Sharman Networks has released a new version of its Kazaa peer-to-peer networking software.

But the company is yet to face record industry lawyers in court and, in a move that is likely to further antagonise its opponents, the company has used the latest release to counter several of the measures that record companies and movie studios have been taking to stamp out peer-to-peer piracy.

The record companies have been flooding the internet with bogus files in an attempt to hamstring peer-to-peer set-ups.

But the latest Kazaa software allows people to rate files, so that corrupt or false examples will quickly collect poor ratings and warn users away. There is also an active default setting called 'filter bogus music and video files'.

According to Sharman Networks the new version introduces several new features, including a better web search device, customisable skins, the ability to create shared play lists, improved image handling and unlimited bit rates.

Frequent KMD users and those who frequently rate files are rewarded with higher priority in download queues. There is integrated antivirus protection and better helpdesk facilities.

The company has also signed several partners in a bid to make money from its product.

These include Cornerband.com, an online music community for emerging bands; Showcase, which provides premium content from Altnet; Tiscali, a European internet service provider; and Bullguard, a home internet security company.

The early version of the software has had more than 119 million downloads and is similar to Napster which was sunk by legal rows with the recording industry.