File Swapper Eluding Pursuers Sat, 21 Dec 2002 06:56:26 -0800 washingtonpost.

com File Swapper Eluding Pursuers Unlike Napster, Kazaa's Global Nature Defies Legal Attacks By Ariana Eunjung Cha Washington Post Staff Writer Saturday, December 21, 2002; Page A01 TALLINN, Estonia -- Their office is spartan, with only five computers in various states of repair and nary a decoration on the wall. Few outside this Baltic capital would even recognize their names, though many of the world's largest recording and movie studios are well aware of their accomplishment. Jaan Tallinn, Ahti Heinla and Priit Kasesalu are the creators of Kazaa. Over the past two years, the oddly named product has become the most popular online file-swapping system in the world. Roughly 160 million people have downloaded the software, primarily to trade music, TV shows and movies over the Internet. At any given time, more than 3 million people are running the program, double the number that Napster had at its peak. Kazaa has become so popular so fast that a coalition of entertainment companies has filed suit in U.S. District Court in Los Angeles, seeking to shut it down. The coalition says the service has become a "candy store of infringement," where millions of pirated copies of songs, writings, TV shows and motion pictures are available to anyone, free. Those same arguments helped the entertainment industry successfully close down Napster. But going after Kazaa is proving more difficult. That's because Kazaa is a multinational creation. The three young men who developed the software hail from Estonia. They were commissioned to do the work by a company in the Netherlands. That company has since sold the software to another based in the Pacific island nation of Vanuatu, whose executives work in Australia.

Filing suit against Kazaa, therefore, has forced the entertainment industry to negotiate the legal rules of no fewer than five countries on three continents. This case "is one in a series of skirmishes that will determine whether the information network the public enjoys five to 10 years from now is open or closed and to what extent different countries will have a role in controlling it," said Jonathan Zittrain, codirector of the Berkman Center for Internet & Society at Harvard University. For now, there is only legal confusion. The entertainment companies filed suit against Kazaa in the United States because that's where most of the users are -- about 9.5 million people a month use the software, according to Forrester Research Inc. But in doing so, the coalition set itself up for inevitable clashes with other countries' court systems. An American judge, for instance, recently ordered Tallinn, Heinla and Kasesalu to cooperate with entertainment industry lawyers seeking documents and testimony on how the software works. But a judge here rebuffed the request, saying the men did not have to talk -- at least for now. An appeals court in the Netherlands, meanwhile, ruled that local distributors of the software shouldn't be responsible for piracy by its users. That's the same question in front of the American judge. Roderick G. Dorman, a lawyer representing Sharman Networks Ltd., the current owner of the software, argues that the Vanuatu-based company is not subject to U.S. laws. He worries that a ruling otherwise could set a precedent that invites any country to meddle in another's online ventures. Lawyers for the Recording Industry Association of America and Motion Picture Association of America, on the other hand, have issued a statement saying Kazaa is perpetrating an "intricate international shell game aimed at evading the U.S. court's jurisdiction and avoiding liability" by spreading its operations around the world.

"They did it intentionally to get around the Napster decision," said Matthew J. Oppenheim, one of the entertainment industry's lawyers. Kazaa's founders scoff at the claim. They say the involvement of people from so many countries is happenstance, a product of how easy it is to do business across borders in the Internet age. A Sensation Is Born Kazaa was originally the inspiration of two Scandinavian businessmen, Niklas Zennstrom and Janis Friis, who wanted to improve upon the "peer-to-peer" fileswapping services that became popular in the late 1990s. Early efforts at the time seemed to work fine for hundreds or maybe thousands of users, but when millions logged on, the systems slowed or even crashed. Zennstrom and Friis hired the three 30-yearold Estonian programmers to come up with something more robust. Tallinn, the quiet leader of the group; Ahti, the adventurer who is fond of disappearing for months in exotic places like Nepal; and Priit, the computer gamer who spends nearly all of his work and non-work time writing programs, met during their college years and decided to start a small software coding shop. They had some experience creating computer games, but this was new. It took the programmers four months to come up with a test version, which they made available free on the Internet in September 2000. The product was an instant hit, and work soon became the engine for other file-sharing services that went by strange names as Grokster and, recently, Morpheus. their giant such until

