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List:       dmca-discuss
Subject:    [DMCA_Discuss] Netherlands Ruling Provides Legal Protection for P2P
From:       Seth Johnson <seth.johnson () realmeasures ! dyndns ! org>
Date:       2003-02-23 17:16:52
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(Forwarded from Interesting People list)

-------- Original Message --------
Date: Sun, 23 Feb 2003 10:30:45 -0500
From: Dave Farber <dave@farber.net>
To: ip <ip@v2.listbox.com>


------ Forwarded Message
From: Barry Ritholtz <ritholtz@optonline.net>
Date: Sun, 23 Feb 2003 08:29:45 -0500
To: dave@farber.net
Subject: Music Industry Confronts New Internet Swap Threats;
Netherlands court ruling provides legal protection for P2P

For IP; An interesting development,
-Barry  


> http://online.wsj.com/article/0,,SB1045782158479680223,00.html

Music Industry Confronts New Internet Swap Threats

February 21, 2003

By ANNA WILDE MATHEWS and CHARLES GOLDSMITH
Staff Reporters of THE WALL STREET JOURNAL

No one in the music industry has ever heard of Pieter Plass,
the chief executive of a construction-management company in
the Dutch city of Arnhem. But he and others like him may
pose a serious threat to big record labels and other
entertainment companies.

Based in the city best known for the World War II battle
that spawned "A Bridge Too Far," Mr. Plass is about to go
into business as an enabler of Internet peer-to-peer
services. He wants to provide software, legal advice and
other help to anyone who wants to start up the next Morpheus
or Kazaa, the renegade online bazaars where users can swap
copyrighted songs and movies for free. The twist is that his
clients would launch their companies in the Netherlands,
where a court ruling last March appears to provide legal
protection for such operations.

The Dutch decision is being appealed, and it isn't clear how
far Mr. Plass will get with his venture, which he's calling
"The Honest Thief." But the effort illustrates the breadth
of the challenge facing music companies and other owners of
copyrighted works as more peer-to-peer providers base their
operations overseas.

Record-label officials maintain that the Netherlands ruling
was an aberration that will be reversed. Courts in South
Korea and Japan have already ruled against peer-to-peer
services in copyright cases. "We intend to enforce our
rights not just in the United States, but world-wide," says
Cary Sherman, president of the Recording Industry
Association of America.

He also argues that under U.S. law, record labels should be
able to get American Internet service providers to block
customers' access to overseas Internet destinations that
offer pirated music. In addition, record labels have taken
steps lately to go after individual peer-to-peer users. A
U.S. court recently found that American Internet service
providers must disclose the names of customers who share
copyrighted music online.

The record labels got a big win last month. A U.S. federal
court said that Sharman Networks Ltd., which now offers the
Kazaa software, could be sued in California even though it
is based on the Pacific island nation of Vanuatu and
operates out of Australia. But a U.S. ruling may not be
enough to shut down services based in countries where courts
have said that peer-to-peer software is legal. Peer-to-peer
operators based overseas say they believe they have a legal
shield. "How are they going to enforce" a judgment? asks Rod
Dorman, one of the lawyers representing Sharman Networks.

In the Netherlands, Mr. Plass says he's prepared to take a
"calculated risk" and test the issue. In addition to the
construction-management company he heads, he owns a
nine-employee software firm, PGR BV, that has developed
tools related to building and real estate. Its programmers
created an application that works much like current popular
services like Kazaa, enabling users to exchange files
between individual computers rather than downloading them
from centralized servers.

With his new venture, he plans to license the software --
which isn't yet finalized -- to clients who will create
Netherlands-based file-sharing operations. His goal is to
grab a chance to "make some honest money," he says.

Mr. Plass and his future clients may not be the only ones to
try to exploit the Dutch ruling. Transparency Software LLC,
a company based in Memphis, Tenn., makes software that
blocks computers from exchanging copyrighted material on
peer-to-peer networks, and it is considering launching its
own Netherlands-based peer-to-peer service. The company
would aim to have the operation contain no unauthorized
works, says Pierce Ledbetter, chief executive of
Transparency Software. But the Netherlands may provide "an
extra layer of legal protection," he says.

The ruling in favor of file-sharing services came last March
from a Dutch appeals court. The case pitted Kazaa BV, which
then controlled the application by the same name, against
two Dutch performing-rights organizations, generally known
as Buma and Stemra.

The appeals court found that Kazaa wasn't responsible for
users' copyright infringements because it had no control
over how its software was used. Its ruling canceled a
lower-court injunction that had shut down Kazaa.

Buma and Stemra have appealed to the Dutch supreme court.
Because the case was limited in scope, focusing mainly on
the injunction, the ruling doesn't delve deeply into the
copyright issues. The high court is expected to disclose its
decision in the fourth quarter, and Buma and Stemra have
suggested they wouldn't pursue a broader claim if they lose.
But Brein, a Dutch foundation that deals with copyright
enforcement, has said it will seek its members' consent to
file such a suit should Buma and Stemra lose.

Major music companies not involved in the case play down the
appeals-court ruling. In a "full-blown proceeding," Dutch
courts would reach "a different result," says Allen Dixon,
general counsel of the International Federation of the
Phonographic Industry. U.S. court decisions would also
likely have force in the Netherlands, he says.

But it's "difficult to predict" which way the supreme court
will go, says Bernt Hugenholtz, professor of law at the
University of Amsterdam. As for the prospects of abiding by
U.S. court decisions, Tim Kuik, director of Brein, says a
U.S. judgment isn't automatically enforced in the
Netherlands. It would probably have to go through a separate
Dutch court proceeding, he says.

Write to Anna Wilde Mathews at anna.mathews@wsj.com 1and
Charles Goldsmith at charles.goldsmith@wsj.com 2

URL for this article:
http://online.wsj.com/article/0,,SB1045782158479680223,00.html


Hyperlinks in this Article:
(1) mailto:anna.mathews@wsj.com
(2) mailto:charles.goldsmith@wsj.com
(3)
http://online.wsj.com/article/0,,SB1039018191727188393,00.html
(4)
http://online.wsj.com/article/0,,SB1017356058302993400,00.html
(5)
http://online.wsj.com/article/0,,SB1045155366137681863,00.html
(6)
http://online.wsj.com/article/0,,SB1044719140284649320,00.html
(7)
http://online.wsj.com/article/0,,SB1043175088163002224,00.html
(8)
http://online.wsj.com/article/0,,SB1031180282400826315,00.html

Updated February 21, 2003


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