Over the last two days, I have been at the Copyright 2010 Conference hosted by the CIPL at ANU and organised by Dr Matthew Rimmer.

I presented two papers at this conference, one on moral rights and open licensing and another on graduated response schemes and the rule of law.

You can grab my slides for these here:

• Open licensing and moral rights (PDF)
• Graduated responses on the rule of law (PDF)

Abstracts below the fold:

Integrity, attribution, and exploitation: contractual and normative moral rights protection in open licensing

Over the last twenty years, the use of open content licenses has become increasingly and surprisingly popular. The use of such licences challenges the traditional incentive-based model of exclusive rights under copyright. Instead of providing a means to charge for the use of particular works, what seems important is mitigating against potential personal harm to the author and, in some cases, preventing non-consensual commercial exploitation. It is interesting in this context to observe the primacy of what are essentially moral rights over the exclusionary economic rights.

The core elements of common open content licences map somewhat closely to continental conceptions of the moral rights of authorship. Most obviously, almost all free software and free culture licences require attribution of authorship. More interestingly, there is a tension between social norms developed in free software communities and those that have emerged in the creative arts over integrity and commercial exploitation. For programmers interested in free software, licence terms that prohibit commercial use or modification are almost completely inconsistent with the ideological and utilitarian values that underpin the movement. For those in the creative industries, on the other hand, non-commercial terms and, to a lesser extent, terms that prohibit all but verbatim distribution continue to play an extremely important role in the sharing of copyright material. While prohibitions on commercial use often serve an economic imperative, there is also a certain personal interest for many creators in avoiding harmful exploitation of their expression – an interest that has sometimes been recognised as forming a component of the moral right of integrity.

One particular continental moral right – the right of withdrawal – is present neither in Australian law or in any of the common open content licences. Despite some marked differences, both free software and free culture participants are using contractual methods to articulate the norms of permissible sharing. Legal enforcement is rare and often prohibitively expensive, and the various communities accordingly rely upon shared understandings of acceptable behaviour. The licences that are commonly used represent a formalised expression of these community norms and provide the theoretically enforceable legal baseline that lends them legitimacy. The core terms of these licences are designed primarily to alleviate risk in sharing and minimise transaction costs in sharing and using copyright expression.

Importantly, however, the range of available licences reflect different optional balances in the norms of creating and sharing material. Generally, it is possible to see that, stemming particularly from the US, open content licences are fundamentally important in providing a set of normatively accepted copyright balances that reflect the interests sought to be protected through moral rights regimes.

As the cost of creation, distribution, storage, and processing of expression continues to fall towards zero, there are increasing incentives to adopt open content licences to facilitate wide distribution and reuse of creative expression. Thinking of these protocols not only as reducing transaction costs but of setting normative principles of participation assists in conceptualising the role of open content licences and the continuing tensions that permeate modern copyright law.

Tensions Between the Rule of Law and Graduated Response Schemes

The recent iiNet decision highlights an important tension in copyright law over the role of intermediaries in responding to what is seen as a crisis in rates of online infringement. Recent legislative developments in the UK, New Zealand, and France seek to require ISPs to terminate the accounts of subscribers suspected of infringing copyright on a number of occasions. The iiNet decision at first instance suggests that such a scheme cannot easily be implied as part of Australian authorisation liability and that a legislative scheme will likely be required if one is to be introduced.

The recent decision of the French Constitutional Council on the first iteration of a French graduated response scheme highlights fundamental rule of law concerns with the creation of an extra-judicial punitive regime designed to curb rates of copyright infringement. The desire to reduce the costs of copyright enforcement is problematic when considered against the requirements of due process, predictability, and transparency expected in liberal democratic theory. The crisis-management based goals of such schemes can also be difficult to reconcile with requirements of proportionality in the enforcement of legal rights. These problems compound with the increasing recognition that internet access is fundamentally important to all aspects of participation in society.

This paper examines these tensions and seeks to identify whether a scheme based upon the termination of internet access of households or individuals found to have infringed copyright can be compatible with rule of law theory. At a minimum, such a scheme is likely to require significantly more judicial oversight than has been proposed by the applicant-appellants in the iiNet litigation. Whether it is possible to decrease enforcement costs without unduly sacrificing due process is likely to be an ongoing debate over the immediate future.

Kylie Pappalardo has an excellent case note on Telstra Corp Ltd v Phone Directories Pty Ltd [2010] FCA 44 (Full decision). This case continues the process that began when the High Court tightened the requirements of originality and authorship in IceTV, applying that logic to contain the previous FCAFC authority of Telstra v Desktop Marketing to its facts. The result is very interesting for Australian copyright law: there is no longer any certainty that telephone directories will be protected by copyright, bringing Australia more into line with international authority on this point.

