Although Federal Court Judge Murray Wilcox ruled that Sharman had not itself violated any copyright law, he said the company’s software enabled millions of users worldwide to do so.
“[Sharman Networks has] long known that its system is widely used for the sharing of copyright files,” Wilcox wrote in his ruling.
Wilcox acknowledged that completely eradicating copyright violations would be impossible for Sharman, but he ordered the company to filter its search function so that any files that match a list of copyrighted music will not show up. The music industry, he said, would supply the list.
The decision comes just months after the U.S. Supreme Court ruled Internet file-sharing companies were liable for copyright piracy, and marks a long line of record industry victories in the realm of copyright law. Hailed by the Recording Industry Association of America (RIAA) as yet another notch on the victory post, the ruling follows 18 months of legal strife for Sharman Networks. Because the company has been ordered to modify its software, roughly 300 million users worldwide could feel the effects of the ruling.
"This decision reflects a growing international chorus: Those who promote theft can be held accountable no matter how they may attempt to escape responsibility," the RIAA said in a statement. "A corrupt business strategy of attempting to hide 'offshore' is not off limits to the enforcement of rights by creators or law enforcement."
Using a peer-to-peer connection, Kazaa lets users access each other directly, sharing files on their computers with others on the Kazaa network. Although the software itself is free, the company sells advertisements that show up while the software is being used. Users who share files are also given points that can be used in promotional campaigns sponsored by the company.
Representatives at Sharman Networks long have argued that Kazaa performs the same function as a photocopier or tape recorder, and they plan to appeal the ruling. Though representatives at the company would not comment on the ruling, an official statement said the company was “confident of a win on appeal.”