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Judge: Kazaa Cannot Sue

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LOS ANGELES: The company that distributes Kazaa filesharing software can’t sue the major record companies and Hollywood studios for antitrust violations, a federal judge ruled Thursday.

The labels and studios filed suit last year against Sharman Networks, alleging that it violated their copyrights by distributing and supporting Kazaa, which lets users copy files from each others’ computers.

Sharman countersued in February, claiming that the companies conspired to keep authorised and copy-protected versions of their songs and movies off of Kazaa.

Some defenders of online music sharing contend that the media companies encourage piracy by refusing to license their wares at low prices to online providers.

On Thursday though, US District Judge Stephen V. Wilson in Los Angeles dismissed all of Sharman’s antitrust claims. Even if Sharman’s allegations were true, Wilson said, it wasn’t entitled to damages because its business is distributing filesharing software, not entertainment.

The ruling won’t prevent Sharman from trying to prove later in the trial that the labels and studios colluded to block its partner Altnet from obtaining licences to their songs and movies. Sharman alleged that the labels and studios feared Altnet could compete with their own online efforts.

“Sharman Networks was grasping at straws to distract the court from their own improper behaviour,” said Matthew Oppenheim of the Recording Industry Association of America (RIAA).

“We are pleased that the court recognised what we have said all along — that these claims lacked any merit.”

Sharman attorney Rod Dorman could not be reached for comment.

Kazaa is the most popular of the many file-sharing networks, attracting at least four million users offering more than 800 million files at any given moment.

The record companies have blamed filesharing for the prolonged slump in CD sales, and the movie studios claim that they could suffer the same fate if technology cuts the time needed to download a feature film.

Wilson, however, ruled in April that two other popular filesharing companies, StreamCast Networks Inc and Grokster, did not violate the labels’ and studios’ copyrights by distributing filesharing software.

Although users of those programs frequently committed piracy, Wilson said, the companies weren’t liable because they didn’t monitor or control them.

The entertainment companies plan to appeal that ruling. Meanwhile, they’re trying to build their infringement case against Sharman.

In its antitrust claims, Sharman argued that its strategy has always been to work with Altnet — a subsidiary of Los Angeles-based Brilliant Digital Entertainment — to distribute authorised copies of music, movies and other files through Kazaa. Sharman’s role ostensibly was to provide the pipeline, while Altnet’s was to get licences.

Sharman alleged that the major media companies conspired to withhold licences.

But Wilson said “Sharman is neither a competitor nor a customer” in that market, and any injuries would be “incidental, not integral, to the alleged anticompetitive scheme.” — LAT-WP

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