[ reposted from EFA ]

Michael Geist is reporting that the text of the secret Anti-Counterfeiting Trade Agreement (ACTA) chapter on internet enforcement has been leaked. As suspected, the text is unlikely to require major changes to Australian law, but it does do two very concerning things:

• Increased pressure on intermediaries (ISPs) to monitor and police their networks: in the recent iiNet litigation, the Federal Court found that ISPs were under no obligation to terminate the accounts of subscribers that the film industry alleged (without proof) were infringing copyright. This is a contentious point, and we expect to see the copyright industry lobby for legislative change. The ACTA provides them with more ammunition to argue for a three-strikes policy, which is unfortunate.
• Increased entrenchment of the harshest level of copyright sanctions: my biggest concern with ACTA is what it means for the way that international copyright law is developed. Copyright is such an important part of the framework that governs the way that we interact online – it underpins nearly every aspect of modern communication. Because the balance between providing authors with an incentive to create and users with the ability to access is so critically important, the way in which copyright policy is made is also critically important for a society. The ACTA, a secret plurilateral agreement, ensures that the role of the public is minimised, allowing corporate rightsholders to set the agenda for copyright policy.

See Michael Geist’s blog for more information:

The draft chapter finally puts to rest the question of whether ACTA in its current form would establish a three strikes and you’re out model. The USTR has recently emphatically stated that it does not establish a mandatory three strikes system. The draft reveals that this is correct, but the crucial word is mandatory. The draft U.S. chapter does require intermediaries to play a more aggressive role in policing their networks and the specific model cited is the three-strikes approach. In other words, the treaty may not specifically require three-strikes, but it clearly encourages it as the model to qualify as a safe harbour from liability. The specific provision, which is another pre-requisite for intermediary safe harbour from liability, states:

an online service provider adopting and reasonably implementing a policy to address the unauthorized storage or transmission of materials protected by copyright or related rights except that no Party may condition the limitations in subparagraph (a) on the online service provider’s monitoring its services or affirmatively seeking facts indicating that infringing activity is occurring;

And what is an example of a policy provided in ACTA? The treaty states:

An example of such a policy is providing for the termination in appropriate circumstances of subscriptions and accounts in the service provider’s system or network of repeat infringers.

This leaks shows how deceptive the USTR has been on this issue – on the one hand seeking to assure the public that there is no three-strikes and on the other specifically citing three strikes as its proposed policy model. Given the past U.S. history with anti-circumvention – which started with general language and now graduates to very specific requirements – there is little doubt that the same dynamic is at play with respect to three strikes.

Of course we already have such a requirement in Australian law, but the iiNet decision means that ISPs do not need to rely on the safe harbours in order to avoid secondary copyright liability. By continuing to push this idea, though, the copyright lobby threatens to change the discourse – and influence the legislature – to make it much easier to introduce three-strikes in the future.

Warwick Rothnie is reporting that the Federal Court has declined to follow Desktop Marketing (which held that telephone directories were protected by copyright in 2002) in light of the High Court’s decision in IceTV (which held that copyright was not infringed by taking time and title information from a timetable). Decision is here: Telstra v Phone Directories [2010] FCA 44.

This is very interesting. The argument that IceTV effectively overrules DMS was inevitable, given Telstra’s near monopoly on a relatively lucrative compilation of information. Telstra argued that IceTV’s discussion of DMS was obiter and that the Federal Court would still be bound by the older Full Federal Court decision. As Warwick highlights, Justin Gordon explains that that contention was incorrect: ([46], citations removed)

Before turning to the facts, mention must be made of the decision of the Full Court of the Federal Court in Desktop Marketing. In that decision, copyright was found to subsist in certain editions of WPDs and YPDs. The Applicants submitted that the resolution of the present case remains governed by the outcome in Desktop Marketing and that the High Court’s comments on copyright subsistence in IceTV should be regarded as obiter dicta. I reject that contention. Firstly, IceTV is binding authority on the proper interpretation of the Copyright Act. The reasoning of both plurality judgments establishes principles of law beyond copyright infringement. Secondly, the High Court directly warned of the need to treat Desktop Marketing with particular care: see IceTV at [52], [134], [157] and [188]. Thirdly, Desktop Marketing [...] did not deal directly with the issue of authorship. Rather, all issues in respect of copyright had been conceded other than that of originality. In fact, Finkelstein J (at first instance) questioned the assumptions the parties had made about authorship: Telstra Corporation Ltd v Desktop Marketing Systems Pty Ltd [2001] FCA 612 at [4]. Finally, the facts of this case are significantly different. The WPDs and YPDs in question are different. Moreover, the Genesis Computer System which stored the relational database and which was used in the production of some of the WPDs and YPDs in issue in these proceedings (after September 2001 in the case of YPDs and late 2003 in the case of WPDs) was not in use in Desktop Marketing[...].

