Kazaa network to fold

File sharing network Kazaa is to fold after being beaten by high legal fees in a copyright infringement case brought against it by major film studios and record labels.

Although the company maintains that it has not violated any copyright laws by allowing users to share files over its service, it looks like Kazaa, owned by Sharman Networks, is set to go the way of its predecessor, Napster.

Kazaa's lawyers have said that the company can no longer afford the ongoing legal fees in the case and will be forced to accept a default judgement, which may leave it responsible for damages in the region of millions.

The San Francisco Chronicle quoted Kazaa's lawyers as saying that the plaintiffs had used legal hardball tactics to "run Kazaa out of business".

"Plaintiffs have engaged in Rambo-style litigation," they said. "Kazaa has now asked for its terms of surrender."

However, Kazaa's collapse is not expected to kill the network, or the trading activity on it.

There are also rumours that Sharman Networks has already sold the Kazaa network to another company that has so far avoided the wrath of the music and picture industries.

The Kazaa network may have been more tempting to prospective buyers after the activation of Altnet on 20 May, which is the piggy back network installed with the Kazaa client and which runs alongside the Kazaa network.