File-Swapping Lawsuit Gets OK

The parent company of Kazaa had argued it could not be sued in U.S. courts, because the company is incorporated in Vanuatu -- a South Pacific Nation.

by / January 13, 2003
LOS ANGELES (AP) -- A federal judge has given record companies and movie studios the go-ahead to sue the parent company of Kazaa, a popular online file-swapping service.

U.S. District Judge Stephen Wilson refused to dismiss a copyright infringement lawsuit against Sharman Networks Ltd., which had argued that it could not be sued in the United States because it is based in Australia and incorporated in the South Pacific nation of Vanuatu.

In a 46-page ruling issued Friday, the judge said Sharman is subject to U.S. copyright laws because it has substantial business dealings in California and its actions are alleged to contribute to commercial piracy within the United States.

Kelly Larabee, a Sharman spokeswoman, said though the company was "disappointed" with the ruling on the case, "we fully expect to prevail on the merits."

Larabee said Sharman would be filing a counterclaim that will "set forth the full story for the first time."

The Sharman case is one of the largest in the recent online copyright wars testing the international reach of U.S. courts. The plaintiffs maintain that Kazaa provides free access to copyrighted music and films to about 21 million U.S. users.

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