Five record labels today launched a legal case against Sharman Networks, claiming that their file-swapping software Kazaa represents the "world's biggest copyright piracy engine." Lawyers for the records labels (which include EMI, Sony BMG and Warner) told an Australian Federal jury today that the Kazaa software was used to make three billion music downloads a month, and that most of these downloads comprise of copyrighted music. The lawyers claim that Sharman Networks has the means to prevent their software from being used to illegally swap pirated material, but that they do not do so, as this would ruin their business. Effectively, it’s claimed that their business promotes and to a great extent exists because of piracy. Sharman Networks says it warns users against copyright violations, but the labels' lawyers have dismissed those claims. The trial is expected to last around three weeks.

"The Kazaa system is an engine of copyright piracy to a degree of magnitude never before seen."

Sounds almost exactly like what happened to Napster a few years back. It will be interesting to see if Kazaa goes the same way.