compensation dependent on the product's success. The programmers insist they did not set out to help people trade music and movies illegally. Rather, they simply wanted to make it easier for people to swap any sort of file. Once people load the software on their computers, they need just type the name of a file they are looking for and then are presented with a list of possibilities. They can select the file they want with one click of the mouse and wait for a copy to be transmitted to their computer. Their copy then becomes part of the giant database of files that is available for others to download. Zennstrom, 36, who with his rectangularframe glasses and a leather jacket looks like a younger, hipper version of Microsoft Corp. founder Bill Gates, said the system, at its core, turns the Internet into a "global hard drive" -- and nothing more. "You can ask for a file and you can download it. That is all the technology does," Zennstrom said. Zennstrom, who sold distribution rights to Sharman, was recently added as a defendant in the entertainment-industry lawsuit. He and Tallinn both say that the case has no merit, and that recent European case law is on their side. That U.S. courts are reconsidering the question is "a baffling situation from our point of view," Tallinn said. "The technology already has been declared perfectly legal" in Europe. Zennstrom, nevertheless, believes a more controlled distribution system for digital files is in store. The programming team is now working on a file-swapping system that would allow people to dictate how their content is to be distributed -- whether it will be free for all, free for a few days and then locked, cost $5 a file, and so on. It also would allow people to copy from the nearest and least busy computer, allowing then to disseminate information much more cheaply and much faster than through centralized systems. Zennstrom has negotiated a contract with a company called Altnet Inc. to provide technology for its online distribution system.

The programmers watched in awe as the number of users of their creation began to climb into the thousands, then hundreds of thousands, then millions. "We were skeptical. . . . We had no idea it would take off like this," said Tallinn, who remembers being so unsure about the software's future that he demanded cash upfront rather than the stock and other

Altnet is also using Microsoft technology to provide a way for people to pay for content. But before the rest of Hollywood embraces such technology, industry analysts said, the lawsuits must be resolved. This summer, a federal judge in the United States sent a request to Estonia asking the programmers to provide documentation for the development of Kazaa. The entertainment industry said it needs to interview the programmers and review the software's plans to prove their accusation that it was built to circumvent copyright law. Getting that access would also give musicand moviemakers something potentially much more valuable: information about how Kazaa works, specifically whether there's an easy way to shut it down. Tallinn City Judge Aase Sammelselg rejected the U.S. request on grounds that it was drafted so vaguely that it might cause the programmers to reveal business secrets and was "not in conformity with the Estonian laws." Kaido Uduste, who represents the plaintiffs in Estonia, suggested that part of the problem stemmed from how the U.S. court order was translated. He said his counterparts in the United States are preparing a new request. "Corporate infringement has taken place using this software, so therefore it's essential for us to find out the creation process and the technical possibilities of Kazaa," Uduste said. A Matter of Motive? The defendants, which in addition to Kazaa include Grokster and Morpheus, contend they are doing nothing wrong. They said their role is analogous to photocopy-machine makers, who aren't responsible for people who copy entire books, or to computer makers, who aren't responsible for people who use their machines for hacking. "If you can be held responsible for everything your end users do with it, it becomes very hard to build any technology," said Fred von Lohmann, a lawyer with the

Electronic Frontier Foundation, which represents Morpheus creator StreamCast Networks Inc. The entertainment industry argues that the Kazaa case is different because the key issue is motive. While some makers of technology truly aren't aware of or do not advertise the illegal aspects of what their technology can do, they say, the owners of these file-sharing systems do. "Peer-to-peer services overwhelmingly are used for illegal copying and transmission of copyright material over the Internet, and actively encourage, assist and participate in this activity," said Allen N. Dixon, executive director of the International Federation of the Phonographic Industry, which represents more than 1,500 music producers and distributors. But even if the entertainment industry wins its legal fight against Kazaa, industry experts said it's unlikely that the software will disappear. "For each one that is shut down, others will arise," said Forrester Research analyst Josh Bernoff. In the past few months, many people have replaced the original Kazaa software with Kazaa Lite, an ad-free version created by a hacker who isn't affiliated with a company and hasn't given out enough information about himself to be named in a lawsuit. He calls himself "Yuri" and lives in yet another country -- Russia. 2002 The Washington Post Company