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KaZaA hits back at Hollywood
Have the studios met their match?

By John Borland

Published: Wednesday 29 January 2003

Sharman Networks, owner of the popular KaZaA file-swapping software, has launched a legal counterstrike against the major record labels and Hollywood studios, asserting they have “obscenely” abused their copyright powers.

In a lawsuit filed in federal court in Los Angeles, Sharman claims that major entertainment companies have colluded to drive potential online rivals out of business. The conduct should preclude the industry from being able to defend its copyrights in court, at least until the behaviour is corrected, Sharman contends.

The lawsuit is a counterstrike by Sharman, which has been sued for allegedly contributing to massive online copyright infringement. Last week, a federal judge ruled that record companies and movie studios can proceed with their lawsuit against Sharman.

The entertainment industry considers Sharman to be as much an outlaw as Napster and Aimster, two file-sharing services that have been shuttered. But Sharman executives say their business is fundamentally different because the company was created to take advantage of legal online distribution.

“What the industry is incapable of doing is realizing that KaZaA is different,” said Sharman attorney Rod Dorman. “Now [they] have got to face the legal consequences.”

The lawsuit marks a significant development in the most critical online copyright case since the disappearance of Napster. Sharman is being sued along with Grokster and Morpheus parent Streamcast Networks. The popularity of KaZaA, the leading file-trading service in the US, has brought it to the top of copyright holders’ list of online enemies.

Sharman purchased the Kazaa software in early 2002 and planned to make money by distributing authorised, copy-protected content, its attorneys said.