Software maker Kazaa BV can't be held liable for the copyright-infringing actions of users of its namesake file-sharing application, a Dutch appeals court ruled Thursday. The court decision marks a setback in the recording industry's battle against piracy.
The Amsterdam Appeals Court overturned a November ruling by a District Court in favor of the recording industry, represented here by music rights organization Buma/Stemra.
"The making available of means for publishing or copying of copyright protected materials is not in its own a publishing or copy," the appeals court wrote in its ruling, adding that if any infringement is taking place, it is the user's responsibility, not Kazaa's.
"We are stunned by the verdict," said George Knops, spokesman for Buma/Stemra. "We will study the verdict and decide whether we want to pursue the case in front of the Supreme Court of the Netherlands."
Kazaa is "very pleased" with the ruling, even though it came little too late, said Kazaa lawyer Christiaan Alberdingk Thijm. The Amsterdam software company sold most of its assets to an Australian company because it was facing hefty fines it could not afford after the November ruling.
"It is a little sad, because the business has been sold and for a much lower price than it would be worth today," said Alberdingk Thijm.
Thijm said the ruling could have significant international impact, as he built his defense largely on international rulings including the 1984 U.S. Supreme Court ruling that said device makers, a VCR maker in that case, can't be held liable for infringing use by users.
Kazaa is peer-to-peer (P-to-P) software that allows users to search the hard drives of other users for files they want, and to download them. Kazaa, which is used by millions of people worldwide, doesn't require a central server to work, unlike Napster Inc., which was successfully shuttered as a result of legal action by the recording industry in the U.S.
In its defense, Kazaa distinguished itself from Napster by stressing that it can't shut down its network because it is not centralized like Napster.
However, this claim recently came under attack when Morpheus, a similar P-to-P file sharing service that runs on the same technology Kazaa uses, was shut down earlier this month. Opponents of the free-wheeling file swappers have been pointing to the Morpheus blackout as ample evidence that the companies running the P-to-P services have control over their systems.
In the U.S., Kazaa faces suits from the Recording Industry Association of America Inc. (RIAA) and several major Hollywood studios, which allege copyright infringement.
Although an RIAA representative expressed disappointment at the Dutch court's verdict today, he does not believe it will affect the group's case against Kazaa in the U.S.
"I'm concerned that (the ruling) reflects a view that content is not important and that the wholesale infringement of creative effort should be sanctioned, but I don't think that it will affect our case," said Matt Oppenheim, senior vice president of business and legal affairs for the RIAA.
Oppenheim added that the Dutch case was a summary judgment in which just one person testified, giving what he claimed was false information. The RIAA expects to be able to present ample evidence against the file-swapping system in its U.S. case, he said.
One thing that the group intends to make clear is that Kazaa can control its system, by pointing to the Morpheus shutdown, according to Oppenheim.
The RIAA's case against Kazaa, Morpheus and fellow file-swapping service Grokster is set to go to trial in October.