Sharman Networks was able to filter Kazaa to prevent copyright infringement, but instead chose to build a massive user base for advertising revenue, the Australian Federal Court heard on day one of the peer-to-peer provider's widely-anticipated trial.

Monday morning's proceedings were dominated by claims from counsel for the record labels, Tony Bannon, that Sharman had the technical means to prevent Kazaa users downloading copyright-owned material, but knew such measures would affect its business.

Copyright filtering in doubt

Sharman has long maintained that its peer-to-peer network cannot be filtered, and that it is powerless to stop the copyright-infringing behaviour of its users. However, Bannon cited a proposal document by Sharman partner companies in 2002, which sought to improve the software, as evidence that Sharman could control copyright-infringement.

The document contains a discussion by Altnet's Anthony Rose and Blue Moon Interactive's Priit Kasesalu (who develops FastTrack/KazaaLib software for Sharman) on reporting download statistics for Altnet paid download suppliers.

The document proposes that a statistics reporting module be developed to show which users have downloaded gold (paid) files. However, Kasesalu warns that this could also track copyright-infringing downloads, and would lump the company with legal responsibility.

This document showed Sharman's true intentions, according to Bannon.

"It is possible (to filter Kazaa), but it's not what the respondents want to do," he said.

MP3 roadblock possible

Sharman had developed virus and family filters for Kazaa that prevented certain words and files appearing as search results, according to Bannon, yet had not used this to protect copyright owners. Sharman could have entered the names of copyright owners in the filters to prevent those artists' works appearing in Kazaa, he said.

"They could have put in Eminem, or Powderfinger," he said.

Kazaa's virus filter blocked all .exe and .dll files, Bannon said, keeping users safe from viruses at the expense of downloading some legitimate software.

However the filters did not block .mp3 files, the most common file to infringe copyright, he said.

"They say this may block some authorized content," Bannon said. "Yet this hasn't stopped them with their virus filter."

The trial continues Tuesday.