Very interesting. It seems that the High Court’s decision in IceTV is already having flow-on effects, bringing Australian copyright law more into line with the higher standard of originality required in the US and other jurisdictions for copyright protection. It seems that Her Honour’s decision was predicated on the lack of identifiable authorship as well as the lack of originality of contributions. The rising importance of authorship is quite interesting; it is something that has been somewhat neglected in copyright law in the past. (See Tim Wu, ‘On Copyright’s Authorship Policy’ 2008 U. Chi. Legal F. 335 (2008) (pre-print at SSRN).)

Justice Cowdroy’s decision in Roadshow v iiNet held that a person who provides facilities that are used for infringement but does not play a more active part — for example by intentionally designing the system to profit, or providing facilities in circumstances where there are only limited non-infringing uses, or explicitly inviting or promoting the use of the system for infringement — will not be held to ‘authorise’ those infringements, because it does not provide the ‘means’ for infringement.

This construction minimises the role of the Category A safe harbour, which is designed to insulate ISPs who “facilities or services for transmitting, routing or providing connections” (s 116AC) for copyright material from monetary damages for copyright infringement. What is the extent of the overlap between this safe harbour and Cowdroy J’s intrepreation of authorisation for ISPs?

The crucial question is whether an ISP will ever be in a position to have authorised infringement but be able to rely on the protection of the safe harbours. It seems that a purely passive general purpose ISP could not, as it would never infringe. Accordingly, the hypothetical ISP must be engaged in some sort of other activities – it must be found to be inviting or promoting copyright infringement, designing its systems to profit from infringement, or perhaps engaged in the provision of a filtered feed where it exercises some form of control over what its users may access. These extra circumstances would give rise to an inference that the ISP is providing the ‘means’ of infringement and would, prima facie, be liable for the infringing acts of its users.

In these cases, the next question becomes whether such an ISP would be entitled to rely on the safe harbours? The safe harbours provide protection where the primary infringement occurs “in the course of carrying out”(s 116AG) activities – relevantly, “providing facilities or services for transmitting, routing or providing connections for copyright material”.(s 116AC) In the paradigmatic case, an ISP who only provides the facilities for infringement will not be liable for authorising any infringements; so this question is really whether the extra circumstances that are required for liability to accrue will necessarily not be “in the course of carrying out” the provision of facilities or services and accordingly remove an ISP from the protection of the safe harbours.

It seems likely that many of the acts that would cause liability to accrue for authorisation would not fall within the definition of being “in the course of carrying out” the provision of facilities or services. In our only authority, we can take the example of the ISP in Cooper. This ISP negotiated an agreement not to charge Cooper for the hosting of his website in return for advertising revenue from the high levels of traffic his website attracted. While this relates to Category C activity, we can imagine a scenario where an ISP negotiates a similar monetary incentive for infringement, or otherwise encourages its users to infringe. Some of the examples come out of the judgment – if iiNet drew a direct financial benefit from infringement and set up its service in order to benefit from infringement, it would probably have been held to have authorised that infringement. Would this still be done ‘in the course of’ providing facilities or services for communications? While there would be some circumstances where an ISP would be liable for authorisation that do not strictly relate to its provision of access, I think that we would have to conclude that an ISP that is promoting or benefiting from infringement is still acting ‘in the course of’ providing access. Prima facie, then, the safe harbours will operate where the ISP is playing some active role in the infringements of its users.

Whether the safe harbours will protect such an ISP then depends on the conditions for compliance set out in s 116AH, which require that an ISP must “adopt and reasonably implement a policy that provides for termination, in appropriate circumstances, of the accounts of repeat infringers”, and must not initiate or modify transmissions of copyright material. The second two requirements are relatively straightforward and easy to comply with. The ‘reasonable’ implementation of a ‘repeat infringer’ policy, however, may be a different matter.

