Judge backs case against Kazaa

US District Judge Stephen Wilson heard arguments in a Los Angeles courtroom about the service, which the companies say offers free access to copyrighted music and film.

Kazaa's parent company, Sharman Networks, is being sued by a range of companies including movie producers Disney, Fox and Paramount, as well as music publishers and songwriters.

There has been confusion over whether the service's parent company, Sharman Networks, can be held liable under US copyright laws.

Its headquarters are in Australia and it is incorporated in the Pacific island state of Vanuatu, 1,550 miles north-east of the Australian coast.

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But Judge Wilson said he "would be inclined to find there's jurisdiction against Sharman" - because so many Californians took advantage of the service.

Prosecution lawyer Carey Ramos said of the judge's comments: "It shows you cannot escape US justice by setting up shop outside the United States."

Kazaa's servers are available to 21 million users, who can swap files - which often include music or films - amongst each other.

The company has made advertising revenue of over $4m (£2.6m).

The judge said: "It is a difficult question, but it has to be resolved. The court will do its best to resolve it promptly."

He did not say when he would make his judgement.

Hackers

The Sharman case has been described as one of the biggest tests of the entertainment industry's ongoing war against digital "piracy" on file-sharing sites.

If it can be sued, the company may face a similar fate to Napster, which was wound up earlier this year.

Sharman's defence attorney, David Casselman, said holding the company liable for copyright violations would be akin to suing computer manufacturers for the crimes carried out by hackers.