Sharman Networks claim that they urge their users not to commit music piracy, but also state that they cannot control the trading on their network. For this reason, everything from music to movies can be downloaded and shared using the network. In the United States, two federal courts in California have cleared Grokster Ltd. and StreamCast Networks Inc. of liability but an appeal by the RIAA to the U.S. Supreme Court is still pending. Sharman Networks have also found legal luck in the past. In December 2003, the Dutch Supreme Court ruled that Kazaa's Netherlands division cannot be held liable for copyright infringement. It will be interesting to see how things go in an Australian court.
Sources:
Reuters
MercuryNews.com