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Thread: Kazaa Articles

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    ok i found these on AustralianIT.com.au
    its an Information Technology News Website for australia.


    Retailers face the online music:
    Gary Gentile
    JANUARY 28, 2003
    SIX American retail record store chains are teaming to offer consumers digital music downloads in their shops and over the internet.

    Music retailers have been hurting from competition from CD burning, online music and large discount stores

    The stores have formed a joint venture called Echo that will provide technology and allow them to offer individual tracks for downloading to portable devices and computers.

    The stores are Best Buy, Tower Records, Virgin Entertainment Group, Wherehouse Music, Hastings Entertainment and Trans World Entertainment, operator of FYE, Strawberries and Coconuts stores.

    "We're trying to make digital music work in a mass market way, for millions of people," said Dan Hart, chief executive of Echo. "That hasn't happened yet."

    Last year, the major record labels formed their own, competing subscription-based online music services, but those legal alternatives to unauthorised file-swapping services such as Napster and Kazaa have yet to catch on with consumers. The record company efforts, pressplay and MusicNet, have declined to release subscriber numbers, leading sceptical analysts to surmise the numbers have remained low.

    The record labels have blamed the popularity of such illegal services for the decline in music sales in recent years.

    The retail music stores also are suffering. Wherehouse recently filed for bankruptcy protection, citing illegal downloads as well as competition from discount stores such as Wal-Mart. Tower Records hopes to avoid bankruptcy by closing stores and dropping CD prices.

    The Echo consortium members hope to leverage their existing relationships with customers and the record labels to package off-line and online music.

    Individual retailers will decide how to use the technology and music provided by Echo, Hart said. For example, stores could offer digital music tracks on a handout CD, allowing customers to access some of them for free and charging a fee to listen to the rest. Portable players could come pre-loaded with music that customers could listen to for a fee.

    Retailers also could allow customers to download tracks at in-store kiosks or over internet sites, such as Radio Free Virgin.

    Hart said he believes the Echo model can work where the recording industry-sponsored services have not.

    "I think consumers will pay, but you have to provide the greater level of value," he said. "We're the traditional trading partner of the labels. We understand marketing and how to provide value to consumers."

    On Friday, national magazine distributor Anderson Merchandisers bought the technology and some other assets of defunct internet music company Liquid Audio. The company said it hopes to offer music through the internet sites of retailers such as Wal-Mart, although no deals have yet been made.

    Echo is working with Microsoft and Real Networks to incorporate digital rights management software that will prevent songs from being copied or sent over the internet. The venture's immediate challenge will be to convince record labels to license their catalogue.

    "Unless you get licensing from the labels, you don't have a product," said Josh Bernoff, an analyst at Forrester Research.

    But if Echo succeeds, the model has a chance, Mr Bernoff said.

    "Once the labels come on board, we could see really interesting stuff," he said. "We could see this be the first successful consumer oriented download site."

    Others, however, think retailers may have come too late to the game.

    "So many consumers are now thinking about internet music in terms of an internet destination site than in terms of a terrestrial brand transplanted to the internet," said Phil Leigh, digital music analyst with Raymond James Associates.

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    US tightens net copyright:
    Simon Hayes
    JANUARY 28, 2003
    UNITED States trade negotiators are pushing for Australia to sign up to a tough new copyright regime that could hold internet service providers liable for breaches.

    The first round of talks in an Australia-US Free Trade Agreement will commence in Australia in March, and the internet industry is flagging that ISP liability for copyright material is "on the table" as far as the US side is concerned.

    US Trade Representative Robert Zoellick has raised the issue in a letter to Congress ahead of the talks.

    A free trade agreement would probably involve the two nations "harmonising" key legislation on commerce. This could include bringing the Australian Copyright Act into line with US law.

    Australia's law differs substantially from the US Digital Millennium Copyright Act, which holds ISPs liable for the transmission of copyright material unless they sign up to a content management agreement that requires them to remove material judged to be in breach of copyright law.

    "The US would like to influence our legislation in a way similar to theirs," Department of Foreign Affairs and Trade regional and free trade agreement section director John Richardson said.

    The US was also likely to seek stronger protection against software piracy, he said. "In copyright they believe we don't have strong enough criminal penalties, as opposed to civil penalties."

    Australian ISPs have said heavy lobbying from the entertainment industry is behind the US stance.

    "The US side is heavily influenced by music and motion picture industry interests, which in the US have been very aggressive in the way they have pursued ISPs," Internet Industry Association chief executive Peter Coroneos said.

