The Federal Court of Australia
decided on Monday that the Kazaa file-sharing network has authorized
copyright infringement and must modify its technology to curtail infringing
activities within two months. Providing authorization to infringe is a
violation of Section 101 of the Australian Copyright Act and is somewhat similar
to principles of secondary infringement in other copyright laws, such as
vicarious infringement in US law. The high court did not (and could not,
for all practical purposes) enjoin Sharman Networks, the Sydney-based developers
of Kazaa, from operating the network completely; Kazaa is still up and running.
The Australian court decision mirrors the US Supreme Court decision in
MGM v. Grokster
of several weeks ago. In his decision, Federal Court Justice Murray Wilcox
stopped short of declaring Kazaa's or any P2P technology to be illegal, and in
fact acknowledged the negative free-speech implications of doing so.
Instead, he offered evidence that Sharman has encouraged consumers to use Kazaa
for infringing purposes, and that Kazaa's commercial viability depends on volume
of piracy that takes place over its network. Those pieces of evidence are
analogous to those that Justice David Souter cited in the Grokster case
to support the "inducement" rule that he used as the basis for the Supreme
Court's decision to refer the case back to a lower court for trial.
We do not see how this decision will have much of an impact, certainly not on
P2P file-sharing in general. For one thing, Kazaa has slipped in
popularity compared to such other file-sharing networks as eDonkey and
BitTorrent. Even then, the actions that Justice Wilcox ordered Sharman
Networks to take may not have much of an effect on its users anyway. He
gave Sharman two months to create new client software with filtering technology
that does one of two things: either manage either a list of works that are
authorized for sharing on the network, and allow them to be shared, or the
converse: manage a list of works that should not be shared and prevent them from
being shared. In either case, the software would depend on files being
tagged with keyword identifiers that signify their authorization to be used.
The tricky part comes in getting users to move to the new client software;
this is something that cannot be done easily in a truly decentralized network.
Justice Wilcox, understanding that Sharman could not possibly get all existing
Kazaa users to adopt the new client software, ordered Sharman to give the
modified client software out to new users and to put "maximum pressure" on
existing users to install the new software.
A far greater source of impact on Sharman is the financial penalties that the
Federal Court has both already assessed on Sharman (and related businesses, such
as Altnet and Brilliant Digital Entertainment) and will assess in the future.
The Court has already ordered Sharman and its allies to pay 90% of the millions
of dollars in legal fees incurred by the music industry entities that sued them.
But that could be nothing compared to the damages that the Court may levy in the
next phase of the trial: the recording industry is seeking billions of dollars.
The highly likely result is that Sharman will cease operations.
And then what will happen? Kazaa will essentially keep on going -- perhaps,
for example, without some of the banner ads that have made the non-premium
version of the service less desirable than some of its competitors. One
thing we are all learning throughout this file-sharing saga is that commercial
enterprise can have consequences when combined with decentralized networks that
are even stranger than those it has when combined with open source software.
Events
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