I think that in many cases where an ISP designs its service to encourage or directly profit from its users infringements, or provides a service that has limited non-infringing uses, it will probably fail the repeat infringer test. The requirement is not only to have a policy, but to ‘reasonably implement’ it. We see in particular authority from the US in Aimster that a provider that wilfully blinds itself to infringement or structures its activities in such a way that it cannot identify repeat infringers will not be held to ‘reasonably implement’ such a policy. The safe harbours, in this construction, would only have operation in a sliver of circumstances where the ISP acts in sufficient bad faith to ‘authorise’ infringement but in sufficient good faith to ‘reasonably implement’ a policy for termination of repeat infringers. In practice, this sliver would appear vanishingly small.

Does such an interpretation mean that the transmission safe harbour has no practical effect? I think that it will have little effect in the case of ‘bad faith’ ISPs, but there may still be circumstances where ‘good faith’ ISPs are held to ‘authorise’ the infringement of their users. Part of the reason that iiNet did not authorise was that it had no control over BitTorrent; so the analysis would change where ISP had more control, or with a different protocol over which ISPs have more control in general. The particular scenario that comes to mind is similar to the cases in the US in the 90s, where ISPs who wanted to provide a ‘cleaner’ experience for their users found themselves potentially liable for their increased control. So, for example, an ISP who offers some sort of filtered service may, if their filters are good enough, exercise sufficient control over what its users can access that it would have the ability to prevent infringements when it is provided with actual or constructive knowledge that it could be held to ‘authorise’ any infringements. In these circumstances, the safe harbours will be useful: as long as the ISP ‘reasonably implements’ some termination policy, it will be insulated from monetary damages.

This is one hypothetical, but it seems clear that the Category A (transmission) safe harbour does still have some (limited) application in Australian law. This doesn’t really come up in US jurisprudence, because the US safe harbours extend beyond ISPs to service providers more generally. Nevertheless, it seems as though the Australian transmission safe harbour still has a role to play in providing certainty for good faith ISPs who wish to do something more than ‘merely’ providing the facilities for infringement.

Who will shed a tear for ss 39B and 112E?

The limited role of the transmission safe harbour remains much broader than that of ss 39B and 112E, which provide that

A person (including a carrier or carriage service provider) who provides facilities for making, or facilitating the making of, a communication is not taken to have authorised any infringement of copyright in a work merely because another person uses the facilities so provided to do something the right to do which is included in the copyright.

On the analysis of Cowdroy J, it is apparent that there are no circumstances where an ISP would be held to have ‘authorised’ an infringement but done no more than provide the “facilities for making, or facilitating the making of, a communication”. Justice Cowdroy rejects this construction, but accepts that it would “highly unlikely” that either of the hypotheticals he poses where s 112E would be useful would result in a finding of authorisation liability.([572]-[573]) This is based off the Full Federal Court authority in Cooper that states that s 112E “‘…presupposes that a person who merely provides facilities for making a communication might, absent the section, be taken to have authorised an infringement of copyright in an audio-visual item effected by the use of the facility’.”([573], quoting Cooper [2006] FCAFC 187, [32]). Justice Cowdroy found himself bound to accept the Full Federal Court authority, although it left “little room for s 112E to have meaningful operation.”([574])

There certainly seems to be some inconsistency in this view, as either s 112E has no practical effect, or Cowdroy J’s rationale for authorisation liability must be incorrect to the extent that a person who does no more than provide facilities will not provide the ‘means’ of infringement and therefore be liable for authorisation. While there is some room to argue that because authorisation is a question of fact that it is technically possible (but practically inconceivable) that someone may authorise for ‘merely’ providing the facilities, this seems, with respect, quite strained. The better view – which Cowdroy J may not have been entitled to reach – would seem to be either that ss 39B and 112E operate to limit liability in some circumstances where the provider does something more than ‘merely’ provide the facilities for infringement, or that ss 39B and 112E have no practical effect. I think that the best construction is that of Wen Wu, who argues that

Ultimately, if recourse must be had to [s 101(1A)] and other authorisation factors, sections 39/112E are superfluous and were probably introduced out of an abundance of caution. (unpublished)

The ‘means’ of infringement: tracing a line through Moorhouse, Tape Manufacturers, Cooper, and Kazaa (via Sony)

The iiNet judgment traces an interesting line through authorisation liability in the context of technology cases. Cowdroy reads the technology authorisation cases (Moorhouse, Australian Tape Manufacturers, Cooper, and Kazaa) as predicating liability firstly upon whether the defendant has provided the ‘means’ of infringement; a complex factual determination that depends on the context, but seems to implicitly incorporate the Sony test of whether the technology has substantial non-infringing uses and an intention test that goes to the design of the system and the invitation to infringe.