    "The US has definitely put ISP liability on the agenda, and we're developing a position on that."

    The controversial DMCA was passed by Congress in 1998, and has been widely attacked for not providing enough protection to users.

    While 1998 amendments to Australia's Copyright Act protect ISPs from legal action when they act as conduits for copyright material, the US law provides that so-called "safe harbour" only when they sign up for a regime of takedown notices.

    Like Australia's internet censorship regime, the US takedown system requires ISPs to deliver notices to alleged violators and to block access to copyright material.

    Copyright owners may also ask for the identity of the subscriber, but many ISPs have fought such orders.

    Just last week, the US District Court ordered ISP and telco Verizon to give up the name of a subscriber alleged to have downloaded 600 songs via Kazaa in a single day.

    Mr Coroneos said the Department of Foreign Affairs and Trade had approached the IIA for input on the copyright issue.

    Unlike many other interests - including the Australian Wheat Board, which is opposing US attempts to dismantle the single desk system for exports - the internet industry could join the agreement quickly.

    The IIA has been working on a code of practice with the Australian Recording Industry Associations for some months.

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    Facing the music over privacy:
    Mark Hollands, Analyse This
    JANUARY 28, 2003

    NOTHING boils the blood of a net-head faster than accusing them of being a thief for downloading music from the web, or having them discover their privacy has been stolen for the umpteenth time.

    When these two events unfold simultaneously, the blood pressure races off the gauge. That is precisely what has happened in the aftermath of a test case in the US Supreme Court.

    A 37-page ruling has thrown a legal spotlight on whether an internet user has the right to privacy while online -- which most Americans believed was guaranteed by their constitution.

    The court decision to force an ISP to reveal the details of any customer suspected of downloading music illegally has dramatic ramifications for the US, whose legal attitudes to all things online often set agendas for those of us who do not live under the Star Spangled Banner.

    The saga began last July when the Recording Industry Association of America said it believed an individual user had downloaded more than 600 songs from the internet and distributed them illegally.

    The RIAA served a subpoena on the user's ISP, Verizon, demanding the name and details of the customer.

    Verizon refused, and the argument ended up in the Supreme Court.

    The judge ruled that Verizon did not have right to deny the RIAA's request under the four-year-old Digital Millennium Copyright Act.

    This has caused tremendous outrage among privacy groups and ISPs, and this has been voiced on the internet and in the media. If you cut through the posturing and politics of this decision, you are left with a cold reality: anyone in the US can now seek a simple authority from a court clerk to require an ISP to reveal the identity of an alleged copyright thief.

    On that basis, millions of internet users risk having their identity revealed not only to the RIAA but to record companies, movie moguls, indeed anyone who owns copyright and thinks their work has been filched.

    Verizon is to appeal.

    Its argument will be more than simply arguing, "this decision completely sucks".

    It claims the Act provides immunity to ISPs, exempting them from having to provide information on customers.

    The "suck" defence might be a better option.

    Undoubtedly, this is the strongest signal yet that governments, courts and the entertainment business in its many forms are getting serious about protecting copyright in the age of the internet.

    The global music industry has long complained that illegally downloading music has become an accepted practice and is pillaging its revenue base.

    Last week, the Australian Record Industry Association reported an 8.2 per cent decline in 2002 sales, as revenue tumbled from $623 million to $573 million.

    In an effort to recover some of the revenue lost to illegal copying, local lobby groups, the Australasian Performing Rights Associations and Screenrights, have a proposal before the Federal Government to put a levy on blank CDs and DVDs.

    The finger of blame is pointed at the internet, as industry officials cite a corresponding increase in broadband adoption as proof that increasing numbers of people are stealing music and movies.

    Adoption of broadband accelerated in most Western countries, including Australia, in 2002.

    Significantly for the music industry, the number of US broadband users leapt 59 per cent year-on-year.

    Globally, the amount of stolen music has been valued at $US5.2 billion ($8.9 billion) by the US RIAA.

    It estimates 2.6 billion music files are downloaded every month using peer-to-peer file-sharing programs, such as Gnutella, Morpheus and Australia's own Kazaa, which is said to sit on more than 100 millions PCs.

    The one-time king of this realm, Napster, tried to go legit with the German music publisher, Bertelsmann, but went under for its troubles.

    Sharing music on the web has become so common that few people believe it is wrong. But it is. It's stealing.

    Why can't people see this? I can't bring myself to believe I have friends and family who are happy to take someone's work without paying a fee just because they can.

    Yet few agree.

