This morning the appeal of The Pirate Bay Four started, but one of the most important cases in the history of file-sharing began with just three defendants. Pirate Bay co-founder Gottfrid Svartholm is in a hospital in Cambodia and is unable to travel to Sweden. The trial continued without him and began with a discussion on the history and some technicalities of The Pirate Bay.

The day started this morning at 09:30 at the Swedish Appeal Court in Stockholm with only three of the four defendants present.

Fredrik Neij, Peter Sunde and Carl Lundstrom all made their way to the Court, but Gottfrid Svartholm couldn’t travel to Stockholm from his home in Cambodia due to medical reasons, his lawyer said. Gottfrid’s mother says she will go to Cambodia to support him.

Svartholm’s absence caused some confusion at the hearing. His lawyer opted that the case should continue without his client present, while the entertainment industry representatives argued that the earlier District Court verdict should be made permanent.

After asking for some input from Bengt Lindell, Professor of Procedural Law at Uppsala University, the Appeal continued with the three defendants who were present. The Court further decided that the Pirate Bay co-founder Svartholm has to hand over a medical report before October 7.

The Appeal Court then continued with the hearing and announced that, in line with the District Court, it does not wish to seek a ruling from the European Court.

Fredrik Neij’s lawyer began by demanding that his client be acquitted and that the damages awarded against him be reduced. Peter Althin representing Peter Sunde also requested acquittal for his client, with no damages to pay. Per E Samuelson, counsel for Carl Lundstrom, asked for the same.

Following an explanation of the BitTorrent technology behind the case and how it works in connection with The Pirate Bay, there was discussion surrounding The Pirate Bay’s history.

The site started very small and was run by Gottfrid and Fredrik. In 2004 they had contact with an Israeli company who provided contacts to Carl Lundström, who at the time was president of telecoms company, Rix Telecom.

Prosecutor Håkan Roswall said that when Neij came into contact with Lundstrom the understanding was that the purpose of The Pirate Bay was to allow people to share files. He added that in January 2005 there were discussions to carry out an international launch of the site, an aim which would require more hardware. Rix are said to have provided hardware in the first days of January and more at later dates.

Roswall said that it was decided that a company would be established around The Pirate Bay, with Lundström owning 40% and Gottfrid and Fredrik owning the remaining 60%.

The prosecutor stated that in 2005, Lundström received information about changes in Swedish copyright law that could render The Pirate Bay illegal. He then allegedly contacted his lawyer and was told that the site would become illegal on 1st July that year.

It’s claimed that Lundström contacted Gottfrid and Fredrik and suggested the site’s servers be moved abroad. Options in Russia and Argentina were considered but not taken up. Roswall also said it was of interest that Lundström had made enquiries around that time in respect of setting up a company in Argentina.

Roswall claimed that in 2006, hosting company PRQ signed contracts with Rix Telecom – before this event The Pirate Bay hadn’t paid anything to Rix. The finances of TPB improved and eventually it partnered with an Israeli company to assist with advertising. He says that Carl Lundstrom, Gottfrid and Fredrik received revenue from these ads.

The prosecutor went on to discuss how the investigation was carried out into the site and how the plaintiffs collected evidence. This progressed to how the police handled the raids against the site in 2006 and how they carried out tests with the confiscated computers. Police said they counted 64 different ads on the site at the time.

The appeal continued in the afternoon with prosecutor Roswall explaining how The Pirate Bay works. A lengthy educational video was shown to the court, explaining how users can find and download files through the site. After some issues with the sound in the courtroom the audience was told not to use 3G connections.

Rosswal then went on presenting evidence against the defendants. Among other things he pointed to a ‘usage policy’ where The Pirate Bay stated that only mislabeled torrent files would be removed, not ones that are allegedly infringing copyrights. A transcript of the policy further said that copyright holders who send take-down notices risk to be mocked.

During the rest of the afternoon the prosecutor cited emails which he claims prove that Peter Sunde was in fact involved in operating the site, and emails that supposedly show that The Pirate Bay was generating a healthy revenue stream though their ads.

Rosswal presented a partnership agreement between Gottfrid Svartholm, Peter Sunde, Fredrik Neij and an Israeli businessman who were dealing with the ads, and discussed several email conversations about advertising. He further discussed worries from the fourth defendant Carl Lundström, who hinted at shutting the site down after pressure from the local Anti-Piracy Bureau.

More news tomorrow, when the prosecution will go over the evidence against Fredrik Neij.

If all goes to plan the trial should be completed by 15th October.