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I didn't know about the Kazaa execs acknowledging on paper that they ought to track things and they knew copyrighted material was being exchanged. That definitely blurs the line. To extend my water pipe analogy, it's kind of like if a bong company had internal documents explaining how their product is designed to make pot taste smoother, or that they did a customer survey and 98% of them use it for pot.
My take on "borderline illegal" things like these are if it's not marketed or solely used for illegal purposes and no mention is officially made of how it can be used illegally, it's none of the government's business because they are punishing THOUGHTS and POSSIBLE INTENTIONS regarding how the product is to be used, rather than anything objective. And although they may very well be right that Kazaa is used 99% of the time for trading copyrighted materials, that sets an extremely dangerous precedent--imagine buying some nails and pipe for a remodeling project, then being sent to jail because some cop thought you planned to make a pipe bomb based solely on that evidence. Or being convicted of burglary because you happened to have a crowbar in your car. Same thing.
But once the company documents that they are perfectly aware their product is being used illegally by most of its users and does nothing to curtail such behavior (or worse yet, encourages it), that hurts their case dramatically because then there is objective, tangible evidence.
So basically the Kazaa people should not have tracked usage, and should've kept their damn mouths shut about using it for sharing copyrighted materials.
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