The conclusion that Cowdrow J draws is that iiNet does not provide the ‘means’ to infringement, because (a) the internet has many ‘lawful uses’ (Tape Manufacturers) (cf Sony, ‘substantial non-infringing uses’); and (b) iiNet has not actively supported the system that is the ‘means’ of infringement (the BitTorrent system, as a whole). Crucially, one does not infringe merely by using the internet – users need to do something else (seek out BitTorrent trackers and files) in order to infringe. If iiNet had played a more active part in the infringement, then it may be seen as providing the ‘means’ (in Moorhouse, this was by providing a copier in a library and effectively extending an invitation to infringe (per Jacobs J) or where it was ‘likely’ to be used for infringement (per Gibbs J); in Kazaa this was the advertising, predominantly ‘join the revolution’; in Cooper it was the knowledge and intent that most files on the website were infringing). What makes this interesting is that ‘means’ appears to incorporate intent in some way, although it is not exactly clear how this plays out.

Only after the ‘means’ are identified do the other factors become relevant – control, power to prevent, and knowledge of infringements. It would seem that the best reading of Cooper is that the ISP in that case was that while it did not provide the ‘means’ by hosting Cooper’s website, it was drawn into his infringement by the support it gave him with knowledge and intent that the files were predominantly infringing. No such relationship of control or support existed between iiNet and anyone providing BitTorrent services.

Much of this reasoning appears to depend on a finding that the internet is much more useful for non-infringing uses (not a ‘human right’, but performs a “central role in almost all aspects of modern life”).([411]) This distinguishes general technologies that “have lawful uses” (Tape Manufacturers) from technologies like Kazaa and Cooper’s website, whose ‘predominant’ or ‘overwhelming’ uses are to infringe ([412]). This seems explicitly draw Australian authority into line with the development of US authority in Sony, that developers will not be liable for products that have “substantial non-infringing uses”, and the exception that was drawn in Grokster holding developers liable where they ‘induced’ infringement. In this way, Cowdroy neatly reads Moorhouse in line with Sony and both Cooper and Kazaa in line with Grokster.

This is actually quite a neat distinction. Rather than treating every link in the chain that makes infringement possible as the ‘means’ of infringement and then having to carefully examine factors such as control, power to prevent, and knowledge, Cowdroy J has managed to articulate a distinction between mere facilities and services that are actually either designed to aide infringement, promoted to do so, or have little other purpose than to facilitate infringement. This puts an end to the classic confusion – if iiNet are liable for the acts of its users, surely the electricity company can also be liable, because but for their power, infringements could not occur. By interpreting ‘means of infringement’to require some more active role, Cowdroy J has created some certainty for the providers of general use technologies.

The role of s 101(1A)

A potential problem on appeal may be whether this definition of ‘means’ is consistent with s 101(1A), which requires that in addressing authorisation, a court must take into account control (power to prevent), relationship, and reasonable steps taken. If the enquiry is ended by the definition of ‘means’ of infringement, these factors may not be adequately taken into account. Justice Cowdroy dealt with this by relying on Kazaa and Metro as authority that 101(1A) did not change the common law for authorisation([415]); the statutory considerations are therefore relevant, and must be considered, but they seem to be subsumed within the threshold question of whether the respondent provided the ‘means’. So, in this case, iiNet did not have a power to prevent because they had no control BitTorrent – which meant that iiNet did not provide the ‘means’.([424],[444]) Similarly, there was nothing in the relationship of iiNet with its subscribers that suggested that iiNet authorised their infringements – unlike Kazaa.([452]) Finally, the Court found that iiNet had no reasonable steps it could have taken to prevent infringement.([458]) It would seem, in Cowdroy J’s framework, that if any of these factors were different, iiNet may be taken as having provided the ‘means’ for infringement (though they are not determinative of themselves). The same goes for knowledge and encouragement, which are relevant but not statutory factors.([463], [473]). More analysis is required as to how exactly the statutory factors inform both the finding of whether a technology provides the ‘means’ of infringement and the questions that must be asked after the means have been identified, but, as a complex question of fact, Cowdroy J’s use of a distinction based upon the ‘means’ does not seem to fall into an error of law and seems to provide a useful way to distinguish active from passive actors.

