The Pirate Bay appeal is moving forward faster than expected. On the second day representatives for the music and movie industries talked about lost sales and revenues they claim can be attributed to The Pirate Bay. In addition, the prosecution uncovered ad sales and money trails to portray The Pirate Bay as a commercial organization.

The second day of the trial began with the announcement that Pirate Bay co-founder Fredrik Neij is not present because he hadn’t slept much the previous night. According to Neij’s lawyer he has been under the weather lately. He is trying to get some more sleep before coming to the court room.

After this minor interruption the hearing started where it left off yesterday, with prosecutor Håkan Roswall presenting more evidence to the Court regarding ad revenues and other financial transactions that involve the defendants. Roswall showed emails and bank statements which he claims proves that all defendants received money for their involvement with The Pirate Bay.

Most, if not all of the information that is being brought up has already been discussed in the District Court hearings last year, and it is assumed that the prosecutor is trying to label The Pirate Bay as a commercial operation. Several advertising deals were discussed, most of which involve an Israeli businessman and his advertising company. Aside from ad revenue, Roswall also discussed the money trail behind the servers that were bought for The Pirate Bay.

Roswall then went on to explain the various tasks the defendants fulfilled according to his claims. Gottfrid Svartholm and Fredrik were the main programmers. Peter Sunde is seen as a general ‘office manager’ who coordinated the programming and helped with optimizing the database, layout and search of The Pirate Bay. In addition, Sunde was involved in contracting advertisers. The fourth defendant, Carl Lundstrom, was a financer and was involved in strategic planning according to Roswall.

After the prosecutor finished, Peter Danowsky of music industry group IFPI took the stand. His introduction caused a few chuckles in the audience as Roswall mispronounced IFPI and introduced him as a member of the “International Federation of the Pornographic Industry.”

Danowsky asked the Appeal Court for extensive damages to compensate the record labels he represents for claimed losses. The defendants willingly ignored copyright law and allowed users to freely share copyrighted music, he said. The Pirate Bay’s download counters were used as evidence to show how many albums were downloaded.

According to Danowsky, the damages claimed from The Pirate Bay are the same as if the site had ‘legally’ obtained licenses to distribute the music world-wide, regardless of whether all the downloaders had later decided to buy the music or not. Effectively, he is trying to say that one download equals one lost sale.

Danowsky further argued that for some recordings the damages per infringement should be significantly higher. Beatles albums are given as an example because the band’s music isn’t available legally online. This is an interesting argument, since there would be no need to download these albums if they were available online. Music that is shared before the official release date should also receive greater compensation, he argued.

After Danowsky finished talking, Henrik Ponten – representative of the movie studios – issued his claims. Ponten stated that he will detail the request for damages next week when Bertil Sandgren, a board member of the Swedish film institute, is scheduled to testify.

The hearing continued after a lunch break with Monique Wadsted, representing the U.S. movie industry. She explained how The Pirate Bay can be used to transfer large files quickly. She further noted that it is very easy for the operators to delete a torrent file, but that the defendants nonetheless chose not to remove any infringing files.

Wadsted further stated that The Pirate Bay is not a ‘passive’ site. The categories, which have been ‘actively’ put up by The Pirate Bay’s operators, make it easier for users to find torrents. She further reiterated what the prosecution has already said, claiming that the defendants earned a significant amount of money, up to 35 million Swedish krona according to an expert report.

Wadsted concluded by saying that the movie studios want compensation for the titles in the lawsuit, but also damages for the losses the industry suffered in general due to The Pirate Bay. She said that The Pirate Bay makes it harder for copyright holders to recoup their investments in films.

The last one and a half hours of the day were for the defense team, starting with Jonas Nilsson, Fredrik Neij’s lawyer. Nilsson rejected most of the prosecution’s claims and started by refuting the claim that the majority of the torrents on The Pirate Bay point to copyrighted material. The lawyer said that the opposite is true.

The lawyer continued by stating that his client has three objections to the indictment.

Firstly, The Pirate bay is merely a search engine and does not store any copyrighted material. Besides, Neij is not aware of all the content that can be downloaded via the site, so he cannot be seen as aiding or abetting copyright infringements. Lastly, The Pirate Bay is a transmission instead of a hosting service, meaning that under the E-Commerce Directive the operators can’t be held responsible for the actions of the site’s users.

Nilsson continued by saying that Fredrik Neij was not involved in founding the site, but that he merely agreed to help out on the technical side. The Pirate Bay itself was never a commercial operation and all the proceeds went to investments in hardware and other technical equipment.

The defense lawyer further said that the purpose of The Pirate Bay website is to share files, not to infringe copyrights. Users interact with the site automatically and the people who are operating the site are not involved in the actual file-transfers or the uploading of .torrent files to the site. BitTorrent as a file-sharing protocol is perfectly legal, Nilsson stated.

Nilsson then went back to the E-Commerce Directive, stating the the operators of The Pirate Bay never changed or edited any torrent files, because they are not considered to be liable for what users share. Under the Directive the site should be seen as merely a transmission service, not a hosting platform, he argued.

The last speaker of the day was Peter Sunde’s lawyer Peter Althin, who spoke for twenty minutes. He refuted the claim of the prosecution that his client was actively operating the website. Sunde did have contact with the Israeli businessman who handled the advertisements, but that was because he was contacted as a spokesperson of the site when others were too busy to respond.

Althin further said that The Pirate Bay is not engaging in criminal activity, and even if the court decides otherwise, his client should be acquitted because he was acting merely as a spokesperson. Sunde appeared in the press many times as a representative of the site, but was never responsible for the financing, programming or other daily operations.

Finally, Althin noted that the plaintiffs have not suffered any financial damage that can be attributed to The Pirate Bay, contrary to what the prosecution has claimed today and yesterday.

That concluded the second day. Thus far the trial is mostly a repeat of the District Court hearings. Everything seems to be going smoothly and the hearing may conclude sooner than expected. The trial continues on Friday.