updated 3/23/2005 9:12:22 AM ET 2005-03-23T14:12:22

The owners of global file-sharing company Kazaa told a court Wednesday they should not be held liable for copyright infringements by network users because the company cannot control how the software is used after it is downloaded.

A group of Australian record labels is suing the makers of Kazaa, Sharman Networks Ltd., and the company's directors in the Federal Court in Sydney for copyright infringements by the network's estimated 100 million members worldwide.

The record companies claim Kazaa users freely download up to 3 billion songs and music files each month, costing the industry millions of dollars in unpaid royalties.

In closing arguments Wednesday, lawyers for Sharman Networks acknowledged that some Kazaa users engage in illegal copying, but said the software's creators could not be held responsible.

Lawyer Tony Meagher told the court that once Kazaa was downloaded onto users' computers, the company had "no power to control" its use — just as the makers of photocopiers and video recorders could not control or be held responsible for illegal copying on their machines.

As a result, Meagher said, the main issue in the case was whether Kazaa, in effect, authorized its users to download copyright protected material.  "We tell these users in our Web site and we tell them in our license that they cannot use this (software) for infringing copyright," Meagher told Judge Murray Wilcox.

By consenting to the terms of the license agreement, the users were exempting Kazaa's owners from liability for copyright infringement, Meagher said.

Grinning, the judge interrupted Meagher's submission to ask if it was "unduly cynical" to assume that most people don't read software licensing agreements.  "One is entitled to use one's general experience that most people don't read through legal documents unless they regard them as critically important," Wilcox said.

Meagher responded that users were required to confirm that they had read the license agreements before using Kazaa to download any materials, copyright-protected or otherwise.

Lawyers for the record industry argue that Kazaa not only enables but encourages users to infringe copyright.  The lawyers also said the company collects information about its users that would enable them to control their use of the software.

Record industry lawyer Tony Bannon told the court that Sharman Networks monitors Kazaa users and sells information about them to advertisers, saying the company's claim that it had no control over the software was "completely mind boggling."

The record companies want Sharman Networks and its directors declared liable for copyright breach and loss of earnings in the civil case.  If they succeed, a case next year would likely set the damages the owners have to pay.

The trial, which is being heard before a judge with no jury, is expected to wrap up late Wednesday.  A verdict is expected within six weeks.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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