Buma & Stemra v. KaZaA

Citation: Buma & Stemra v. KaZaA, Amsterdam Court of Appeal (2002)..

Factual Background
KaZaA &mdash; a company established in Amsterdam &mdash; has escaped liability for the copyright infringing activities of those who use its software to distribute unlicensed copies of music recordings on the Internet.

KaZaA's software enables users to connect with one another directly, through a peer-to-peer network that does not require a central server in order to work properly. In this sense, KaZaA differs from Napster, which did depend on a central server. And because KaZaA does not, it represents an even bigger threat to copyright owners than Napster did.

Vereniging Buma and Stichting Stemra &mdash; the performing and mechanical rights organizations that issue licenses on behalf of music publishers and record companies in the Netherlands &mdash; sued KaZaA. And at first, Buma/Stemra, as the organizations are commonly known, were successful.

Trial Court Decision
A lower court judge ordered KaZaA to take whatever measures were necessary to prevent its software from being used to infringe Buma/Stemra's copyrights. The penalty for failing to do so was stiff: 100,000 Guilders a day, to a maximum of 2 million Guilders, or about $45,000 a day to a maximum of $900,000. KaZaA asserted that it could not &mdash; as a matter of technology &mdash; comply with the lower court's order. Apparently that was so, because inresponse to the order, KaZaA shut down the website from which it had been distributing its software (or at least cut off access to it by those in the Netherlands).

Appellate Court Decision
KaZaA's shutdown was short-lived, however, because it won a complete victory from the Amsterdam Court of Appeal. In a short decision, the appellate court held that KaZaA did not violate Dutch copyright law, even if its users did.

The Court of Appeal noted that KaZaA's software was not used "exclusively" to download copyrighted works. Rather, KaZaA offered evidence showing that "a large number . . . of works" distributed by KaZaA users were distributed with the authors' consent, or were in the public domain, or were distributed legally under a "legal limitation" in Dutch copyright law.

Buma/Stemra argued that despite these legal uses of KaZaA's software, "the sole essential function" of KaZaA's software is to exchange copyrighted works; but the appellate court was not persuaded. "That these other uses lack true meaning," the court said, "may undoubtedly be true for Buma/Stemra, but that does not mean . . . that it holds true for these other users." As a result, the appellate court concluded that KaZaA's distribution of its software "cannot be considered as unlawful."