Behind the Deal: Labels Argue Legal Relationships Behind Kazaa

For the first time anywhere in the world, a lawsuit filed by record labels against tech companies over unauthorized peer-to-peer file sharing has proceeded through trial.

Australian barristers completed their closing arguments March 23 in the Federal Court in Sydney, focusing on whether parties affiliated with a bundle of software known as Kazaa Media Desktop (KMD) should be liable to the major labels and 25 other record companies.

The parties' final written submissions to the court included more than 500 pages of briefs arguing the evidence presented in more than 2,000 documents submitted into evidence.

One issue that has drawn worldwide industry attention is the legal and financial relationship among the parties behind -- or somehow connected to -- Kazaa.

The following is a portion of the final submissions that the labels filed with the court. These points are arguments -- not yet proved as true since the case is still pending -- that there is a direct relationship between all of the "respondent" parties and Kazaa.

"The First Respondent Sharman License Holdings Limited ("Sharman License") was incorporated in Vanuatu on 6 June 2003. The second Respondent Sharman Networks Limited ("Sharman", "Sharman Networks" or "SNL") was incorporated in Vanuatu on 15 January 2002. The Third Respondent LEF Interactive Pty. Limited ("LEF") is an Australian corporation. It was incorporated on 21 February 2002. Each of Sharman License, Sharman Networks and LEF carries on business in Australia from premises located at ... Military Road, Cremorne, New South Wales.

The Fourth Respondent, Ms. Nicola Hemming, is described in various Sharman documents as the CEO of the Sharman companies. The Fifth Respondent Mr. Philip Morle is the Sharman technical director.

Understanding the relationship between the Respondents includes a consideration of the role of three other corporations, Joltid Limited ("Joltid"), Kazaa BV and Bluemoon Interactive ("Bluemoon").

The principal business carried on by Sharman is the supply of the Kazaa software to Kazaa users. That business commenced after Sharman Networks acquired Kazaa BV's (a Netherlands corporation formerly known as Consumer Empowerment BV) business described as "the provision of peer to peer Internet enabled software directly via the website to end users world wide to enable searching for and downloading files from other users of the software" on 7 February 2002.

In order to conduct its business Sharman requires the right to use, and sublicense others to use, the KazaaLib/FastTrack software.

On 15 January 2002 Kazaa BV and Sharman