<nettime> KaZaA vs Morpheus: Music Industry in Global Fight on Web Copies

["Paul D. Miller" <anansi1@earthlink.net>]

so the open source situation continues to dissolve the music industry 
as we know it.
paul



Music Industry in Global Fight on Web Copies

October 7, 2002
By AMY HARMON

http://www.nytimes.com/2002/10/07/technology/07SWAP.html?ex=1034971763 
&ei=1&en=7730ba28f781f62d

Having vanquished the music swapping service Napster in court, the
entertainment industry is facing a formidable obstacle in pursuing its
major successor, KaZaA: geography.


Sharman Networks, the distributor of the program, is incorporated in the
South Pacific island nation of Vanuatu and managed from Australia. Its
computer servers are in Denmark and the source code for its software was
last seen in Estonia.

KaZaA's original developers, who still control the underlying technology,
are thought to be living in the Netherlands - although entertainment
lawyers seeking to have them charged with violating United States
copyright law have been unable to find them.

What KaZaA has in the United States are users - millions of them -
downloading copyrighted music, television shows and movies 24 hours a day.

How effective are United States laws against a company that enters the
country only virtually? The answer is about to unfold in a Los Angeles
courtroom.

A group of recording and motion picture companies has asked a federal
judge to find the custodians of KaZaA liable for contributing to copyright
infringement and financially benefiting from it. If the group wins, it
plans to demand an immediate injunction. Sharman would then have to stop
distributing KaZaA or alter the program to block copyrighted material,
which it says is not possible because of how its technology works.

Sharman asked the court last week to dismiss the case, asserting that
because the company has no assets or significant business dealings in the
United States, the court has no jurisdiction over it. Moreover, the
company said, because the Internet does not recognize territorial
boundaries, anything Sharman does with KaZaA at the behest of a judge in
Los Angeles would affect 60 million users in over 150 countries. Arguments
are scheduled for Nov. 18.

"What they're asking is for a court to export the strictures of U.S.
copyright law worldwide," said Roderick G. Dorman, a lawyer for Sharman.
"That's not permitted. These are questions of sovereignty that
legislatures and diplomats need to decide."

Legal experts say the Los Angeles judge, Stephen V. Wilson of Federal
District Court, may well decide his court has jurisdiction over Sharman
because Americans download software from its Web site and the company
makes money from showing them advertisements.

The struggle over how to apply sometimes conflicting national laws to a
medium that pays little mind to geographic boundaries is likely to remain
at the heart of the lawsuit, if it proceeds. While there is broad
international agreement on what constitutes direct copyright infringement,
the penalty for those who enable others to infringe has not yet garnered
such consensus.

None of the entities being sued in association with KaZaA distribute
copyrighted material themselves. Instead, the software enables millions of
people to search for files on each other's personal computers when they
are connected to the Internet. When a KaZaA user types the name of an
artist or title into a search box, a list of matching files that other
users have placed in a "shared" folder on their hard drives appears on the
screen. The user can then click on an item to download a copy.

Under the copyright law of most countries, people who use software like
KaZaA to download copyrighted material from each other would almost
certainly be liable for infringement. The conflict is over whether
distributing software that makes it easy for people to break the law is
itself a copyright violation.

"The question is whether there is liability in making it possible to
infringe," said Jane C. Ginsburg, a professor at Columbia University who
teaches international copyright law. "If there are genuine markets for the
software in different countries, it could be very difficult to figure out
which law to apply."

In the Napster case, a federal appeals court in San Francisco found that
the company was likely to be held liable for violating United States
copyright law and ordered it to stop operating until the case could go to
trial. Napster has since filed for bankruptcy and its service has been
defunct for more than a year.

An appeals court in the Netherlands, however, ruled earlier this year that
it was legal to distribute the KaZaA software there. "Insofar as there are
acts that are relevant to copyright, such acts are performed by those who
use the computer program and not by KaZaA," a translation of the court's
ruling provided by Sharman's lawyers says.