    My eldest son spent a fair bit of his summer holidays learning how to download music -- a skill I refused to share, so his cousin helped out.

    No matter how much I complain and make the case for copyright, not one "grown-up" has supported me in telling him what he is doing is wrong.

    Admittedly, the entertainment companies do not help themselves much.

    Years of stubborn refusal to take their businesses online have contributed to the diabolical situation we face now.

    If these companies would embrace a micro-payment system, such as PayPal, the need to breach copyright would be diluted.

    They could even work with the likes of Kazaa to run legitimate file-sharing sites, which would produce revenue instead of court cases.

    The IT industry has been no friend to the world of entertainment in this matter.

    Hardware manufacturers have rejected requests to install anti-piracy devices, saying such technology would slow PCs' performance.

    This standoff will not last forever.

    Some music companies announced this month they would join two US IT groups -- the Business Software Alliance and the Computer Systems Policy Project -- to find common ground.

    Meanwhile, the movie industry continues to be the main lobbyist for legislation that would make anti-piracy devices compulsory.

    Its efforts are having some success.

    It was a prime mover behind a January 15 decision by the US Supreme Court to uphold a 1998 decision to extend the term of copyright by another 20 years.

    Had the decision gone the other way, early cartoons of Mickey Mouse, for example, would have become public domain.

    An editorial in the New York Times complained the 7-2 court decision meant we were seeing the "end of public domain and the birth of copyright perpetuity".

    It added: "The ability to draw freely on the entire creative output of humanity is one of the reasons we live in a time of such fruitful creative ferment."

    The pro-copyright camp has been further heartened by Microsoft, which last week announced a digital rights management system that could prevent music being transferred from CD to PC.

    The cumbersomely named Media Data Session Toolkit creates two layers of data on a CD. One is designed to allow the disc to be played normally, while the second layer, designed for the PC, could prevent copying and even limit the amount of times it could be played on a computer.

    The battle for copyright control is far from over.

    The lawyers, not file-sharing technology, may yet have the final say.

    That will make plenty of people's blood boil.

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    Pirate hunter Rosen resigns:
    Wires
    JANUARY 23, 2003
    HILARY Rosen, the US recording industry's head lobbyist who waged a high-profile battle against Napster and music piracy, is resigning at the end of the year.

    Rosen cited personal reasons for leaving the Recording Industry Association of America (RIAA), where she has served as chief executive since 1998.

    "During my tenure here, the recording industry has undergone dramatic challenges and it is well positioned for future success. I have been extremely proud to be a part of this industry transition," Ms Rosen said. "But I have young children and I want to devote more of my time to them."

    She said the RIAA board will conduct a formal search for a replacement.

    David Munns, chairman and chief executive of EMI Recorded Music North America, called Ms Rosen "a tremendous advocate" who has been "extremely influential in both transforming the music industry in the digital age and in fighting piracy."

    The recording industry has been struggling with declining sales, which Rosen has blamed on illegal downloading over Napster and successors like KaZaa. Album sales declined for the second straight year in 2002, down 10.7 per cent from the previous year.

    Within the past few weeks, top executives at Sony Music and Vivendi Universal's MCA Records also said they were leaving.

    Ms Rosen's departure comes as the organisation sought to soften its image among internet consumers, many of whom viewed the RIAA — and Ms Rosen personally — with antipathy over incessant pressure for crackdowns on sharing digital music over the internet.

    On Tuesday, Ms Rosen's group won a closely watched lawsuit seeking internet providers' cooperation in tracking down individual computer users who illegally download music. USP ISP Verizon Communications had resisted, citing privacy concerns.

    The RIAA recently set aside a simmering dispute with leading technology companies by agreeing to oppose any government efforts to build locking controls into future generations of entertainment devices.

    Technology companies have complained that such controls, which would hamper consumers' efforts to share movies and music, are too expensive and complex.

    The recording industry also has been promoting its own, for-fee online music services, but consumers have largely rejected them because of usage restrictions and limited selections.

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    ISPs drafted in DMCA piracy fight:
    Ted Bridis
    JANUARY 22, 2003
    A RULING handed down by a US Federal Court on Tuesday means American internet service providers must agree to requests by the music industry to track down computer users who illegally download music.

    The decision by US District Judge John D Bates upheld the recording industry's power under a 1998 law to compel internet providers to identify customers that illegally trade music or movies online.

    Judge Bates acknowledged that the case was an important test of subpoena powers Congress granted to copyright holders under the Digital Millennium Copyright Act.

