District court delivers guilty verdict in peer-to-peer file-swapping case

The Taipei District Court found Taiwan's largest peer-to-peer (P2P) operator guilty of intellectual property rights (IPR) infringement Sept. 9. Three executives of the Kuro Web site were given jail terms in what is widely believed to be the first incidence of a criminal conviction for operating an Internet file-sharing service.

Kuro President Chen Shou-teng was given two years in jail. His sons, Fashionow Co. Ltd. CEO Chen Kuo-hua and General Manager Chen Kuo-hsiung, were each sentenced to three years in prison. Fashionow is the company that operates the Kuro Web site, located at www. kuro.com.tw. Each of the family members was fined US$91,000 in addition to their jail terms.

Having asked the court for a sentence of up to seven years in prison for the Kuro CEO, and to fine him US$15 million, prosecutors were reportedly unhappy with the short sentence and said they would appeal on the grounds that the US$91,000 fines were too low. Kuro likewise said it would appeal the verdict to a higher court.

"We wanted to cooperate with the record industry, but we were denied," CEO Chen was reported as saying. The organization that initiated the prosecution was the Taiwan office of the International Federation of the Phonographic Industry (IFPI), whose executives were pleased with the ruling.

"This is good news for artists and the music industry, particularly in Taiwan, which has had a history of piracy problems," Lauri Rechardt, IFPI director of licensing and litigation, was reported as saying. "Kuro has received a criminal conviction, which sends a strong message that profiteering from infringement will not be tolerated," she added.

In addition to the company executives, one of Kuro's 500,000-800,000 members was also convicted of illegally downloading music in MP3 format. Chen Chia-hui, a 24-year-old woman who downloaded a reported 970 songs using the service, was sentenced to four months in jail and three years' probation.

The ruling was greeted with mixed feelings in Taiwan. Stakeholders in the Taiwanese music industry widely regarded it as a victory that had been long in coming. It was likewise welcome news to business and political interests who want to improve trade ties with the United States by having Taiwan removed from the U.S. Trade Representative's Special 301 Watch List of IPR violators. U.S. negotiators have reportedly ruled out any sort of free-trade arrangement with Taiwan so long as the island remains on the list, prompting vigorous government efforts to demonstrate concern over piracy in Taiwan.

Meanwhile, proponents of freedom-of-information rights, users of P2P file-swapping networks and activists who believe the powerful recording industry already wields too much control over what music is available in Taiwan were disappointed by the verdict.

After the court's decision was handed down, Kuro launched an online petition to amend Taiwan's Copyright Law. The Web site claimed that several hundred signatories, including academics, businessmen and politicians, had lent their endorsement to the online petition. Specifically, the plea calls on the Legislative Yuan to revise the relevant piece of legislation so that the freedom of individuals to use the Internet is protected, it was reported.

The verdict has been compared to an Australian court's ruling against file-sharing giant Kazaa just days earlier, although it stands in sharp contrast to one handed down by the Taipei Shihlin District Court June 30, in which another P2P file sharing operator, Weber Wu of ezPeer, was found not guilty of copyright infringement in a similar case.

It was reported in a local English-language newspaper that the head of the Government Information Office (GIO)--the agency that publishes this newspaper--said Premier Frank Hsieh had asked members of the recording industry to reconcile with file-sharing operators.

"Premier Hsieh said that the music industry should work out a way of cooperating with the file-swapping operators so consumers can legally enjoy the results of the latest technologies," said Pasuya Yao.

"The government cannot turn a blind eye to the record industry slump, but we should not leave Internet users in constant fear of violating the law," the GIO head quoted the premier as saying, adding that Hsieh had asked the Intellectual Property Office to set up a meeting so the two sides could find a compromise.

"We appreciate the premier's attention," said Robin Lee, Secretary General of the IFPI Taiwan office. Lee explained, however, that his organization was only acting as an agent for Taiwan's recording companies in the matter of the lawsuits and was not authorized to engage in any commercial negotiations.

Meanwhile, at the time of writing, Kuro stated on its Web site that it would continue allowing its members to share music files from each other's computers despite the court's verdict. It has been reported that the site has had an average of 40,000 hits per day.