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KaZaA Says Can't Comply with Dutch Copyright Ruling
By Lucas van Grinsven
LONDON (Reuters) - A Dutch judge has ruled that Internet company KaZaA must stop its users sharing copyrighted music files, but the company said on Friday it could not comply because, unlike Napster (news - web sites), it does not know who its customers are.
In a court case which has upped the ante for copyright abuse over the Internet, the Dutch judge also said KaZaA and music publishing rights organization Buma/Stemra should resume licensing negotiations within two days.
KaZaA said it cannot prevent users of its software from swapping copyrighted music files, because unlike Napster it is designed to work without a central computer server that tracks the file sharing between its users.
``The computer program has already been distributed. KaZaA can't see what sort of files people are sharing or who its users are. We don't really know what the judge wants KaZaA to do,'' said KaZaA's attorney Christiaan Alberdink Thijm.
He hopes the second part of the verdict, forcing Buma/Stemra to resume talks with KaZaA about a licensing deal, will soon lead to an agreement that will render the main part of the verdict irrelevant.
If KaZaA cannot stop illegal use of its software within 14 days of the signing of the verdict by Buma/Stemra, it will have to pay 100,000 guilders ($40,240) a day with a maximum of two million guilders ($800,480).
``On balance this is a good ruling for rights' holders, confirming that any service that distributes copyrighted music needs to be licensed to do so,'' the music industry's international trade body IFPI said.
KaZaA has built its service with software from Netherlands-based FastTrack. Both companies are founded and run by the same person: 35-year old Swedish-born Niklas Zennstrom.
FastTrack has picked up where Napster left off. Its software has enabled tens of millions of computer users to trade tracks of The Beatles and Britney Spears for free, plus one better: hefty movie files too.
FastTrack licenses its technology to two other clients: the popular file-swapping services Grokster and Morpheus's Music City Networks which together transferred 1.81 billion files last month alone, according to U.S. research firm Webnoize.
This has made the FastTrack technology they run on the most popular online exchange for music and movie fans after Napster went dormant since July, following its own legal defeat.
KaZaA, Grokster and Music City have all been named in a separate lawsuit filed last month by the Recording Industry Association of America (news - web sites) (RIAA) and the Motion Picture Association of America (MPAA).
The trade groups claim the services permit users to download and trade copyrighted material without permission. The RIAA has grounded Napster with a similar copyright infringement suit.
Napster, now backed by Germany-based media powerhouse Bertelsmann, is not due to relaunch until early 2002.
Zennstrom insists his firm is no Napster clone. The file-swapping technology, he says, was designed as a legitimate business tool, to help corporations communicate with clients and employees in far-flung outposts around the world.
The stakes are high for the five major music labels, which have seen CD sales fall and music piracy increase with the popularity of illegal downloading and CD burning. The International Federation of the Phonographic Industry reported that CD sales fell five percent in the first half of 2001.
In what's been called a defensive move, the labels said they will launch subscription download services MusicNet and Pressplay within several weeks.
Warner Music Group, a unit of AOL Time Warner Inc., Bertelsmann's BMG, and EMI Inc. are backing MusicNet, while Sony Corp (news - web sites) and Vivendi Universal are behind Pressplay