In a fresh blow to the entertainment industry's campaign against file-sharing, the Supreme Court of the Netherlands has upheld a lower court's ruling that the creators of Kazaa can't be held liable for the copyright-infringing actions of users of the popular file-sharing application.
Dutch music rights body Buma/Stemra took its case against Kazaa BV to the high court last year, seeking to overturn a March 2002 ruling by the Amsterdam Appeals Court. That court found Kazaa not responsible for unauthorized downloading of copyright-protected music conducted using the software it developed and markets.
The Supreme Court of the Netherlands is the highest European body yet to rule on file-sharing software. In its decision Friday, the court cites international rulings including the 1984 U.S. Supreme Court ruling in the so-called Betamax case. In Sony v Universal, the U.S. Supreme Court said device makers--in this case, VCR maker Sony--can't be held liable when people infringe copyright using Sony's equipment.
The Dutch decision also cites a Los Angeles federal judge's dismissal of a lawsuit against file-sharing services Grokster and StreamCast Networks last April. U.S. District Court Judge Stephen Wilson decided the two companies could not be held culpable for illegal file trading done over their networks.
Kazaa lawyer Christiaan Alberdingk Thijm expects the Dutch decision will have an impact internationally, beyond the European Union where copyright laws have been aligned.
"This is a great ruling," Alberdingk Thijm says. "What is important is that this ruling does not only set a precedent in the Netherlands, but also worldwide."
Buma/Stemra in a statement Friday says it regrets that the Dutch Supreme Court's decision allows Kazaa to transfer responsibility to its users.
The International Federation of the Phonographic Industry (IFPI) also issued a statement Friday calling the Dutch ruling "a flawed judgment" based on a "one-side presentation of the facts." The IFPI believes the ruling is of "minor importance" as it will "almost certainly be overtaken by future decisions based on a full airing of the facts."
IFPI contends Kazaa can control and filter usage of its service, and thus should be held responsible for infringing uses by its customers, according to the statement.
The Dutch ruling does not discuss whether individual file sharers can be held liable. Alberdingk Thijm expects the Dutch entertainment industry to sue users of file-sharing software, just as the Recording Industry Association of America (RIAA) has been doing in the United States.
The IFPI in its statement also notes that the Dutch judgment "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."
The RIAA was also dealt a blow in its effort to battle piracy on Friday. The U.S. Court of Appeals for the District of Columbia has ruled the organization does not have the authority under U.S. law to subpoena the names of alleged file traders from ISPs.
Kazaa is peer-to-peer 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 the older version of Napster, 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. After Napster was shut down, the brand was bought by Roxio, which used the name for a legitimate online music service that was launched in October.
The Dutch court ruling came too late for Kazaa BV. The Amsterdam software company that introduced Kazaa sold most of its assets to Sharman Networks, which incorporated in the South Pacific island nation of Vanuatu because it faced hefty fines it could not afford after a District Court ruling against it.