International rulings cloud file swapping

The Tokyo District Court last week ruled that Tokyo-based MMO Japan is prohibited from offering users its online file-swapping service, dubbed File Rogue. That decision, which marks the first court ruling in Japan on the issue, comes just weeks after a Dutch appeals court essentially rejected liability against file-swapping software maker Kazaa for distributing its code.

To be sure, it's still too early to tell what these decisions will ultimately mean for file swappers. Media giants have brought several cases targeting file swapping in the United States, but courts have not yet issued a final ruling on the practice.

Despite superficial differences, legal experts said that a consistent legal treatment of file-swapping services is not precluded by the rulings handed down to date.

"Some people are saying we're entering into a world with different rules: What's legal in Holland is what's illegal in Japan--and I'm not sure that's the right way to read this," said Fred von Lohmann, an attorney with the Electronic Frontier Foundation.

"It may be these decisions are entirely consistent and that they say if you're running a service and you have control over what end users are up to...the liability may attach; on the other hand, if you distribute a software product where the end users have control over their own activities then you are likely off the hook."

Regardless of the significance of the rulings out of Holland and Japan, all eyes now are focused on the U.S. courts, where the majority of high-profile cases are pending.

Napster, once the Net darling of file-swapping services, has been embroiled in a copyright lawsuit with the major U.S. record labels since December 1999. The company voluntarily shut the service down after a federal judge ordered it to remove copyrighted material from its network. Three weeks ago, a U.S. federal judge set a discovery timetable for the company's investigation into whether the big record labels have misused their copyrights in their online businesses.

Kazaa, which distributes the FastTrack file-swapping software used by Sharman Networks, is also being sued in the United States, along with co-defendants Morpheus and Grokster. That case is expected to turn on different legal reasoning due to important differences in software created by Napster and Kazaa.

Napster ran a centralized database to help file swappers locate files on its system, a role that also allowed it to theoretically monitor and filter the content traded. Kazaa, by contrast, claims that it merely distributes software, and has no knowledge or control of the files on the network or the practices of its customers.

Von Lohmann said that distinction has cropped up in the two international file-swapping cases recently decided in Japan and the Netherlands. Japan's case, he said, involved a service similar to Napster in which there was centralized control over people's activities, whereas in the Kazaa case, it's a decentralized system.

MMO Japan was hit with the suit Jan. 29, in a filing by the record labels requesting that the digital files produced from commercial music CDs be excluded from its File Rogue service. The Japanese Society for Rights of Authors, Composers and Publishers (JASRAC) and the Recording Industry Association of Japan (RIAJ) found that more than 70,000 MP3 files were available through the service.

The Tokyo ruling represented a win for record companies worldwide that are aiming to protect their musical works from online pirates in a market that is the second largest behind the United States, according to the RIAJ. The association said sales reached $6,535.3 million (704,516 million yen) in 2000.

"We are pleased that the Japanese courts, like their U.S. counterparts, have found that it is illegal to create and operate networks that facilitate copyright infringement regardless of whether the copyrighted material is stored on that network," said Jonathan Lamy, a spokesman for the Recording Industry Association of America. "This ruling will hopefully encourage others to act more responsibly and help build a marketplace where creativity and cultural productions are cherished and rewarded."