The supreme court upheld a March 2002 ruling in which an appeals court ruled in favor of Fasttrack, the Amsterdam-based firm that developed Kazaa, Reuters reported. Australia-based Sharman Networks later acquired Kazaa.
The Dutch court is the highest European body to rule on the issue of P2P liability and rejected the argument that Kazaa facilitated copyright infringement and that future versions of its software should include a block on copyrighted content.
The entertainment industry took the ruling as a blow to its effort to crack down on the illegal trading of copyrighted material in Europe over P2P networks, a legal argument they are also trying to win against Kazaa in the United States.
The International Federation of the Phonographic Industry (IFPI), which is the trade group representing Warner Music, Sony Music, BMG, EMI and Universal Music, has stated that it will continue legal action against P2Ps regardless of the judge's ruling, Reuters reported.
The ruling comes on the heels of a U.S. Court of Appeals ruling last week that outlawed the Recording Industry Association of America from issuing certain types of copyright subpoenas to Internet Service Providers as a way of obtaining personal identification information on specific users.
The Dutch ruling also compounds the fact that Kazaa has been named one the most popular P2P networks in Europe and is considered an undisputed leader among other file-sharing companies by Nilsen/NetRatings.
"Today's ruling on Kazaa by the Dutch Supreme Court is a flawed judgment, but still leaves no doubt that the vast majority of people who are using file-swapping services like Kazaa are acting illegally -- whatever country they are in," IFPI told Reuters.
Kazaa's popularity in Europe has a great deal to do with a stronger density of broadband users in countries like Germany, Spain, the United Kingdom, and France, and a nearly absent fear of getting caught and sued for trading copyrighted content over the Internet, which has been a mounting concern for U.S.-based file-sharers.
Jupiter Research stated that based on information from many of Europe's broadband providers, 75 percent of their combined subscribers used file-sharing networks, and more than 50 percent of their traffic generated from file-sharing.
