TechMedia: Aussie Victory for Entertainment Industry over P2P networks
05 September 2005
The Federal Court of Australia has today ruled in favour of a raft of record companies (including Universal Music, EMI, Sony and Warner)in finding that the Kazaa internet peer-to-peer file sharing system infringes copyright. This is a further nail in the coffin for P2P file sharing systems that enable the distribution of music and other copyright works without the owners' consent.
This comes in the wake of the recent US Supreme Court ruling in Grokster where a similar decision was reached. The Australian court not only considered Australian law but English law, which it closely mirrors. It had been thought that English law might offer protection to P2P networks following a ruling in favour of Amstrad in the 1980's where it was held that the makers of tape to tape decks were not responsible for illegal copying of music by users of the machines. This must now be seriously in doubt.
The likely result of the Kazaa and Grokster decisions is that P2P software providers will be forced to collaborate with copyright owners or face extinction. The rationale for a business model based upon the growth of P2P systems through sharing of copyright works, and hence generating ever increasing advertising revenues, has gone.
The Kazaa software allowed users to create a virtual network for the sharing of music files held on millions of computers around the world. The Australian court decided that in supplying the software, Sharman Networks Limited and their partners Altnet Inc had authorised the users of the software to infringe copyright and so were infringers themselves. Echoing the Grokster decision, the Judge found that Sharman and Altnet knew that the software was widely used to share infringing copyright files. Notices to users that they should not infringe copyright were known by the Defendants to be ignored and completely ineffective. On the other hand, there were technical measures that could have been taken by the Defendants to curtail the infringements but they chose not to do this. Indeed, this was understandable because if such measures had been taken then advertising revenue for the Defendants would have been likely to be seriously diminished as fewer users, unable to obtain music for free, would have used the system. Finally, the Defendants had encouraged infringements by making users think it was "cool" to take on the record companies.
The Judge has given the Defendants two months and two options to put matters right by either putting in place filtering software for all new users of Kazaa and placing maximum pressure on existing users to upgrade to the new filtering version or limiting the Kazaa system to produce search results for licensed works only. The Defendants also face compensation claims for past infringements.
For further information about this case, please contact Ian De Freitas by email at ian.de.freitas@blplaw.com.
This comes in the wake of the recent US Supreme Court ruling in Grokster where a similar decision was reached. The Australian court not only considered Australian law but English law, which it closely mirrors. It had been thought that English law might offer protection to P2P networks following a ruling in favour of Amstrad in the 1980's where it was held that the makers of tape to tape decks were not responsible for illegal copying of music by users of the machines. This must now be seriously in doubt.
The likely result of the Kazaa and Grokster decisions is that P2P software providers will be forced to collaborate with copyright owners or face extinction. The rationale for a business model based upon the growth of P2P systems through sharing of copyright works, and hence generating ever increasing advertising revenues, has gone.
The Kazaa software allowed users to create a virtual network for the sharing of music files held on millions of computers around the world. The Australian court decided that in supplying the software, Sharman Networks Limited and their partners Altnet Inc had authorised the users of the software to infringe copyright and so were infringers themselves. Echoing the Grokster decision, the Judge found that Sharman and Altnet knew that the software was widely used to share infringing copyright files. Notices to users that they should not infringe copyright were known by the Defendants to be ignored and completely ineffective. On the other hand, there were technical measures that could have been taken by the Defendants to curtail the infringements but they chose not to do this. Indeed, this was understandable because if such measures had been taken then advertising revenue for the Defendants would have been likely to be seriously diminished as fewer users, unable to obtain music for free, would have used the system. Finally, the Defendants had encouraged infringements by making users think it was "cool" to take on the record companies.
The Judge has given the Defendants two months and two options to put matters right by either putting in place filtering software for all new users of Kazaa and placing maximum pressure on existing users to upgrade to the new filtering version or limiting the Kazaa system to produce search results for licensed works only. The Defendants also face compensation claims for past infringements.
For further information about this case, please contact Ian De Freitas by email at ian.de.freitas@blplaw.com.