AU music industry actions disrupt US court proceedings

The recent raids on file-sharing companies, their executives and Internet providers by Australian record labels were so disruptive they caused the deferral of the court case of their US parent companies, according to Sharman's defence lawyer in the US.

The recent raids on file-sharing companies, their executives and Internet providers by Australian record labels were so disruptive they caused the deferral of the court case of their US parent companies, according to Sharman's defence lawyer in the US.

On 6 February, the same day as the raids took place in Australia, Sharman's US lawyers filed an application -- Ex parte application for protective order regarding duplicative and vexatious discovery proceedings in Australia -- raising concerns over the impact of the Australian raids. The US Judge, Patrick Walsh, declined to issue any orders and instead referred the matter to the Australian courts, Sharman's US lawyer David Casselman told ZDNet Australia  . However, Justice Murray Wilcox of the Federal Court of Australia -- before whom the Australian case was proceeding -- was not available the following day, Saturday 7 February.

"Thereafter, the plaintiffs in the US action apparently recognised that our request was justifiable and agreed to a four week stay of the depositions in Australia to allow Sharman to recover from the impact and confusion caused by the Anton Piller proceedings," said Casselman. "They are now scheduled to begin in mid-March."

The application filed in the US raised two issues concerning the surprise raids conducted by the record labels earlier this month. Sharman was concerned that the Australian action allowed information to be seized that the US court had previously ruled didn't need to be produced by the peer-to-peer company, in addition to posing problems in meeting the deadline for the depositions for the US court. Sharman claimed the raids resulted in the destruction of a hard drive belonging to the chief technology officer of Sharman Networks, making information retrieval difficult.

"The order allowed forcible removal of information which was privileged, highly confidential, and copyright protected," stated Sharman in the application. "In addition, literally tens of thousands of other documents were demanded for seizure, many of which was requested in the US action and rejected by order of this court."

Alan Morris, executive vice president of Sharman Networks, submitted a declaration to the court supporting the application in which he pointed out that Sharman had produced its source code to the counsel for the record labels in the US under the terms of a "Software Materials Protective Order", which prevented the disclosure of the source code to anyone else. Sharman are now concerned that the source code has been seized without any protective measures in place.

"Plaintiff's clandestine seizure order effectively bypasses these safeguards," said Morris. He also pointed out that the individuals who were raided -- including Sharman chief executive officer Nikki Hemming and chief technology officer Phil Morle -- were due to give depositions for the US case this month. The application for protective order claimed the action by the record labels in Australia was to interfere with the process in the US.

"Transparently, seizure of all the documentation in the possession of Sharman was designed to literally shut down the business operations of Sharman," read the application. "This would predictably prevent Sharman employees from meeting with their attorneys and locating (much less reviewing) all of the necessary materials for their depositions."

Sharman is entitled to refuse production or seek the return of documents that contain privileged information, but in order to do this "Sharman's key personnel...will likely spend hundreds of hours over the next few weeks reviewing documents", said Morris in his statement.

Sharman requested the US court produce orders:

  • Enjoining plaintiffs, by and through any of their subsidiary corporations or agents, from proceeding with any further discovery actions in Australia or, alternatively, staying any further prosecution of this action;
  • Excluding from this action any and all documents or other evidence obtained as a result of these Australian discovery tactics; Precluding any plaintiff, subsidiary, employee or agent from using or
  • communicating (directly or indirectly) to any U.S. attorneys, any of the information obtained as a result of these Australian discovery tactics; and
  • Staying all Australian depositions until Sharman can fully recover from the business interference and confusion occasioned by these strategically timed discovery efforts, and its personnel noticed for depositions in this case are available to prepare for depositions and attend the depositions.

Sharman Networks is also attempting to have the Anton Pillar order used by the record labels to raid its premises overturned.

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