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Dutch court clears Web music swapping

Blow to music industry as Internet software firm given go ahead to distribute file-sharing programme.

In a setback for efforts to halt copyright abuse, a Dutch appeals court on Thursday ruled that the maker of computer software that lets people download music, movies and other copyright-protected material isn't liable for copyright infringement.

The ruling in the case between Internet software company KaZaA and Dutch music rights organisation Buma Stemra overturned a decision in November in favour of the music industry.

The music industry says rampant online piracy has severely damaged recording sales and the movie industry fears the same could happen to it as computers become more powerful.

The Amsterdam Court of Justice ruled that KaZaA could not be held liable for the use of its software, which thousands of people employ to download and share songs, photos, films and other copyrighted material on the Internet. "We are stunned by the verdict," a Buma Stemra spokesman in the Netherlands said, adding the organisation could appeal further to the High Court.

But Niklas Zennstrom, the Swedish founder of Netherlands-based KaZaA and its technology provider Fasttrack, heralded the decision as "a great victory for our company and for the whole technology sector". However, he also said the ruling came too late to save KaZaA, whose main assets were sold after the initial ruling last year to Australian company Sharman Networks.

The move sets the stage for an intense round of new debate on file sharing. Already, in the United States of America, regulators are examining the copyright law at the heart of the swapping issue, and a watershed trial involving film studios, record labels and file-sharing services like KaZaA is set to begin in October.

KaZaA attorney Christiaan Alberdingk Thijm expected the Dutch ruling to be closely watched in the U.S., as his defence was partly built on a 1984 U.S. Supreme Court ruling which said manufacturers of video recorders are not liable if consumers use their products to abuse copyrights.

"This is not just about KaZaA. It also affects producers of digital recording devices," he said. These would include DVD recorders from Philips and Panasonic, and digital TV recorders from TiVo.

The Dutch ruling is in stark contrast to last year's decision in which a U.S. judge forced Napster, the original file-swapping Internet service, to cease operation until it could guarantee that there was no copyright infringement on its network. Unlike Napster, KaZaA and its peers do not operate a central server connecting different users and enabling them to transfer files. KaZaA has claimed in its defence that it was unable to control usage after its "peer-to-peer" software has been installed on PCs.

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