The Australian copyright infringement trial of KaZaA has ended bluntly for six of the ten defendants, including parent company Sharman Networks, CEO Nicola Anne Hemming, Altnet Inc., and Brilliant Digital Entertainment Inc. The judge did not give the entertainment companies everything they wanted, but did rule on inducement and actual infringement, and ordered Sharman to alter KaZaA in such a way as to disable unauthorized file transfers. This ruling cuts directly against U.S. and other precedent, which has held that the network provider is not responsible for the behavior of its users. Sharman promises to appeal.

Though much noise surrounded the recent Supreme Court ruling in the Grokster case, this Australian result is arguably more important to the rhetorical case argued in the press, and in courts, by the major labels. While Grokster pointed to inducement as the basis of its voiding of lower-court dismissals of litigation against Grokster, sending the parties back to the lower courts for full-fledged arguments, this Australian case rests on the other side of those arguments, and has concluded actual infringement.

The relevant portion of the judge's summary follows. [via Donna Wentworth]

I return to the true issue in the case: the applicants' copyright claim. Here again, the applicants overstated their case. It cannot be concluded, as the applicants claimed in their pleadings, that the respondents themselves engaged in communicating the applicants' copyright works. They did not do so. The more realistic claim is that the respondents authorised users to infringe the applicants' copyright in their sound recordings. Section 101 of the Australian Copyright Act provides that copyright is infringed by a person who, not being the owner of the copyright and without the licence of the copyright owner, authorises another person to do in Australia an infringing act.

(i) despite the fact that the Kazaa website contains warnings against the sharing of copyright files, and an end user licence agreement under which users are made to agree not to infringe copyright, it has long been obvious that those measures are ineffective to prevent, or even substantially to curtail, copyright infringements by users. The respondents have long known that the Kazaa system is widely used for the sharing of copyright files;

(ii) there are technical measures (keyword filtering and gold file flood filtering) that would enable the respondents to curtail – although probably not totally to prevent – the sharing of copyright files. The respondents have not taken any action to implement those measures. It would be against their financial interest to do so. It is in the respondents' financial interest to maximise, not to minimise, music file-sharing. Advertising provides the bulk of the revenue earned by the Kazaa system, which revenue is shared between Sharman Networks and Altnet.

(iii) far from taking steps that are likely effectively to curtail copyright file-sharing, Sharman Networks and Altnet have included on the Kazaa website exhortations to users to increase their file-sharing and a webpage headed 'Join the Revolution' that criticises record companies for opposing peer-to-peer file-sharing. They also sponsored a 'Kazaa Revolution' campaign attacking the record companies. The revolutionary material does not expressly advocate the sharing of copyright files. However, to a young audience, and it seems that Kazaa users are predominantly young people, the effect of this webpage would be to encourage visitors to think it 'cool' to defy the record companies by ignoring copyright constraints.