More detailed analysis

Cowdroy’s reading of Moorhouse confines liability to what he identifies as providing “the true ‘means’ of infringement’.([381]) In context, Moorhouse was to be read as imposing liability when copying machines were placed in close proximity with library books; the inference to be drawn is that UNSW authorised library users to copy library books.(UNSW v Moorhouse at 14 (Gibbs J); 21 (Jacobs J, McTiernan ACJ agreeing).) Only after proper ‘means’ of infringement had been established were the quesitons of control, power to prevent, and knowledge of infringements relevant.([382]) The implication is that in an authorisation case, “it is of fundamental importance to decide, in the particular circumstances of each case, whether the person alleged to have authorised actually provided the ‘means’ of infringement. Context is all important in authorisation proceedings.” ([382])

Armed with this distinction, Cowdroy J then considers the judgments in Cooper and Kazaa. Cooper’s website was the proper ‘means’ of infringement, because “The website is clearly designed to – and does – facilitate and enable this infringing downloading”, and that Cooper “designed and organised it to achieve this result”([391]-[392], quoting Cooper [2005] FCA 972, [84]). Cooper went well beyond Moorhouse in that “Mr Cooper intended that the website be used to infringe copyright.”([392]) Cowdroy J finds support for the distinction in the FCAFC decision, where Branson J found that what was required was not just the provision of a technical capacity, but one which was “calculated to lead to the doing of [the infringing] act”([394], quoting 156 FCR 380, [41]).

Justice Cowdroy traced a similar distinction in Kazaa, it was the intention to invite infringement that made the Kazaa Media Desktop the ‘means of infringement’ (following the reasoning of Gibbs J in UNSW v Moorhouse) or the ‘explicit invitation’ (following the reasoning of Jacobs J) ([397]).

Interestingly, Cowdroy J considered that Comcen, the ISP hosting Cooper’s website, did not provide the ‘means’ of infringement, but was liable because it was “so complicit in the existence of the website (which was the ‘means’ of infringement) that it provided such facility in the same way that Mr Cooper himself did”([398]) (based upon its knowledge that the website was used predominantly infringing and the financial benefit it purposely drew up in contractual arrangements with Cooper to benefit from high levels of traffic).

Applying this reasoning to whether iiNet provided the ‘means’ of infringement, Cowdroy J continues:

It is important to distinguish between the provision of a necessary precondition to infringements occurring, and the provision of the actual ‘means’ of infringement in the reasoning of Gibbs J in Moorhouse. As discussed earlier, a photocopier can be used to infringe copyright, but on the reasoning of Gibbs J and Jacobs J, the mere provision of a photocopier was not the ‘means’ of infringement in the abstract.”([400]
[...]
In the present circumstances, it is obvious that the respondent’s provision of the internet was a necessary precondition for the infringements which occurred. However, that does not mean that the provision of the internet was the ‘means’ of infringement. [...] ([401])

The use of the BitTorrent system as a whole was not just a precondition to infringement; it was, in a very real sense, the ‘means’ by which the applicants’ copyright has been infringed. This is the inevitable conclusion one must reach when there is not a scintilla of evidence of infringement occurring other than by the use of the BitTorrent system. Such conclusion is reinforced by the critical fact that there does not appear to be any way to infringe the applicants’ copyright from mere use of the internet. There will always have to be an additional tool employed, whether that be a website linking to copyright infringing content like Mr Cooper’s website in Cooper, or a p2p system like the Kazaa system in Kazaa and the BitTorrent system in the current proceedings. Absent the BitTorrent system, the infringements could not have occurred.([402])
The infringing iiNet users must seek out a BitTorrent client and must seek out .torrent files related to infringing material themselves. In doing so, they are provided with no assistance from the respondent. The respondent cannot monitor them doing so or prevent them from doing so.([403])

Accordingly, it was the “use of the BitTorrent system as a whole which is the ‘means’” of infringement, not iiNet’s service.([404]) iiNet could accordingly not be said to authorise any infringements.

Because iiNet had no connection to the BitTorrent system (unlike the ISP in Cooper, which ‘actively supported’ the creation and upkeep of Cooper’s website), it could not be drawn into the liability of anyone who did actually provide the ‘means’ of infringemnet.([407]-[408])

[ edit: full decision is now available: Roadshow Films Pty Ltd v iiNet Limited (No. 3) [2010] FCA 24. More commentary to come. ]

More analysis on iiNet, after I have seen the written summary of the judgment. Justice Cowdroy found that iiNet did not ‘authorise’ the infringements of its users. In coming to this conclusion, Cowdroy J drew a distinction between iiNet and Moorhouse, Jain, Metro, Cooper, and Kazaa based upon what it meant to provide the ‘means’ of infringement:

“There does not appear to be any way to infringe the applicants’ copyright from the mere use of the internet. Rather, the ‘means’ by which the applicants’ copyright isinfringed is an iiNet user’s use of the constituent parts of the BitTorrent system. iiNet has no control over the BitTorrent systme and is not responsible for the operation of the BitTorrent system.”

