An Aug. 26 Business article about federal raids on people suspected of trading music and movies over the Internet incorrectly referred to Skype, which provides telephone service over the Internet, as a file-sharing service. It uses similar peer-to-peer technology but does not share files. (Published 8/31/04)

Federal agents yesterday took their first steps to go after individuals who illegally trade copyrighted music and videos over the Internet, seizing computers, software and related equipment at five homes around the country.

After a months-long sting operation, FBI agents raided residences in Texas, Wisconsin and New York where people were suspected of operating "hubs" of file-sharers that were part of a system called the Underground Network. About 7,000 users connected to the network via file-sharing software known as Direct Connect, according to law enforcement officials.

Among the copyrighted works that were downloaded for free by an undercover agent who signed up for the service was a studio-screening copy of the movie "Cold Mountain," before it had been released in theaters or on DVD. Altogether, the agent downloaded about 84 movies, 40 software programs, 13 games and 178 sound recordings from five hub sites, according to court documents.

No arrests were made yesterday, and no charges have been filed. But the raids for the first time throw the weight of the Justice Department behind what has been an intense campaign by the music, movie and software industries to curb online file-sharing that millions of computer users around the world use every day.

Already, more than 4,600 file-sharers have been sued by the recording industry in a high-profile campaign to get people to give up the practice. Now, the prospect of criminal prosecution looms for those who steal copyrighted works valued at more than $2,500, which qualifies as a felony.

"Today's actions send an important message to those who steal over the Internet," Attorney General John D. Ashcroft said in a statement. "The Department of Justice is committed to enforcing intellectual property laws, and we will pursue those who steal copyrighted materials even when they try to hide behind the false anonymity of peer-to-peer networks."

The action is sure to stoke an already heated debate over file-sharing services, many of which have become household names, such as Kazaa, Grokster and Morpheus. Kazaa claims more than 30 million users who have downloaded more than 1 billion files.

The entertainment industry, which hailed yesterday's action, has tried to get U.S. courts to shut down the file-sharing networks, arguing that they exist primarily to enable people to get copies of copyrighted works without paying for them.

Those efforts have largely failed; just last week, the U.S. Court of Appeals for the 9th Circuit ruled that providers of underlying technologies cannot be held responsible for the illegal actions of some users. Operators of file-sharing networks argue that their services also are used for legal transfer of digital entertainment and software.

One file-sharing service, Skype, provides the equivalent of telephone service over the Internet.

The motion picture and recording industries have now turned their efforts to Congress, pushing legislation sponsored by top Senate leaders that would hold liable anyone who produces technology that induces illegal file-sharing.

The bill, known as the Induce Act, is opposed by a wide range of computer and telecommunications companies and civil liberties groups as being overly broad and a threat to innovation of new products and services.

David M. Israelite, deputy chief of staff at the Justice Department who is spearheading its copyright enforcement efforts, said yesterday that the department is not targeting a particular technology.

"We are not in favor banning of peer-to-peer technology," which allows computer users to trade directly with one another, he said. "We don't think the technology is good or bad. We're interested in punishing bad actors."

But Mike Godwin, policy counsel for Public Knowledge, a digital rights advocacy group, said he is concerned about the raids.

"We favor government involvement in truly criminal infringement," Godwin said. "But generally, the option of first choice is to have the copyright owner" try to get resolution. "A policy that risks roping in a bunch of end users . . . risks losing the hearts and minds" of a public that has embraced file-sharing.

According to an affidavit filed by the undercover agent on the case, the Recording Industry Association of America posted a notice on the Underground Network in May warning that copyrighted material was being illegally traded on the network. According to the affidavit, the warning was removed within 15 minutes and the RIAA poster was blocked from the network.

Documents provided by the Justice Department identified only one of the homes that was raided, belonging to Michael Chicoine of San Antonio. Calls to his residence were not returned.

Agents also went to the Dallas offices of the Planet Internet Services Inc., an Internet service provider that also hosts Web pages for businesses.

Lance Crosby, the firm's chief operating officer and general counsel, said agents confiscated the server that was used to host the Underground Network.

"We're a medium of exchange . . . not the content police," Crosby said, adding that his company often does not know what its customers are doing with their Web sites.

The raid did not put the Underground Network out of action, however. Its service was up and running last night, hosted by computers overseas.

The raids did not involve California-based NeoModus Inc., maker of the Direct Connect file-sharing software, which officials said is used by about 250,000 people. The company did not respond to an e-mail seeking comment.

"The Department of Justice is committed to enforcing intellectual property laws," Attorney General John D. Ashcroft said.