Well I'm certainly not a lawyer and I don't really understand legalese, but to me breaking down that sentence logically:
Clause 1: "Defendant converted into mp3"
Clause 2: "Defendant put converted MP3's into his shared folder"
Statement is Clause 1 AND Clause 2 => violation
Applying a little Boolean logic, that means
(NOT Clause 1) OR (NOT Clause 2) => NOT violation
Of course, perhaps applying Boolean logic to legalese is illegal ;-)