December 20, 2001 12:50 PM PST

Kazaa plays on despite threat of fines

By Jasper Koning

HILVERSUM, Netherlands--Nearly a week after a court-ordered deadline to institute anti-piracy controls, the operator of Kazaa, a popular file-swapping network, is continuing to negotiate with copyright holders over its fate.

In a decision last month, Judge Orobio de Castro told the network to block customers from trading illegal files by Dec. 13 or pay a $45,000 a day fine. As of now, however, the service has not altered its business practices, company attorney Christiaan Alberdingk Thijm said Thursday. The service was developed by Netherlands-based FastTrack.

"You could derive from that, that the negotiations have went in a such a way that for now no fines have to be paid," he said.

Kazaa is one of several products that allow people to find and copy digital files stored on each other's hard-drives. Purveyors of the technology, known as peer-to-peer networking, have drawn a flurry of lawsuits from copyright holders who allege that the products are nothing more than an open ticket to piracy.

Kazaa faces suits in both the Netherlands and the United States, where it was sued along with Grokster and MusicCity by the record industry and Hollywood studios.

The Dutch court decision came in a suit brought by Kazaa against Dutch copyright organization Buma/Stemra, which has been in on-and-off licensing negotiations with Kazaa. The software maker charged Buma/Stemra with antitrust violations for refusing to negotiate. Buma/Stemra then countersued Kazaa.

Last month's decision also ordered Buma/Stemra to resume licensing talks, which broken off last month after the Recording Industry Association of America and the Motion Picture Association of America filed their copyright infringement suit in Los Angeles against Kazaa and several other makers of file-swapping software.

Copyright holders have so far been successful in shutting down peer-to-peer companies, most notably Napster, which popularized the concept. A federal judge ordered the company late last year to filter copyright material from its network, effectively forcing the service to close while it develops the necessary technology. The company plans to reopen next year as a subscription service using fully licensed material.

According to defense attorneys in the Los Angeles case, new developments in peer-to-peer technology may have changed some of the underlying legal assumptions in such suits.

Early peer-to-peer services helped customers trade files by offering search directories hosted on individuals' computers, among other services. Such features were almost necessary at the time to help ease network bottlenecks associated with sending bulky media files over the Internet.

The second round of peer-to-peer litigation potentially poses some tougher legal questions, the technology's advocates argue, since companies such as FastTrack merely make and market software products and play no other role in assisting file-trading among their customers.

Staff writer Jasper Koning reported from Hilversum.

 

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