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There was just a court case that tested this a few weeks ago. If I understand the ruling correctly, Kazaa is legal; however, sharing copyrighted material without the consent of the copyright holder is illegal. The court held that Kazaa could not be held liable for the illegal use of its product by its users, since Kazaa has no control over the illegal use. But if you are going to share songs - you are using Kazaa illegally.
Make sense?
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