    The judge said that controversial law, which was enacted to uphold copyrights online, permits music companies to force internet service providers (ISPs) to turn over the name of a suspected pirate upon subpoena from any US District Court clerk's office, without a judge's order.

    Cary Sherman, president of the Recording Industry Association of America, said, "The illegal distribution of music on the internet is a serious issue for musicians, songwriters and other copyright owners, and the record companies have made great strides in addressing this problem by educating consumers and providing them with legitimate alternatives."

    During a contentious hearing in October, the judge lamented ambiguities in the copyright act, saying that the US Congress "could have made this statute clearer". At the time, the music industry indicated that a ruling in its favour could result in reams of warnings to scare internet pirates into taking their collections offline.

    The case arose from efforts by the recording association to track down a customer of US ISP Verizon Communications who was freely sharing copies of more than 600 songs by well-known artists.

    Mr Sherman said that his organisation, once it knows the identity of the Verizon customer, would "let them know that what they are doing is illegal".

    Verizon had resisted the music industry's subpoena to identify its customer, saying it could turn ISPs into a turnstile for piracy suits and put innocent customers at risk.

    Through programs like Kazaa, Morpheus and Gnutella, a person can find virtually any song or movie — sometimes even before it's released in stores — and download it for free. On a typical afternoon, about 3 million people were connected on the Kazaa network and sharing more than 500 million files.

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    ISPs drafted in DMCA piracy fight:
    Ted Bridis
    JANUARY 22, 2003
    A RULING handed down by a US Federal Court on Tuesday means American internet service providers must agree to requests by the music industry to track down computer users who illegally download music.

    The decision by US District Judge John D Bates upheld the recording industry's power under a 1998 law to compel internet providers to identify customers that illegally trade music or movies online.

    Judge Bates acknowledged that the case was an important test of subpoena powers Congress granted to copyright holders under the Digital Millennium Copyright Act.

    The judge said that controversial law, which was enacted to uphold copyrights online, permits music companies to force internet service providers (ISPs) to turn over the name of a suspected pirate upon subpoena from any US District Court clerk's office, without a judge's order.

    Cary Sherman, president of the Recording Industry Association of America, said, "The illegal distribution of music on the internet is a serious issue for musicians, songwriters and other copyright owners, and the record companies have made great strides in addressing this problem by educating consumers and providing them with legitimate alternatives."

    During a contentious hearing in October, the judge lamented ambiguities in the copyright act, saying that the US Congress "could have made this statute clearer". At the time, the music industry indicated that a ruling in its favour could result in reams of warnings to scare internet pirates into taking their collections offline.

    The case arose from efforts by the recording association to track down a customer of US ISP Verizon Communications who was freely sharing copies of more than 600 songs by well-known artists.

    Mr Sherman said that his organisation, once it knows the identity of the Verizon customer, would "let them know that what they are doing is illegal".

    Verizon had resisted the music industry's subpoena to identify its customer, saying it could turn ISPs into a turnstile for piracy suits and put innocent customers at risk.

    Through programs like Kazaa, Morpheus and Gnutella, a person can find virtually any song or movie — sometimes even before it's released in stores — and download it for free. On a typical afternoon, about 3 million people were connected on the Kazaa network and sharing more than 500 million files.

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    ISPs drafted in DMCA piracy fight:
    Ted Bridis
    JANUARY 22, 2003
    A RULING handed down by a US Federal Court on Tuesday means American internet service providers must agree to requests by the music industry to track down computer users who illegally download music.

    The decision by US District Judge John D Bates upheld the recording industry's power under a 1998 law to compel internet providers to identify customers that illegally trade music or movies online.

    Judge Bates acknowledged that the case was an important test of subpoena powers Congress granted to copyright holders under the Digital Millennium Copyright Act.

    The judge said that controversial law, which was enacted to uphold copyrights online, permits music companies to force internet service providers (ISPs) to turn over the name of a suspected pirate upon subpoena from any US District Court clerk's office, without a judge's order.

    Cary Sherman, president of the Recording Industry Association of America, said, "The illegal distribution of music on the internet is a serious issue for musicians, songwriters and other copyright owners, and the record companies have made great strides in addressing this problem by educating consumers and providing them with legitimate alternatives."

    During a contentious hearing in October, the judge lamented ambiguities in the copyright act, saying that the US Congress "could have made this statute clearer". At the time, the music industry indicated that a ruling in its favour could result in reams of warnings to scare internet pirates into taking their collections offline.

