Record Companies Turn Tail In File-Sharing Case

by Glen Shapiro, LawAndTax-News.com, New York

08 August 2006

Just days after IFPI and RIAA reached a global out-of-court settlement with the Kazaa peer-to-peer network, a failed music piracy prosecution in the US has raised fears that the record companies may find it increasingly difficult to win file-sharing cases.

When Tammie Marson of Palm Desert, California, whose computer contained illegal music files downloaded over her internet connection, refused to pay the $3,500 compensation demanded by Virgin, Sony BMG, Arista, Universal and Warner Brothers, the record companies agreed to dismiss the case and pay their own costs.

Marson and her lawyer Seyamack Kouretchian of Coast Law Group argued that numerous other people had access to Marson's Internet connection and computer and that any of those people could have engaged in the allegedly infringing conduct. Marson is a cheerleader teacher, and hundreds of her pupils had access to her computer and Internet connection.

Kouretchian and other lawyers are now claiming that the record companies give up quickly and settle when faced with resistance to file-sharing prosections, because of the extreme difficulty of proving in court that a given defendant personally downloaded offending files.

The companies' settlement with Kazaa applies to Kazaa's operations worldwide and concludes the ongoing legal proceedings brought by the record companies against the service's operators in Australia and the United States.

Under the terms of the settlement, Kazaa has agreed to pay $100 million in compensation to the record companies that took the legal action to stop copyright infringement on the Kazaa network. Kazaa will also introduce filtering technologies ensuring that its users can no longer distribute copyright-infringing files.

John Kennedy, chairman and CEO of IFPI observed that: "Kazaa was an international engine of copyright theft which damaged the whole music sector and hampered our industry's efforts to grow a legitimate digital business. It has paid a heavy price for its past activities. At the same time Kazaa will now be making a transition to a legal model and converting a powerful distribution technology to legitimate use."

"This is the best possible outcome for the music industry and consumers. Our industry will have a new business partner and consumers will experience new ways of enjoying music online, with more choice. This is a win-win scenario."

The settlement follows a landmark ruling in the Federal Court of Australia last year which found the Kazaa operators guilty of authorising widespread copyright infringement, and litigation in the US by record companies, music publishers and motion picture studios against Kazaa, Grokster and Streamcast for copyright infringement.

The case against Grokster and Streamcast ultimately reached the US Supreme Court, which in June 2005 unanimously ruled that individuals or companies that promote copyright theft by users of their service can be held responsible. Grokster settled the case with the record labels and motion picture studios in November last year.

Despite the deal with Kazaa, the record companies will probably feel that they have to persist in attacking file-sharers themselves or see the rebirth of a file-sharing industry that is immune from prosecution.

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