KaZaA owner fails in antitrust claim against entertainment industry

The antitrust argument was made by Sharman in a counterclaim against a lawsuit filed against it by the entertainment companies for copyright infringement.

The thrust of Sharman's argument was that the other companies in the lawsuit between them control, by its estimate, 85% of the market for manufacturing, labelling and distributing copyrighted music and films. It said that they acted as a monopoly and in restraint of trade by refusing to licence any of these works to Altnet, a company with which Sharman has entered into a partnership.

Altnet's business is described by Sharman as licensing copyrighted works for fee-based distribution to KaZaA users. When KaZaA users perform a search for files, the Altnet files matching the search query will appear above the free results – i.e. the legitimate, paid-for content will appear above the infringing content. After seven months of operation, KaZaA says Altnet is issuing nearly 15 million licensed files per month.

Sharman receives a fee from Altnet for generating sales, but its success is being throttled by companies like MGM and Warner Bros refusing to licence their works to Altnet.

The problem for US District Judge Stephen Wilson was that it had no title to bring an antitrust case. "Sharman is neither a competitor nor customer in the relevant market," wrote Judge Wilson. "Rather, Sharman's sole stake in that market arises derivatively from its contractual relationship with Altnet".

Sharman's business is the distribution of file-sharing software, not entertainment. Therefore, concluded Judge Wilson, "Sharman does not have standing."

Sharman's claim is here

The judgment, dismissing its claim, is here