel for MIPI, Tony Bannon, argued during the Feb. 20 hearing that that the U.S. appeal had no bearing on any case in Australia, as the copyright laws in both countries are different.

Sharman's attorney, David Casselman, says the seizure of tens of thousands of documents in Sydney during the Feb. 6 raids meant Sharman was delayed in supplying some of those documents to the court in Pasadena. As a result, he says, a ruling in the U.S. case will now not be possible until mid-March.

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