The directors of Kazaa will appeal a ruling by the Federal Court that they breached music copyright laws in Australia. The Court ruled that Sydney-based boss Nikki Hemming and associate Kevin Bermeister owners of Sharman Networks, and Sharman License Holdingshad knowingly allowed Kazaa users to illegally swap copyrighted songs.

The decision was applauded by music industry executives worldwide. Justice Wilcox ordered Sharman to pay 90 per cent of the record companies' costs, a separate hearing will be held to determine damages in the case which could run into hundreds of millions.The court ruled that future versions of Kazaa will need to include filters to prevent the trading of copyrighted music works.
Kazaa's owners would have to apply "maximum pressure" on existing users to upgrade their software to the new, filtered version.

Documents produced by the respondents contain claims that, at any time, several million people were using the system to share files. At the beginning of 2004, the Kazaa website said over 317 million people, worldwide, had downloaded Kazaa onto their computers, thereby enabling them to share files. Australian music industry spokesman Michael Speck said the ruling sent "a loud and clear message to anyone involved in the illegal online music business to get out of it and get legal".

The case had been an important investment by music companies to "stop the rip-offs", Mr Speck said.

However, the court did not find the defendants guilty of the more serious charge of copyright infringement, leading Sharman's lawyers to also claim a partial victory. Lawyers for Sharman and other repondents described the court decision as a partial win for both parties. They claimed neither side had a complete victory. The court also dismissed allegations against Sharman's chief technical officer Philip Morle and Anthony Rose. Sharman's lawyers had earlier argued the company could not control or monitor what Kazaa users did. They said Kazaa's legal uses included trading of authorised songs, videos and even recipes, and the website contained clear warnings that users were not authorised to infringe copyright.

Kazaa's Nikki Hemming