Australian Court Finds Sharman Infringed Music Copyrights
September 5, 2005. The Federal Court of Australia issued its judgment in Universal Music Australia v Sharman License Holdings, holding that the distribution of Kazaa file sharing system by Sharman and others violates Australia copyright law.
This is a long document, with 526 numbered paragraphs. It holds Sharman and five other respondents liable for copyright infringement under Australian law. The Court also concluded that both public education regarding copyright infringement, and lawsuits against individual infringers, are likely to have little impact. The Court also noted that the June 27, 2005, opinion [55 pages in PDF] of the U.S. Supreme Court is not pertinent to the present case. The Court also stated that it will issue an injunction.
The Court concluded that the Kazaa system is widely used for the sharing of copyright files and that "each of the respondents was aware that a major use of the Kazaa system was the transmission of copyright material"
The Court wrote that witnesses testified that "Kazaa could be used in a non-infringing way", such as to share the works of Shakespeare or Milton. Moreover, it concluded that "some people use Kazaa only in a non-infringing way". However, it concluded that "it seems unlikely that non-infringing uses would sustain the enormous Kazaa traffic claimed by the respondents. The explanation of that volume of traffic must be a more populist use. ... The evidence indicates that use is popular music."
The Court continued that "It is understandable that the respondents would wish to increase file-sharing. Kazaa is apparently sustained by advertising revenue. It is a fundamental of advertising marketing that price is sensitive to the exposure likely to be achieved by the advertisement. The more shared files available through Kazaa, the greater the attraction of the Kazaa website. The more visitors to the Kazaa website, the greater its advertising value and the higher the advertising rate able to be demanded by Sharman. And what is more likely to attract large numbers of visitors to the website than music, especially currently popular ‘hits’?"
"In short, I find that all the respondents knew the predominant use of Kazaa was for the sharing of copyright-infringing material. None of them had an interest to prevent or curtail that predominant use; if anything, the contrary. Each of the respondents was at least acquiescent in the use of Kazaa for copyright-infringing activities."
The Court then concluded that respondents could have, but did not, employ various technological measures, such as filtering, that would have reduced the amount of copyright infringement by users.
The Court also concluded that the respondents had done little to educate the users about copyright infringement. However, it concluded that public education on this matter would have little effect. It wrote that "I have no reason to believe any significant number of Kazaa users, apparently mainly teenagers and young adults, has any knowledge about, or interest in, copyright law or its application to file-sharing. Nor have I any reason to believe that any significant proportion of users would care whether or not they were infringing copyright. The ‘Join the Revolution’ material displayed on the Kazaa website and the ‘Kazaa Revolution’ T-shirt indicates the Sharman respondents perceive they might not. While I agree with the applicants that the existing warnings do not adequately convey to users what constitutes breach of copyright, I am not persuaded it would make much difference if they did."
The Court also examined respondents failure to take any legal action against individual infringers for violation of the license agreement, which prohibits infringement, but is widely violated. The Court concluded that "it is not realistic to believe legal action against individual infringers will stamp out, or even significantly reduce, file-sharing infringements of copyright."
The Court conclusions on these two points, regarding the futility of public education and suits against individual infringers, contrasts with the procedures being employed currently in the United States. The content industries currently seek to educate consumers about copyright infringement, and to involve government agencies in this process. Moreover, the record industry has brought thousands of civil actions against individual infringers.
The Court then applied the facts of the case to Sharman, and "held that Sharman infringed the applicants’ copyright". The Court also found that five other corporate entities and individuals also infringed copyrights, "individually and as joint tortfeasors pursuant to a common design".
The Court ruled for the respondents on several non-copyright claims, including violation of the Australian Trade Practices Act.
Finally, the Court wrote that "it is appropriate to grant an injunction to restrain future infringements of the applicants’ copyrights. This injunction should be couched in general terms, reflecting the relevant respondents’ general obligation not further to infringe the applicants’ copyright. However, I am anxious not to make an order which the respondents are not able to obey, except at the unacceptable cost of preventing the sharing even of files which do not infringe the applicants’ copyright. There needs to be an opportunity for the relevant respondents to modify the Kazaa system in a targeted way, so as to protect the applicants’ copyright interests (as far as possible) but without unnecessarily intruding on others’ freedom of speech and communication. The evidence about keyword filtering and gold file flood filtering, indicates how this might be done. It should be provided that the injunctive order will be satisfied if the respondents take either of these steps. The steps, in my judgment, are available to the respondents and likely significantly, though perhaps not totally, to protect the applicants’ copyrights." (Parentheses in original.)
"Accordingly, I propose to make an order restraining the six infringing respondents from further infringing the applicants’ copyright in any sound recordings by authorising the doing in Australia by Kazaa users of any infringing acts, in relation to any sound recording, the copyright of which is held by any of the applicants, without the licence of the relevant copyright owner."
The Court also commented on related litigation in the U.S. The Court wrote that MGM v. Grokster has no effect on the present case.
The Court wrote that "On 25 April 2003, the Federal District Court in Los Angeles summarily dismissed an action brought by various copyright holders against corporations allegedly associated with two United States-based peer-to-peer file-sharing systems, ‘Grokster’ and ‘StreamCast’. The Court of Appeals for the Ninth Circuit affirmed that decision. However, after I had reserved judgment in this case, the United States Supreme Court unanimously reversed the lower courts and allowed the suit to go to trial. On 27 June 2005, the judgment was delivered: see Metro-Goldwyn-Mayer Studios Inc v Grokster Ltd 125 S.Ct 2764 ..."
The Court continued that "It had always been obvious that there were similarities between the Kazaa system and the Grokster and StreamCast systems. There were also differences in the conduct of the systems’ respective operators. Moreover, much of the Australian statutory law had no counterpart in United States law. So there was a question in my mind as to whether the Supreme Court’s decision provided any guidance to the resolution of this case. On 30 June 2005, I invited the parties to comment about that matter. They all did so. Their comments confirmed my impression that the differences, both factual and legal, are such as to render Grokster of little assistance to me."
The following are selected TLJ stories regarding related litigation in the United States.
This case is Universal Music Australia Pty Ltd, et al. v Sharman
License Holdings Ltd., et al., Federal Court of Australia, No.  FCA
1242, Judge Murray Wilcox presiding.