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KaZaA.com continues to operate its Napster-style software downloads despite a ruling against its former owners in a Dutch court.

An Amsterdam district court yesterday ruled KaZaA, the Dutch software and products firm that founded KaZaA.com, provided software that encouraged copyright infringement. It ordered KaZaA to stop the worldwide distribution of its popular P2P software.

The court ruled the software "justifies on its own a ban on the use of the Web site", the Press Association reports.

Earlier this month KaZaA.com was sold along with a license for its P2P stack by developers Fast Track to Australian firm, Sharman Networks Limited.

So it's unclear if the decision of the Dutch Court is enforceable. The KaZaA.com Web site is still in the Netherlands according to the Whois database, but it's up in in the air whether or not this leaves Sharman liable to any enforcement action.

Sharman's US PR agency told us the company is evaluating the ruling. Meanwhile KaZaA.com remains online and operational, albeit with support for Linux users mysteriously curtailed since the resumption of the service by Sharman Networks, after a brief suspension of the service by KaZaA days before its sale.

A notice on the Web site, which has a counter documenting a steady rate of continuing downloads, states: "KaZaA does not condone activities and actions that breach the copyright of artists and copyright owners - as a KaZaA user you are bound by the KaZaA Terms of Use and laws governing copyright in each country."

In October, the Recording Industry Association of America (RIAA) filed a lawsuit against KaZaA, as well as peer-to-peer MP3 file sharing services MusicCity and Grokster, which use FastTrack's code. A lawsuit was lodged in the Netherlands by a music copyright protection agency, Buma/Stemra.

In November, a Dutch judge gave KaZaA two weeks to cease infringing recording artists' copyrights or risk a penalty of 100,000 guilders ($40,317) a day.

KaZaA, which claims its software has been downloaded more than 30 million times, filed an appeal against this decision by saying it could not comply with the judge's order as it has no way of identifying those who use its software.

Unlike Napster, KaZaA uses the true peer-to-peer principle enshrined in the Gnutella protocol, so it operates without a central server or distribution point.

The courts have rejected KaZaA argument. But will this become a hollow victory? Although the music industry has successfully won its court case, it faces a greater challenge in shutting down the service. ®

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