LOS ANGELES (AP) -- A federal judge considering an Internet copyright case said Monday he was inclined to allow U.S. record companies and movie studios to sue the Australia-based parent company of Kazaa, a popular online file-swapping service.
U.S. District Court Judge Stephen Wilson heard arguments on whether Sharman Networks, which is headquartered in Australia and incorporated in the Pacific Island nation of Vanuatu, is subject to U.S. copyright laws.
"It is a difficult question, but it has to be resolved," Wilson said. "The court will do its best to resolve it promptly."
Kazaa's software allows users to download copyrighted music and movies for free. Plaintiff's lawyers estimate the service is accessed by some 21 million users in the United States, netting Sharman more than $4 million in advertising revenue.
Although Wilson did not indicate when he plans to issue a ruling, he appeared to tip his hand, noting that he "would be inclined to find there's jurisdiction against Sharman."
"I find the argument about providing the service to so many California residents compelling," he said.
The case is one of the largest in the recent copyright wars testing the international reach of U.S. courts. If the judge decides that Sharman can be sued, the company would be added to a pending lawsuit against Streamcast Networks and Grokster, two other file-swapping companies that use similar technology.
Two other popular online services, Napster and Aimster, have been stymied by similar legal challenges.
David Kendall, an attorney representing six movie studios, including Disney, Fox and Paramount, said the fact that Sharman's product is available in this country is cause enough to try them in U.S. courts.
"It does not violate due process to have them stand here to answer for their conduct," Kendall said.
Sharman attorney Rod Dorman countered that such a move could open a door for a judge in "communist China" to rule against U.S. companies that operate online.
The judge did not appeared to be swayed by the argument.
"I'll take my chances with that judge in communist China," Wilson quipped.
Carey Ramos, an attorney representing a class of song writers and music publishers, said the judge's comments would send a message to those companies seeking to operate offshore.
"This is important because it shows that you cannot escape U.S. justice by setting up shop outside the United States," Ramos said.