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"Plaintiffs' tactics appear to be designed not to achieve substantial justice or answer the important question of copyright law presented by this case, but rather to put its opponents out of business by sheer weight of paper," Kazaa's lawyers wrote in a filing submitted to the US District Court for the Central District of California last week.
Kazaa, along with fellow file-swapping services Morpheus and Grokster, have been busy battling a lawsuit over copyright infringement charges related to the content swapped over the P-to-P networks.
But while the case was set to go to trial in October, Kazaa said that it could no longer afford to fight the charges.
"Kazaa has asked plaintiffs for their terms of surrender," the filing states. "Simply put, plaintiffs have run Kazaa out of business."
The company, which consists of two unpaid directors, said that it would accept a default judgment, which could, potentially, entail millions of dollars in damages.
The incident marks a setback for P-to-P defendants who hoped that Kazaa could, potentially, legitimise the technology in US courts, given that a Dutch court had ruled that the company was not responsible for copyright infringement done by people using its technology.
Kazaa's decision drew little sympathy from the entertainment industry.
"Kazaa BV is running an international shell game," Matt Oppenheim, senior vice- president of business and legal affairs at the Recording Industry Association of America said in a statement.
"They have restated over and over their legal rights, and now they are running scared from the having a court decide the matter because they realise that so much of what they have said in the past is simply not accurate."
Recently, millions of Morpheus users were blocked from the network in what the company later explained was a denial-of-service attack. One of Kazaa's main defences all along was that, unlike Napster, it had no central servers and no way to control the network. The shutdown of Morpheus implied, however, that the P-to-P networks could be controlled.
After the shutdown, Morpheus switched to the open source Gnutella technology, although it is still waging its court battle along with Kazaa and Grokster. But Morpheus is also facing financial troubles. Executives from the company confirmed yesterday that they had to let go of their lawyer because he was too costly to retain.
However, Kazaa has managed to license its technology, called FastTrack, through another venture started by Kazaa founders. The new company, Blastoise, which also operates under the name Joltid, recently licensed the technology to Brilliant Digital Media subsidiary Altnet, which launched a search engine on the Kazaa network earlier this week.
The Kazaa Web site, brand, logo and licence to the FastTrack technology was sold to Australia's Sharman Networks earlier this year.