    The case arose from efforts by the recording association to track down a customer of US ISP Verizon Communications who was freely sharing copies of more than 600 songs by well-known artists.

    Mr Sherman said that his organisation, once it knows the identity of the Verizon customer, would "let them know that what they are doing is illegal".

    Verizon had resisted the music industry's subpoena to identify its customer, saying it could turn ISPs into a turnstile for piracy suits and put innocent customers at risk.

    Through programs like Kazaa, Morpheus and Gnutella, a person can find virtually any song or movie — sometimes even before it's released in stores — and download it for free. On a typical afternoon, about 3 million people were connected on the Kazaa network and sharing more than 500 million files.

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    ISPs warned over copyright:
    Kate Mackenzie
    JANUARY 15, 2003
    AN Australian internet industry body is warning its members to heed form letters from US organisations about P2P copyright breaches, after a letter sent recently indicated "a new order of magnitude".

    WA Internet Association president Kimberley Heitman said his organisation held an executive meeting yesterday in light of a letter sent to an unnamed Australian ISP by US company Mediaforce on behalf of Warner, which was published on broadband user group website Whirlpool.

    Mr Heitman, who also works as a lawyer for the University of Western Australia, said while the proliferation of automated anti-piracy software and services meant copyright breach notifications were commonplace, the Mediaforce letter was more serious than those seen previously.

    "What we're dealing with here is, apart from a very specific complaints about a particular user downloading a particular file, we also have a demand for the ISP to take action against the user according to American law," he said.

    In addition, the letter demanded the ISP block all access to a particular P2P port. "You have a situation where they would not only ask the ISP to stop a continuing act - but also ask them to take action against this particular user for using a P2P network."

    It was possible that action could be taken under either US or Australian copyright laws.

    "Australia has agreed that if an overseas copyright owner has a case against an Australian for copyright infringement, they can bring that too," Mr Heitman said.

    In response to the action, WAIA plans to hold a forum for its members, with legal experts to look at ISPs' obligations to respond to such complaints, which member ISPs have been advised to take seriously.

    Mr Heitman said many ISPs did not know how to respond.

    "We're going to be advising our members on the importance of ensuring that their networks are not hubs for P2P networks - the situations where ISPs ought not find themselves drawn into the litigation against KaZaA or other P2P operators," he said.

    WAIA would also look into setting up its own Code of Practice under Australia's copyright laws, which could help further clarify its members' obligations when accused of allowing copyright infringements. Mr Heitman said this could enhance the protection for members under Australia's international copyright agreements, although it would be difficult to determine the level of protection it would provide against action taken in US courts - "you'd have to go to the US and pay a lot of money to find out".

    Australia's legal standing relative to the copyright battles of the US is shifting in the wake of a US district judge's decision to allow the Australian company behind P2P network Kazaa, Sharman Networks, to face legal action brought by record companies and film studios in the US.

    Law firm Gilbert and Tobin, who advised the copyright owners' US lawyers, said the Kazaa decision P2P operators could not avoid US court action even if they were based in other jurisdictions.

    "The effect of Judge Wilson's decision is that courts will not allow P2P operators to escape judgment or law enforcement by moving servers or operations around the world," the firm said in a statement.

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    DVD teen acquitted:
    Doug Mellgren
    JANUARY 08, 2003
    HOLLYWOOD didn't get its happy ending after a Norwegian court acquitted a teenager of digital burglary charges for creating and circulating online a program that cracks the security codes on DVDs.

    The ruling, the latest setback in the entertainment industry's drive to curtail illegal copying of its movies, was a key test in how far copyright holders can go in preventing the duplication of their intellectual property.

    Jon Lech Johansen, who was 15 when he developed and posted the program on the internet in late 1999, said he developed the software only to watch movies on a Linux-based computer that lacked DVD-viewing software.

    "I'm extremely satisfied," said Mr Johansen, who sat placidly in the small courtroom with his family and computer enthusiasts as the verdict was read. "Most of those who have watched the case from the outside have said nothing criminal happened."

    Mr Johansen, now 19, said he would celebrate by watching DVDs using similar DVD-cracking software.

    Head judge Irene Sogn said people cannot be convicted of breaking into their own property. Sogn said prosecutors failed to prove that Mr Johansen or others had used the program to access illegal pirate copies of films.

    "The court finds that someone who buys a DVD film that has been legally produced has legal access to the film. Something else would apply if the film had been an illegal ... pirate copy," the three-member Oslo City Court said in a unanimous 25-page ruling.