This is very interesting; it suggests that not every link in the chain that enables infringement will constitute providing the ‘means’ of infringement. It seems to make sense, but it does change the way we have come to think about infringement. Having said that, Cowdroy J did not find that ss 39B and 112E, which insulate a provider from liability where it merely “provides the facilities” for infringement, would have prevented iiNet from being liable. This suggests that the scope of ss 39B and 112E are not particularly greater than the Moorhouse test for infringement, which is something the Philips Fox report suggested, but has never been made clear.

Interestingly, as a finding of fact, Cowdroy J found that iiNet had actual knowledge of infringements and did not act to stop them.

So, the decision was based primarily upon the Moorhouse test for infringement – whether iiNet ‘sanctioned, approved, or countenanced’ the infringements of its users. Justice Cowdroy found, in relatively strong terms, that iiNet could not be seen as authorising any infringements, as “iiNet has done no more than to provide an internet service to its users.” His Honour contrasts this clearly with the most recent secondary liability cases, where there was clearly bad faith in the actions of the providers: “This can be clearly contrasted with the respondents in the Cooper and Kazaa proceedings, in which the respondents intended copyright infringements to occur, and in circumstances where the website and software respectively were deliberately structured to achieve this result.”

In coming to this conclusion, Cowdroy J worked through the requirements for authorisation liability in s 101, which include the extent of iiNet’s power to prevent infringements and whether iiNet took any reasonable steps to prevent or avoid infringements. Very interestingly, His Honour found that a scheme for notification, suspension and termination of customer accounts is not “a relevant power to prevent copyright infringement” pursuant to s 101(1A)(a); nor is it a ‘reasonable step’ pursuant to s 101(1A)(c). It seems that here the Judge must have been impressed with iiNet’s arguments that disconnection of internet access is not a correct or reasonable response to allegations of copyright infringement. Given the way in which Cowdroy J distinguished the earlier authorisation cases, it seems that the factors in 101(1A) are more likely to be relevant where the provider has some sort of more fine-grained control over the network or service that provides the actual ‘means’ to infringement; not just a big switch on the entirety of a customer’s network connection.

This is an excellent finding of fact – it shows that Cowdroy J rejects AFACT’s argument that it would be ‘reasonable’ to disconnect users based upon unproved allegations of infringement. Clearly a win for the interests of users.

This finding of fact in itself is sufficient to allow iiNet to escape liability. Justice Cowdroy, however, also made some findings of facts on the safe harbours, in case of any appeal. Interestingly, His Honour held that the safe harbours would have covered iiNet’s actions if it were liable for authorisation; the critical finding here is whether iiNet reasonably implemented a policy for termination of the accounts of repeat infringers. In explicitly turning to US authority, Justice Cowdroy found that though it was not a policy of the form that AFACT would have liked, iiNet did reasonably implement a repeat infringer policy. There’s not much detail on this point in the summary, but this will be an important consideration in the future. We were a bit concerned for a while that the safe harbours, which many of us had assumed were designed to cover ISPs in iiNet’s position, did not provide adequate certainty. It seems that that may now have been rectified, at least for passive ISPs, and the interpretative battle lines will have to be redrawn around content providers now – particularly sites like YouTube who are more directly involved in any infringements.

All in all, this seems like a very strong win for iiNet. The two main findings of fact – that iiNet did not ‘authorise’ and that iiNet’s policy was ‘reasonable’ – will make it extremely difficult for AFACT to appeal. Having said that, an appeal does seem inevitable. I will provide some more information when the full text of the judgment is available.

[ reposted from EFA ]

The next round of negotiations on the secret Anti-Counterfeiting Trade Agreement (ACTA) are due to begin this week in Guadalajara, Mexico. On the agenda this week are civil copyright measures, border measures, internet enforcement measures, and, very briefly, the issue of the lack of transparency in the negotiations.

While much of the text is hidden from public view, the EU’s analysis of the negotiations was leaked late last year. The leak confirms that the ACTA is designed to impose the tough sanctions developed by the US for copyright infringement on other signatories. The main goal of the ACTA seems to be to bypass the WIPO system and entrench US-style copyright regulations around the world. In this sense, a multi-lateral agreement may be more effective than the series of bi-lateral agreements that we have seen in recent years because it has the opportunity to bind several countries at once to implement US-equivalent law.

