And, in a continuing war of words, a spokesperson for the industry's legal team says Sharman has been spreading "red herrings" by sending press releases describing criticism of team leader Michael Williams, of Gilbert & Tobin, by Justice Wilcox in the Federal Court of Australia.

According to Justice Wilcox's ruling last week, Sharman must put in place by December 5 some 3000 keyword filters that will prevent new users from swapping a large number of copyrighted songs (see CDN Monday). This follows last September's finding that Kazaa had infringed music companies' copyrights.

According to a Sharman release, at a technical meeting on Monday to discuss the filtering, the judge had exhibited "extreme anger"

over the absence of Williams, and said the industry lawyer had "shot himself in the foot".

Williams was not available for comment yesterday, but Gilbert & Tobin' spokesperson Felicity Moffatt describes the Sharman release as a red herring to divert attention from the "very real prospect that Sharman could be shut down", if it does not comply.

Spokesperson for Sharman, Julie Fenwick, says that despite objections from the record companies, the company was granted a further stay until late in February 2006 - conditional on Sharman modifying its software by December 5. (Sharman has appealed the September ruling, and that matter is due to be heard in February).

"The court also indicated that it was not prepared to make an order that Sharman give security for damages," said Fenwick.

'Sleight of hand' claim

However, Moffatt said that Sharman had tried to sway public opinion by "sleight of hand", with a claim that the ruling affects Australian operations only and that any damages would also be limited by geography.

"No figure has been placed on damages other than seeking a $200 million bank guarantee," Moffatt told CDN. "We will be seeking damages in billions, which will represent the price for the average cost of a song on a legal site over the length of the time that Kazaa has been running."