Federal judge allows Kazaa suit to proceed in US

A federal judge has ruled that Sharman Networks, the company behind Kazaa, can be sued in the US. How does a California court think they can get away with challenging a company based out of Australia and incorporated in Vanuatu?
"Given that Sharman's (Kazaa) software has been downloaded more than 143 million times, it would be mere cavil to deny that Sharman engages in a significant amount of contact with California residents," Wilson wrote. Also, he said, "many, if not most, music and video copyrights are owned by California-based companies."
If the lawsuit does go forward, I wouldn't suspect that Sharman Networks stands much of a chance. They'd probably end up becoming the next Napster. However, there are bigger issues at stake in this case. Napster was very much a US-based company, and Sharman is not. If a California court is able to extend its jurisdiction to a company based in Australia and incorporated in a tiny Pacific Island, the ramifications will be felt far beyond the file sharing community.

Does a California court have the right to let the RIAA and MPAA sue Sharman Networks? If they don't, who does? Australia? Vanuatu? Would a more dangerous precedent be set by allowing the California court to proceed or permitting Sharman Networks to hide behind the legal system of countries where it has a physical presence?

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