- The Washington Times - Wednesday, August 25, 2004

The Justice Department yesterday seized computers in the first federal investigation of a peer-to-peer network used to share illegal copies of movies and music.

Separately, the trade group representing the music industry yesterday sued 744 persons it said illegally shared music files on peer-to-peer networks. It was the first wave of suits since a federal appeals court decision last week that companies developing file-sharing software can’t be held liable for copyright infringement committed by people using the software.

Federal agents executed six search warrants in Texas, New York and Wisconsin as part of the investigation into piracy of movies, music, games and software. Five warrants were served on people with a group called the “Underground Network,” and a sixth warrant was served at an Internet service provider.

“The execution of today’s warrants disrupted an extensive peer-to-peer network suspected of enabling users to traffic illegally in music, films, software and published works. The Department of Justice is committed to enforcing intellectual property laws, and we will pursue those who steal copyrighted materials even when they try to hide behind the false anonymity of peer-to-peer networks,” Attorney General John Ashcroft said.

Peer-to-peer networks allow computer users connected to the Internet to swap files that are on one another’s hard drives.

The effort to quash illegal file sharing is part of a larger campaign by the Justice Department against a variety of cyber-crimes, from spam to “phishing,” which relies on e-mail to fool people into divulging bank account information.

Search warrants were served at homes of people operating hubs, computers that serve as indexes of movie and music files available through the Underground Network, which the Justice Department said had 7,000 members as of Aug. 2.

The Underground Network had movies, music, games and software available on its hubs, and people traded movies including “Gladiator,” “Saving Private Ryan” and “Lost in Translation,” according to an affidavit used to obtain a warrant to search the home of Michael Chicoine, of San Antonio.

Albums by Bruce Springsteen, Barry White, Van Halen and a single by James Taylor were among the music files available on the network, according to the affidavit.

An undercover agent who joined the Underground Network said he downloaded 178 music files, 84 movies, 40 software applications and 13 games.

One movie available on the network, “Cold Mountain,” was an illegal copy of an advance version of the movie used for screening and marketing purposes.

The Justice Department’s investigation “should send a strong message to everyone who contemplates stealing movies and distributing them on the Internet that illegal actions are not without real consequences. This should also puncture the myth that illegal activity on the Internet is safe because it is untraceable,” said Jack Valenti, president and chief executive officer of the Motion Picture Association of America.

Investigators said they are likely to file charges and make arrests once evidence is examined. The maximum penalty for criminal copyright infringement is a fine of $250,000 and five years in prison.

The motion-picture industry estimated that it loses $3 billion in revenue annually to piracy. The music industry estimates that it loses $4 billion per year.

The Recording Industry Association of America, which represents the major record labels, has sued 4,680 persons since it began its legal dragnet in September 2003 to curb piracy, and yesterday it targeted users of fast-growing peer-to-peer network EDonkey for the first time. The industry had been targeting users of Kazaa.

EDonkey, based in New York, is the second-most-popular file-sharing network, with an estimated 2 million simultaneous users, compared with 2.5 million simultaneous users on Kazaa.

“It’s just disheartening for this to happen,” said Sam Yagan, president of EDonkey.

Mr. Yagan said he has been trying to persuade the music industry to broker a deal to use EDonkey to distribute music.

“We have been very aggressive in public and private talks with the record labels, telling them we want to be part of the solution. I thought we had been making progress, but this is not acting in good faith,” he said.

EDonkey became a target as Kazaa users migrated to other peer-to-peer networks. The music industry also filed lawsuits yesterday against people using peer-to-peer networks Kazaa, Limewire and Grokster.

The record industry also sued an additional 152 persons whose names were obtained through lawsuits filed earlier, but who have ignored attempts by the RIAA to settle piracy charges.

More than 800 people sued by the music industry have settled charges against them.

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