December 3, 2004 7:48 AM PST

Report asserts Kazaa makes the rules

Setting aside Sharman Networks' objections, an Australian judge accepted on Friday an affidavit with potentially damaging assertions about Kazaa's handling of copyrighted material.

The affidavit contains a report from George Barker, director of the Australian National University's Center for Law and Economics, Intellectual Property and Copyright, and focuses on the financial consequences of the Kazaa system, which is run by Sharman Networks.

According to the report, the Kazaa system is a "marketplace" that brings together people who have copyrighted works and people who want to make unauthorized copies of those works. The report adds that Kazaa "designs the rules, facilitates the 'market' for exchange of copyright works, and enforces or has the capacity to enforce the rules of that market."

"The attractiveness of the system to users, and the success of Sharman's network growth strategy is verified by the fact that Sharman claims that Kazaa has more than 60 million subscribers and is the most downloaded program in history--approximately 20 million downloads per month," the report says. "As the network grows in size, it becomes more attractive to potential users--because more content will be available--and more valuable to Sharman."

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