Police and investigators in Australia this morning raided the offices of Brilliant Digital Entertainment [BDE] and Sharman Networks, two peer to peer file sharing companies. Brilliant Digital Entertainment is also a major player in the game industry.

In addition to their offices, the home of the Brilliant Digital CEO Kevin Burmeister was also raided.

The reason for the raid, according to Music Industry Piracy Investigators was to go after the owners and operators of the Kazaa file sharing network, which is based inside Sharman Networks, the other company that was raided Friday. Sharman bought Kazaa in 2002.

BDE and Sharman networks have had a long-standing relationship. BDE created spy software that was secretly downloaded by millions of people who used the Kazaa network. Their intent was to activate a new global network of file sharing using their secret user base. BDE later apologised and offered to pay people to host Kazaa instead.

Sharman Networks released a statement saying the raid was an unfounded attempt by the record industry to harm their business.

“There is no doubt this is a cynical attempt by the industry to disrupt our business, regain lost momentum, and garner publicity,” the statement said. “The assertions by the plaintiffs are hackneyed and worn out. It is a gross misrepresentation of Sharman’s business to suggest that the company in any way facilities or encourages copyright infringement.”

If the music industry’s intentions were to harm the business of the companies involved, that goal seems achieved, at least in the short term. BDE’s stock was down 16 percent about an hour after the raids.

Lawyers from both companies are scheduled to head to court in Australia later today. GiN will bring new developments as they occur.