Music Industry In Global Fight On Web Copies - New York Times
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`Music Industry In Global Fight On Web Copies
`
`By AMY HARMON
`Published: October 7, 2002
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`Having vanquished the music swapping service Napster in court, the entertainment industry is
`facing a formidable obstacle in pursuing its major successor, KaZaA: geography.
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`Sharman Networks, the distributor of the program, is incorporated in the South Pacific island
`nation of Vanuatu and managed from Australia. Its computer servers are in Denmark and the
`source code for its software was last seen in Estonia.
`
`KaZaA's original developers, who still control the underlying technology, are thought to be
`living in the Netherlands -- although entertainment lawyers seeking to have them charged with
`violating United States copyright law have been unable to find them.
`
`What KaZaA has in the United States are users -- millions of them -- downloading copyrighted
`music, television shows and movies 24 hours a day.
`
`How effective are United States laws against a company that enters the country only virtually?
`The answer is about to unfold in a Los Angeles courtroom.
`
`A group of recording and motion picture companies has asked a federal judge to find the
`custodians of KaZaA liable for contributing to copyright infringement and financially
`benefiting from it. If the group wins, it plans to demand an immediate injunction. Sharman
`would then have to stop distributing KaZaA or alter the program to block copyrighted
`material, which it says is not possible because of how its technology works.
`
`Sharman asked the court last week to dismiss the case, asserting that because the company has
`no assets or significant business dealings in the United States, the court has no jurisdiction
`over it. Moreover, the company said, because the Internet does not recognize territorial
`boundaries, anything Sharman does with KaZaA at the behest of a judge in Los Angeles would
`affect 60 million users in over 150 countries. Arguments are scheduled for Nov. 18.
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`''What they're asking is for a court to export the strictures of U.S. copyright law worldwide,''
`said Roderick G. Dorman, a lawyer for Sharman. ''That's not permitted. These are questions of
`sovereignty that legislatures and diplomats need to decide.''
`
`Legal experts say the Los Angeles judge, Stephen V. Wilson of Federal District Court, may well
`decide his court has jurisdiction over Sharman because Americans download software from its
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`http://www.nytimes.com/2002/10/07/us/music-industry-in-global-fight-on-web-copies.html?pagewanted=all&src=pm[3/21/2014 6:03:10 PM]
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`Apple Exhibit 4396
`Apple v Sightsound Technologies
`CBM2013-00023
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`Music Industry In Global Fight On Web Copies - New York Times
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`Web site and the company makes money from showing them advertisements.
`
`The struggle over how to apply sometimes conflicting national laws to a medium that pays
`little mind to geographic boundaries is likely to remain at the heart of the lawsuit, if it
`proceeds. While there is broad international agreement on what constitutes direct copyright
`infringement, the penalty for those who enable others to infringe has not yet garnered such
`consensus.
`
`None of the entities being sued in association with KaZaA distribute copyrighted material
`themselves. Instead, the software enables millions of people to search for files on each other's
`personal computers when they are connected to the Internet. When a KaZaA user types the
`name of an artist or title into a search box, a list of matching files that other users have placed
`in a ''shared'' folder on their hard drives appears on the screen. The user can then click on an
`item to download a copy.
`
`Under the copyright law of most countries, people who use software like KaZaA to download
`copyrighted material from each other would almost certainly be liable for infringement. The
`conflict is over whether distributing software that makes it easy for people to break the law is
`itself a copyright violation.
`
`''The question is whether there is liability in making it possible to infringe,'' said Jane C.
`Ginsburg, a professor at Columbia University who teaches international copyright law. ''If there
`are genuine markets for the software in different countries, it could be very difficult to figure
`out which law to apply.''
`
`In the Napster case, a federal appeals court in San Francisco found that the company was
`likely to be held liable for violating United States copyright law and ordered it to stop
`operating until the case could go to trial. Napster has since filed for bankruptcy and its service
`has been defunct for more than a year.
`
`An appeals court in the Netherlands, however, ruled earlier this year that it was legal to
`distribute the KaZaA software there. ''Insofar as there are acts that are relevant to copyright,
`such acts are performed by those who use the computer program and not by KaZaA,'' a
`translation of the court's ruling provided by Sharman's lawyers says.
`
`That case is on appeal to the highest court of the Netherlands, but music industry lawyers say
`it has little bearing on the KaZaA case in Los Angeles, even if it is upheld. The global reach of
`the Internet, they say, does not take away the right of the United States to enforce its laws
`when they have an impact on its citizens, within its borders.
