Kazaa says it cannot control what its customers do

Kazaa said its software, which allows users to exchange copyrighted music over the internet, was essentially no different to a video cassette recorder.

It cited a US ruling which said video recorder maker Sony was not responsible when people illegally copied films.

Leading record labels are suing Sharman Networks, which owns Kazaa, alleging copyright infringements by its members.

Sharman says it has no control over what its estimated 100 million network users do with the files they swap.

Lawful uses

Outlining Kazaa's defence strategy on the second day of the civil case in Sydney, lawyer Tony Meagher referred to a 1984 US Supreme Court ruling, which said Japanese electronics giant Sony was not liable when people used its video recorders to copy films illegally.

He pointed to the court's ruling that Sony's product had significant uses that did not violate copyright laws.

"It is plain [Kazaa] has lawful uses," Mr Meagher told Sydney's Federal Court.

Mr Meagher said that while the owners of Kazaa did not authorize piracy, and required users to accept a licence agreement forbidding the illegal copying of music and films using its software, the company was powerless stop it.

"We are not in a position to control and we do not control use," he said.

Falling sales

However, a lawyer for the recording industry earlier told the court that Kazaa was making little effort to enforce its own licence agreement.

He said Kazaa had a policy pledging to ban anybody from its network caught distributing child porn, and added that similar stringent measures should be enforced against those sharing copyrighted material.

Sharman Networks, based in Australia but registered in the Pacific island state of Vanuatu, is being sued along with nine other firms behind Kazaa.

The labels behind the case are EMI, Warner, Sony BMG and Universal, as well as a number of Australian record companies.

Sales of recorded music have fallen in recent years, and the industry says file-swapping is to blame.

But critics argue that file-sharing can encourage music purchases by allowing people to hear material they could not find on radio, pointing to the growing popularity of online music stores such as Apple's iTunes.