Court rulings in Peer-to-Peer service cases, 2005

November 15, 2005

In the last five months, four landmark court decisions in four countries across three continents indicate that a global consensus is forming: P2P services that encourage and profit from large-scale copyright infringement are illegal and will not be tolerated.

The decisions also make clear that P2P services cannot simply turn a blind eye to illegal activity; effective filters or other methods to prevent infringements must be put in place. The clear and concise message sent by the courts has already encouraged P2P services to begin the process of going legitimate and technology companies to develop new tools to enable new legitimate services.

MGM v GROKSTER - US Supreme Court decision

In June, a 9-0 unanimous decision by the US Supreme Court clearly established that P2P service providers, who promote infringing use of their technology, can be found liable for inducing the resulting infringement. On 7 November Grokster's owners and operators entered into a settlement with the music and film industries marking an important milestone in the continuing transformation of the online marketplace. Grokster accepted a permanent injunction prohibiting direct or indirect copyright infringement and immediately ceased distribution of its software and operation of its system.

SORIBADA INC. - Korean District Court decision

In August, the Korean court granted an injunction against Soribada, the operator of a local P2P service, finding that it had aided and abetted the infringement by its users on its service. Soribada's knowledge of infringement, profits from the service and failure to filter were all cited as reasons for its liability. Its arguments that it was not actively involved in the infringements because of the system structure, were rejected, and because it was unable to put in place effective filters Soribada was forced to close the service. On 7 November Soribada completely shut down all versions of its service, sending a strong message to Korea - an important jurisdiction with the highest proportion of broadband usage anywhere in the world - and beyond.

UNIVERSAL MUSIC v SHARMAN ("Kazaa") - Australian Federal Court decision

In September the Australian Federal court found Kazaa liable for authorising the infringements occurring on its service. Kazaa's knowledge of infringement, it failure to curb the infringements even though it could, and its encouragement of and direct financial interest in the infringements all lead to the finding. In addition to paying damages and the industry's legal costs, Kazaa has been given until December to implement an effective filter or face closure.

FASHIONNOW CO. LIMITED ("KURO") - Taiwanese District Court decision

In September, Kuro, a popular Taiwanese subscription P2P service, and its principals were convicted of criminal copyright infringement by the Taiwanese court. The three principals were all sentenced to two or three years' imprisonment and all three, and the company itself, were each fined NT$3m (approximately US$90,000). This is the first criminal ruling of its kind anywhere in the world and shows a clear unwillingness to tolerate such profiteering. The prosecutor has even appealed, seeking stiffer sentences.

For further information please contact Adrian Strain or Julie Harari at IFPI Communications on tel: +44 (0)20 7878 7935 or go www.ifpi.org.