A US federal court has cleared the way for Kazaa file-sharing software owner Sharman Networks to sue the entertainment industry for copyright infringement, Sharman said on Friday. Sharman, targeted by studios and record companies because its software is used to trade music and video files, has sought to turn the tables on the industry, accusing it of misusing Kazaa software to invade users' privacy and send corrupt files and threatening messages.

Studios and record companies had asked the court to throw out Sharman's counter-suit, but US district judge Stephen Wilson in Los Angeles declined to do so.

Sharman, headquartered on the island nation of Vanuatu in the South Pacific, said it would pursue the case.

A spokesman for the Recording Industry Association of America said: "The court does not appear to want these claims to proceed at this point. If they ever proceed, Sharman will have a very difficult time providing evidence to support their allegations."