That case is on appeal to the highest court of the Netherlands, but music
industry lawyers say it has little bearing on the KaZaA case in Los
Angeles, even if it is upheld. The global reach of the Internet, they say,
does not take away the right of the United States to enforce its laws when
they have an impact on its citizens, within its borders.

"The copyright industries around the world are not going to stand still
and let other companies build businesses off the sweat of their brow
simply because they're willing to set up shop in some other country," said
Matt Oppenheim, a lawyer for the Recording Industry Association of
America.

Nearly three million people typically use the KaZaA Media Desktop software
at any given time, collectively providing access to half a billion files,
Sharman said, roughly double Napster's usage at its peak. In addition to
music, KaZaA makes it possible to trade other digital files, including
pictures, text and video.

Although a vast majority of files exchanged with the software appear to be
copyrighted works, people also use it to trade material that is not
subject to copyright restrictions. For that reason, critics have said that
banning it would unnecessarily restrict speech and technological
innovation. They say Hollywood is simply trying to avoid the daunting
process of pursuing individual users, and a potential public relations
backlash from suing its own customers.

But the entertainment industry has so far prevailed in all of its legal
actions against companies based in the United States that they have
accused of contributing to infringement. Napster, Aimster and Audiogalaxy
have either shut down or altered their services. Sharman's assertion that
it cannot change its software to screen out copyrighted material,
entertainment lawyers suggest, has more to do with the advertising revenue
it would lose once people could no longer download popular music and
movies than with technological reality.

Two other companies whose software enables file trading are named in the
Los Angeles case. But one of those, StreamCast Networks, the distributor
of a program called Morpheus, is based in the Nashville suburb of
Franklin. The other, Grokster, is incorporated in the West Indies but is
owned by a California family.

The difference with Sharman is that even if the entertainment companies
win their lawsuit, the enforcement of any judgment may rely entirely on
legal authorities in other nations, and their cooperation is not assured.
Last year, for instance, a federal court in San Jose, Calif., declined to
honor the judgment of a court in France that prohibited Yahoo from
displaying Nazi materials to French citizens visiting its auction Web
site. The court said the First Amendment principles of the United States
trumped the French ruling, and it would not be enforced.

The Sharman case may well raise again the unsettled question of whether
Internet companies should be forced to adhere to the laws of every country
whose citizens have access to their Web sites.

Some copyright experts object to that notion, on pragmatic grounds and
because they say it contradicts the Jeffersonian principle that
governments derive their powers from the consent of the governed. But the
alternative, for a company to be bound only by the laws of the country
where it is headquartered, could lead to a race to incorporate in
countries whose laws are the most lax.

Sharman officials have said that the company is registered on Vanuatu
because of its favorable tax conditions, and that it will abide by the
laws of Australia. Australia is one of nearly 150 countries that have
signed the Bern Convention for the Protection of Literary and Artistic
Works, which sets minimum levels of copyright protection.

Jurisdictional issues aside, Sharman's lawyers say that their software is
fundamentally different from Napster's because the company's servers do
not control a central index of what files reside on which of its users'
computers. The company says that even if it ceased operations entirely,
people who already have the software would be able to exchange files.

The Hollywood companies suing Sharman dispute the assertion that it has no
control over the network of people who use it. Meanwhile, they are still
sorting out who owns what with respect to the KaZaA program, and what
continent they are on.

Nikki Hemming, the chief executive of Sharman, which is based in Sydney,
Australia, is scheduled to meet with the entertainment industry's lawyers
soon to give a deposition, though at the request of her lawyers, the
meeting will probably take place in Canada. Niklas Zennstrom and Janis
Friis, who developed the software, are being sought in Europe. And
according to a lawyer for the record industry, the programmers in Estonia
who once possessed a copy of the program's source code told a judge there
last week that they no longer had it, but they would not say where it was.


http://www.nytimes.com/2002/10/07/technology/07SWAP.html?ex=1034971763
&ei=1&en=7730ba28f781f62d





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