UPDATE: MIPI raids Sharman Networks, Brilliant Digital Entertainment

MIPI obtained an Anton Pillar order - which allows a copyright holder to enter a premises to search for and seize material that breaches copyright without alerting the target beforehand - yesterday from Justice Murray Wilcox, and began raiding premises in Queensland, New South Wales and Victoria this morning searching for documents and electronic evidence to support its case against the peer-to-peer companies.

In addition to the offices of Sharman Networks and Brilliant Digital Entertainment (BDE), MIPI raided the residences of Sharman Networks' CEO Nikki Hemming, Brilliant Digital Entertainment Chief Executive Officer and President Kevin Burmeister and Phil Morle, Director of Technology at Sharman Networks. Monash University, the University of Queensland and the University of New South Wales were also raided, as well as four ISPs including Telstra.

"Telstra lawyers are presently working with lawyers from the record labels in order to determine exactly what information is being sought under the terms of the order," Telstra spokesman Warwick Ponder told ZDNet Australia  . "We have not been asked for and will not provide any BigPond subscriber information."

"Telstra has made it very clear for a long time now that it does not support copyright infringement or any other illegal activity," said Ponder. "At the same time Telstra clearly respects its obligation to protect customers information and privacy under the Telecommunication Act and Privacy Act under Federal law."

MIPI general manager Michael Speck told ZDNet Australia   the order was specifically targeted at the operators of the Kazaa network. "This is not about individuals, this is about the big fish," said Speck. "This is a signal that Internet music piracy is finished in Australia." The ISPs and Universities were raided to gain evidence about the operators of the Kazaa network.

The investigation into the Kazaa network has been ongoing for six months, and was precipitated by a significant change in the physical and technical structure of Sharman Networks, according to Speck. "The Kazaa operation infringes copyright within the terms of the Australian Copyright Act," he said.

"This action appears to be an extraordinary waste of time, money and resources going over legal ground that has been well and truly covered in the US and Dutch Courts over the past 18 months," said Sharman Networks in a statement. "This is a knee-jerk reaction by the recording industry to discredit Sharman Networks and the Kazaa software, following a number of recent court decisions around the world that have ruled against the entertainment industry's agenda to stamp out peer-to-peer technology."

Sharman Networks became a target for the music industry when it purchased the Kazaa peer-to-peer file-sharing technology from its Dutch creators Kazaa BV in 2002. It has had a long relationship with BDE, and in 2002 had to defend against a backlash when it was revealed spyware had been included with the Kazaa software. BDE subsidiary Altnet was later formed and offered to pay people for hosting content on the Kazaa network.

"Kazaa operators know the difference and make the decision as to whether they facilitate legitimate or illegitimate downloads," said Speck. "It's very clear they are facilitating and authorising global copyright infringement."

Sharman disagreed, claiming it bought the Kazaa software "with the express purpose of building it into a legitimate channel for the distribution of licensed, copyright protected content which in turn financially benefits artists".

"There is no doubt this is a cynical attempt by the industry to disrupt our business, regain lost momentum, and garner publicity," said Sharman. "The assertions by plaintiffs are hackneyed and worn out. It is a gross misrepresentation of Sharman's business to suggest that the company in any way facilitates or encourages copyright infringement."

Monash University and the University of Queensland have challenged the order, and the arguments will be heard before Justice Wilcox at 3.30 pm today.

Sharman Networks, Australian subsidiary LEF Interactive and BDE will face the record company lawyers before Justice Wilcox on Tuesday.

According to MIPI, there are around three million users simultaneously online and connected to the Kazaa network at any one time sharing around 573 million files. Over 850,000 tracks are made available by over 2,500 Australian users. If each downloaded track was purchased for US$0.99 the total would be over US$2 billion per month globally.