Ruling on Monday in Australia's Federal Court, Justice Murray Wilcox found against Sharman Networks, which distributes the Kazaa file sharing software.
Following the filing of a lawsuit against it ten months ago by a group of five record labels, Sharman had argued that it is unable to control the uses to which its software was put, meaning that it could not be held responsible for the copyright infringing activities of its users.
However, Justice Wilcox stated that Sharman had "long known that the Kazaa system is widely used for the sharing of copyright files", further announcing that:
"The respondents authorised users to infringe the applicants' copyright in their sound recordings."
Sharman Networks has been given two months to modify its software in order to prevent further copyright abuses, and has been ordered to pay 90% of the record companies' costs.
A separate hearing will determine the level of damages payable by the firm.
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