After studying the facts of the case for more than a month, U.S. District Judge Stephen Wilson has ruled music and movie picture companies can sue the off-shore file-swapping site Kazaa, which argued it was exempt from U.S. jurisdiction because it is based in Australia and incorporated on the island of Vanuatu.
The ruling is major victory for the Motion Picture Association of America (MPAA) and the Recording Industry Association of America (RIAA), which have been seeking to include Kazaa, which is owned by Sharman Networks, Ltd., in a massive copyright infringement suit brought against a number of file swapping companies, including Tennessee's MusicCity.com, Inc. and MusicCity Networks, Inc. (which runs the popular Morpheus service), and West Indies-based Grokster, LTD.
Wilson ruled that Kazaa does substantial business in the U.S and since it is alleged the company engages in copyright infringement, the company is subject to U.S. law.
The music and movie empires claim the file-swapping sites are costing the industries billions, and the entertainment industry has been unrelenting in its legal and legislative assault on what it considers to be largest heist in the history of intellectual property rights. The RIAA attorneys contend that Kazaa's peer-to-peer network is used by about 21 million users in the U.S. to share digital files.
In addition to its off-shore status, Sharman argued that Kazaa should not be held liable for copyright infringement, pointing out that PC makers aren't responsible for the actions of destructive hackers.
A Sharman spokesperson said the company was disappointed in the ruling but still felt it would win the case based on the merits.
