Kazaa Suit Turns Tables on Record Labels, Movie Studios

Accused by the major record labels and movie studios of enabling rampant global copyright infringement, the company behind the world’s most popular file-sharing network has sued the labels and studios.

For copyright infringement.

Last year, the labels and studios filed a federal suit alleging that Sharman Networks Ltd., which distributes the Kazaa file-sharing software people use to copy billions of songs and movies they haven’t paid for, contributes to and benefits from online piracy.

On Monday, Sharman tried to turn the tables.

Its federal countersuit claims that the entertainment companies, in their zeal to ferret out pirates, hooked up to the Kazaa network with unauthorized versions of the free Kazaa software -- violating Sharman’s copyright. The countersuit also revives Sharman’s allegation that the entertainment companies violated antitrust laws by stopping Sharman and its partner, Altnet Inc. of Woodland Hills, from distributing authorized copies of music and movies through Kazaa.

U.S. District Judge Stephen V. Wilson rejected the antitrust claims July 2 but last week allowed Sharman to try again.

More detailed than previous filings, the countersuit alleges that executives at Vivendi Universal’s Universal Music Group and AOL Time Warner Inc.’s Warner Music Group refused to permit their copyrighted songs to be distributed via Altnet.

Universal and Warner declined to comment.

Based in the South Pacific tax haven of Vanuatu, Sharman has moved aggressively to enforce its copyrights. For example, it has sent letters twice in the last six weeks to Google Technology Inc. of Mountain View, Calif., demanding that the Internet search service stop providing links to Kazaa Lite and to other downloadable software that allegedly infringes Sharman’s copyrights.

Kazaa Lite is a replica of Sharman’s software, minus elements that display ads -- Sharman’s chief revenue source.

Monday’s counterclaim accuses the entertainment companies of using Kazaa Lite to get onto the network. It also said that the companies’ efforts to combat piracy on Kazaa, including offering bogus versions of copyrighted works and sending instant messages to users, violated the terms for using the network.

A spokesman for the Recording Industry Assn. of America said Sharman’s “newfound admiration for the importance of copyright law is ironic to say the least.

“Too bad this self-serving respect stops at its headquarters’ door in Vanuatu, and doesn’t extend to preventing the rampant piracy on its networks or lifting a finger to educate its users about the consequences of illegal file sharing.”