    The Motion Picture Association of America (MPAA), which had encouraged the prosecution, had no comment, spokeswoman Phuong Yokitis said.

    The decision was only the latest setback for the entertainment industry in its efforts to discourage the digital distribution of its wares.

    Last week, US Supreme Court Justice Sandra Day O'Connor lifted an emergency stay that prohibited the posting of similar DVD decryption programs on the internet.

    Last March, a Dutch appeals court cleared copyright-infringement charges against KaZaA, a maker of computer software that lets people download music, movies and other copyright-protected material.

    Jonathan Zittrain, a Harvard University law professor who studies the internet, doubted Tuesday's decision would discourage the entertainment industry's anti-piracy campaign.

    "The fight over Johansen's program, DeCSS, was always more a symbolic fight," Mr Zittrain said. "This is not the literal code that millions of Americans would use to copy Hollywood's treasures."

    Nonetheless, the ruling signals that Hollywood cannot tell buyers of its products how they can be used, said Robin Gross of IP Justice, an organisation that promotes more balance in applying intellectual-property laws.

    “Now the people are beginning to say 'Hey, wait a minute! We have some say in this,”' she said. “These are our DVDs and if we want to watch them on computers using the Linux operating system, we are well within our rights to do that.”

    Mr Johansen became a folk hero to hackers, especially in the United States, where a battle still rages over a 1998 copyright law that bans such software.

    The short program Mr Johansen wrote is just one of many readily available programs that can break the film industry's Content Scrambling System (CSS), which prevents illegal copying but also prevents the use of legitimate copies on unauthorised equipment.

    Charges against Mr Johansen were filed after Norwegian prosecutors received a complaint from the MPAA and the DVD Copy Control Association, the group that licenses CSS.

    Prosecutors asserted that the program, in effect, left film studios' property unlocked and open for theft. The prosecution charged Johansen with data break-in, rather than copyright infringement.

    Although the decision is legally binding only in Norway, it "will be referred to in other cases because there have not been many," said Haakon Wium Lie, a member of the Electronic Frontier Norway.

    The prosecution, which had called for a 90-day suspended jail sentence, confiscation of computer equipment and court costs, said it would decide in the next two weeks whether to appeal.

    The ruling found that consumers have rights to view legally obtained DVD films "even if the films are played in a different way than the makers had foreseen".

    Mr Johansen said that was key.

    "As long as you have purchased a DVD legally, then you are allowed to decode it with any equipment and can't be forced to buy any specific equipment," he said.

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    US companies sue KaZaA:
    Sandra Marquez
    NOVEMBER 27, 2002
    A FEDERAL judge has signaled his support for a bid by record companies and movie studios to sue the parent company of KaZaA, a popular online file-swapping service.

    US District Judge Stephen Wilson heard arguments Monday on whether Sharman Networks, which is headquartered in Australia and incorporated in the Pacific Island nation of Vanuatu, is subject to US copyright laws.

    "It is a difficult question, but it has to be resolved," Judge Wilson said. "The court will do its best to resolve it promptly."

    Although Judge Wilson did not indicate when he plans to issue a ruling, he appeared to tip his hand, noting that he "would be inclined to find there's jurisdiction against Sharman".

    "I find the argument about providing the service to so many California residents compelling," Judge Wilson said, referring to the plaintiffs' claims that KaZaA provides free access to copyrighted music and films to some 21 million users in the United States. The company has advertising revenue of about $US4 million.

    The Sharman case is one of the largest in the recent copyright wars testing the international reach of US courts. If Judge Wilson decides Sharman can be sued, the company would be thrust into the same legal predicament that has stymied popular swapping services such as Napster and Aimster.

    David Casselman, an attorney representing Sharman, said holding the online swapping company liable for copyright violations would be akin to prosecuting a computer manufacturer for the actions of computer hackers.

    David Kendall, an attorney representing six movie studios, including Disney, Fox and Paramount, said the fact that Sharman's product is available in the US was sufficient cause to face trial in a US court.

    "It does not violate due process to have them stand here to answer for their conduct," Mr Kendall said.

    Sharman attorney Rod Dorman countered that such a move could open a door for a judge in "communist China" to rule against US companies that operate online. The judge did not appeared swayed by the argument.

    "I'll take my chances with that judge in communist China," Judge Wilson quipped.

    Carey Ramos, an attorney representing song writers and music publishers, said the judge's comments would send a message to those companies seeking to operate offshore.

    "This is important because it shows that you cannot escape US justice by setting up shop outside the United States," Mr Ramos said.

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