The music industry will attempt to seize money paid to acquire the Pirate Bay, according to a high-level music industry source and a spokesman for the International Federation of the Phonographic Industry (IFPI), the trade group representing the music industry worldwide.
Global Gaming Factory, a Swedish software company, made big news two weeks ago by announcing that it would acquire the Pirate Bay, the popular outlaw file-sharing site, for $7.8 million. Since then the company has been touting a new business model and even hiring executives, such as Wayne Rosso, the former Grokster president, to legally obtain content from film and music industries.
What remains to be seen is how that sale might be affected by attempts by the music industry to collect the $3.6 million damages that a court in Sweden awarded it in April. The court found the four operators of the Pirate Bay--Fredrik Neij, Gottfrid Svartholm Warg, Peter Sunde Kolmisoppi, and Carl Lundström--guilty of copyright violations and sentenced each to a year in jail. The court also ordered them to pay 30 million Swedish kronor ($3.6 million).
Alex Jacob, a spokesman for the IFPI, said that the group has always intended to collect the damages award, but now, should the sale go through, music execs know that the original Pirate Bay operators have access to the money.
Whether these attempts to seize part of the proceeds could hold up a sale remain unclear. The first thing to remember is that the sale isn't yet done.
According to a press release, Global Gaming's offer is to pay half of the $7.8 million in cash and the other half in the company's stock. To finance the deal, Global Gaming must issue new shares and to do that it needs the blessing of investors and board of directors. Any acquisition isn't expected to be finalized before August, the company said.
On the other side, the Pirate Bay's founders have said that they haven't owned the company for years.
"We never had any interest in earning money from the Pirate Bay," Peter Sunde told Dagens Nyheter, a Swedish newspaper. "We haven't owned TPB since the search and seizure in 2006... Those who will get the money, friends in a foreign company, have agreed as a condition to put the money in a foundation for future internet projects."
The legal adviser for Global Gaming has said that the Pirate Bay is owned by a company in the Seychelles called Reservella.
Jacob, from the IFPI, says it makes no difference who owns the Pirate Bay. He said: "The judge found the four operators guilty and ordered them to pay the damages."
That's who the IFPI will try to get the money from.
CNET News intern Mats Lewan contributed to this report.