Executives in the recording industry weren't the only ones cheering Friday's raid on the headquarters of Sharman Networks Ltd., which makes and distributes Kazaa peer-to-peer software. At least one chief executive officer of a peer-to-peer (P-to-P) software company welcomed the news as well.
"I think this may answer a lot of questions about what kind of control Kazaa has over their network and what kinds of information Kazaa has been storing about its users," said Michael Weiss, chief executive officer (CEO) of StreamCast Networks Inc., maker of Morpheus P-to-P software.
The afternoon raid by investigators working for the Australian Recording Industry Association (ARIA) combined with a new software release by Los Angeles-based StreamCast, has the P-to-P world roiling with controversy and intrigue as Sharman scrambles to protect sensitive documents taken in the raid and to defend a rear-guard action from competitors who covet its large network of users.
Speaking on Friday, Weiss said that the raid on Sharman's offices may pull back the covers on what his company has long contended is a centralized file-sharing network, with Sharman wielding control over individual P-to-P software users.
"It's been one hell of a week," Weiss said, lumping the Sharman raid in with other good news for his company, including the release of a new version of Morpheus software, Morpheus 4, and a court hearing in the 9th U.S. Circuit Court of Appeals that many viewed as favorable to StreamCast and other defendants in a suit brought by entertainment industry groups.
If true, the discovery of such a control structure would be harmful to Sharman which, like other P-to-P vendors, has argued in court that it can't be held liable for illegal file-trading activity on its network, in part because it does not have direct knowledge of or control over illegal file-trading activity.
Speaking Monday, an attorney for Sharman dismissed Weiss' allegations as "fantasy."
"Kazaa Media Desktop is a decentralized software application. Kazaa has no central servers that have anything to do with searching, indexing or downloading functionality," said Lawrence Hadley, an attorney at Hennigan, Bennett & Dorman LLP, a Los Angeles law firm representing Sharman.
The bad blood between Morpheus and Sharman goes back to the early days of Kazaa, when StreamCast along with Grokster Inc. licensed the FastTrack P-to-P technology from Kazaa BV, an independent company. At that time, StreamCast had one of the largest P-to-P networks, with more than one million Morpheus users online at any time.
In January 2002, Sharman acquired the technology assets of Kazaa BV and weeks later Morpheus users were abruptly denied access to the FastTrack network by a change in the network protocol that was not extended to StreamCast customers.
Sharman claims that the decision to eject Morpheus users from the FastTrack network was not theirs and had to do with StreamCast's failure to pay licensing fees to Kazaa BV, a Dutch company that licenses FastTrack P-to-P technology.
Weiss is skeptical of that claim and said the move always smacked of a centralized network, in which Sharman knew about and monitored activity of millions of P-to-P users.
"All I can say is that they were able to just switch off 28 million Morpheus users in February 2002, and you can't do that without having control over the network," Weiss said.