`
`''The copyright industries around the world are not going to stand still and let other companies
`build businesses off the sweat of their brow simply because they're willing to set up shop in
`some other country,'' said Matt Oppenheim, a lawyer for the Recording Industry Association of
`America.
`
`Nearly three million people typically use the KaZaA Media Desktop software at any given time,
`collectively providing access to half a billion files, Sharman said, roughly double Napster's
`usage at its peak. In addition to music, KaZaA makes it possible to trade other digital files,
`including pictures, text and video.
`
`Although a vast majority of files exchanged with the software appear to be copyrighted works,
`people also use it to trade material that is not subject to copyright restrictions. For that reason,
`critics have said that banning it would unnecessarily restrict speech and technological
`innovation. They say Hollywood is simply trying to avoid the daunting process of pursuing
`individual users, and a potential public relations backlash from suing its own customers.
`
`But the entertainment industry has so far prevailed in all of its legal actions against companies
`based in the United States that they have accused of contributing to infringement. Napster,
`Aimster and Audiogalaxy have either shut down or altered their services. Sharman's assertion
`that it cannot change its software to screen out copyrighted material, entertainment lawyers
`suggest, has more to do with the advertising revenue it would lose once people could no longer
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`Music Industry In Global Fight On Web Copies - New York Times
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`download popular music and movies than with technological reality.
`
`Two other companies whose software enables file trading are named in the Los Angeles case.
`But one of those, StreamCast Networks, the distributor of a program called Morpheus, is based
`in the Nashville suburb of Franklin. The other, Grokster, is incorporated in the West Indies
`but is owned by a California family.
`
`The difference with Sharman is that even if the entertainment companies win their lawsuit, the
`enforcement of any judgment may rely entirely on legal authorities in other nations, and their
`cooperation is not assured. Last year, for instance, a federal court in San Jose, Calif., declined
`to honor the judgment of a court in France that prohibited Yahoo from displaying Nazi
`materials to French citizens visiting its auction Web site. The court said the First Amendment
`principles of the United States trumped the French ruling, and it would not be enforced.
`
`The Sharman case may well raise again the unsettled question of whether Internet companies
`should be forced to adhere to the laws of every country whose citizens have access to their
`Web sites.
`
`Some copyright experts object to that notion, on pragmatic grounds and because they say it
`contradicts the Jeffersonian principle that governments derive their powers from the consent
`of the governed. But the alternative, for a company to be bound only by the laws of the
`country where it is headquartered, could lead to a race to incorporate in countries whose laws
`are the most lax.
`
`Sharman officials have said that the company is registered on Vanuatu because of its favorable
`tax conditions, and that it will abide by the laws of Australia. Australia is one of nearly 150
`countries that have signed the Bern Convention for the Protection of Literary and Artistic
`Works, which sets minimum levels of copyright protection.
`
`Jurisdictional issues aside, Sharman's lawyers say that their software is fundamentally
`different from Napster's because the company's servers do not control a central index of what
`files reside on which of its users' computers. The company says that even if it ceased
`operations entirely, people who already have the software would be able to exchange files.
`
`The Hollywood companies suing Sharman dispute the assertion that it has no control over the
`network of people who use it. Meanwhile, they are still sorting out who owns what with respect
`to the KaZaA program, and what continent they are on.
`
`Nikki Hemming, the chief executive of Sharman, which is based in Sydney, Australia, is
`scheduled to meet with the entertainment industry's lawyers soon to give a deposition, though
`at the request of her lawyers, the meeting will probably take place in Canada. Niklas
`Zennstrom and Janis Friis, who developed the software, are being sought in Europe. And
`according to a lawyer for the record industry, the programmers in Estonia who once possessed
`a copy of the program's source code told a judge there last week that they no longer had it, but
`they would not say where it was.
`
`Chart: ''Software With Reach'' KaZaA is one of the file-sharing programs that has gained users
`after Napster's demise. Graph tracks the top file-sharing applications (listed below) from Jan.
`2001-June 2002: NAPSTER AUDIOGALAXY SATELLITE MORPHEUS KAZAA MEDIA
`DESKTOP Although KaZaA's distributor, Sharman Networks, is being sued in the United
`States over accusations of copyright infringement, the company's operations are based around
`the world. Map of the world highlights the locations of the following countries:
`NETHERLANDS -- Original developers DENMARK -- Server computers ESTONIA --
`Software's programmers LOS ANGELES -- Site of lawsuit VANUATU -- Incorporation of
`Sharman Networks AUSTRALIA -- Sharman Networks' managers (Source: comScore Media
`Metrix [application user data])(pg. A6)
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