Universal Music v. Sharman License Holdings

Citation: Universal Music Australia Pty Ltd v. Sharman License Holdings Ltd, [2005] FCA 1242federal%5fct/2005/1242.html?query=universal+music+and+sharman

Sharman Networks was held to have infringed the Australian copyrights of record companies in that country by “authorising” its users to commit infringements.

Sharman is the operator of Kazaa P2P network. Kazaa’s users infringed the record companies’ copyrights by making unauthorized copies of their recordings and by “communicating” them to the public. But Justice Murray Wilcox rejected the record companies’ argument that Sharman too “communicated” recordings s to Kazaa’s users.

Instead, in a very long opinion, Justice Wilcox concluded that Sharman was liable for copyright infringement because it had “authorised” Kazaa’s users to infringe the record companies’ copyrights. The Justice found that there are technical measures that would have enabled Sharman to “curtail &mdash; although probably not totally to prevent &mdash; the sharing of copyrighted files,” but Sharman did implement those measures because it would have been against its financial interests to do so. “It is in [Sharman’s] financial interest to maximise, not to minimise, music file sharing,” Justice Wilcox explained, because “[a]dvertising provides the bulk of the revenue earned by the Kazaa system. . . .”

The Justice “restrained” Sharman “from authorising Kazaa users to do in Australia any. . . infringing acts. . . .” But he added that the continued operation of Kazaa would not violate his order if Sharman modified the Kazaa software to include “key-word filter technology” and users were “pressure[d]” to upgrade their software to the new version containing that technology.

Rather than do so, Sharman purportedly shut down the operation of Kazaa in Australia by displaying a banner on its website that reads, “Attention Users in Australia: To comply with orders of the Federal Court of Australia, pending an appeal. . ., use of the Kazaa Media Desktop is not permitted by persons in Australia. If you are in Australia, you must not download or use the Kazaa Media Desktop.”