By doing away with the open international process that WIPO conducts, the ACTA poses a real threat to the reasoned modification of intellectual property laws worldwide. By doing so in secret, it ensures that democratic processes are marginalised; the public will only get to see the text once it has been finalised, at a point when it is likely to be too late, politically, for states to withdraw support.

The big problem for Australia is that we have already been strong-armed into US-style copyright laws. The Australia – United States Free Trade Agreement resulted in us adopting many of the measures that the EU and Canada have so far refused to adopt – including criminal sanctions for non-commercial copyright infringement; a full notice and takedown scheme; civil and criminal penalties for the circumvention of technological measures and the distribution of circumvention devices; and protection for ‘rights management information’. To add to this, our copyright law is already stricter than US law on third party liability, where we prohibit acts that are taken as ‘authorising’ the infringement of copyright, and, depending on the outcome of the iiNet case, we may well even already have a sort of three-strikes system to disconnect individuals accused of using their internet connection to infringe copyright (without judicial oversight).

Late last year, I had a telephone meeting with the Department of Foreign Affairs and Trade (DFAT), who are negotiating the agreement on behalf of Australia. DFAT’s position throughout these negotiations (as I reported in October 2008) has been that they are “not seeking to drive domestic changes” through the ACTA. While DFAT were not at liberty to disclose their analysis of the draft text, they were quite helpful and willing to provide what information they could. Unlike the US, DFAT is not willing to discriminate against stakeholders by providing text information under confidentiality agreements, which, while limiting overall access to the text, may be preferable in that it avoids the privileged position of special interest groups. I remain to be quite impressed with the degree to which DFAT is willing to be open, within the confines of the trade agreement process, about the details. I was told that for the most contentious internet and civil enforcement measures, there is sufficient flexibility in the text that means that Australia will not have to amend its laws. This is relatively unsurprising, as we already have the worst of US copyright law (without the concomitant balancing user right of fair use).

The two main threats to Australian law from ACTA are statutory damages and ISP liability. Statutory damages mean that the copyright owner does not have to prove any actual harm in order to recover significant punitive damages under copyright law. Recently in the US we have seen awards of $2,250 per song for filesharing (recently reduced from the $80,000 per song awarded in 2009) and another award of $22,500 per song. These damages are sought in order to provide a deterrent to copyright infringement, but they are clearly manifestly excessive and certainly do not appear to be achieving any significant deterrent effect. Australia has an aggravated damages clause, but still requires copyright owners to show harm, and awards as high as the US are highly unlikely. I asked DFAT whether the ACTA will require states to introduce statutory damages schemes and was told that there is sufficient flexibility in the current drafts to allow member states to determine their own damages regime and no obligation to introduce statutory damages. It was heartening to hear that DFAT will not support a position that limits this flexibility.

The other threat is the issue of ISP liability. The iiNet litigation is currently before the courts, and there is a chance that the Federal Court will find that iiNet had no obligation to pass on infringement notices or to terminate repeat infringers. It is conceivable that the ACTA will require higher standards of ISP liability, which could potentially see Australia introduce legislation to essentially overturn any verdict in the iiNet case. Apparently, again, the draft text does not exceed the standard required under AUSFTA (to which Australian law is compliant) and is sufficiently flexible to allow member states to develop their own case law on the interpretation of the safe harbours. If this is correct, then there will be no requirement to make changes to our safe harbours as a result of the ACTA.
All of this means that Australia’s participation in these negotiations is unlikely to mean significant changes to our law. For Australia (and unlike the EU, Canada, and many other states negotiating the ACTA), the problem is not necessarily this agreement, but the precedents it sets. Over the last half century, it has become absolutely apparent that the particular rules we choose for copyright have a huge effect on the ability of people to communicate and the way that societies can develop. The balances we enact affect the royalties that are payable to authors, the power of publishers and intermediaries, the freedom to innovate, the access of disadvantaged sectors of society to educational and entertainment material, the cost of education, and the freedom to engage (and critically engage) with our culture. Given the importance of the copyright balance to our society, there is no justifiable reason to conduct negotiations behind closed doors. The choices we make now will stay with us for the foreseeable future. If we value the democratic process, we should certainly not allow it to be subverted in this way; we should not tie the hands of our government to the will of the US copyright industry, and we should certainly not do it without democratic discourse.

The ACTA is not a trade agreement; it is an intellectual property agreement. It is apparently being dressed up as a trade agreement to avoid public scrutiny. We can only assume that this is because it does not, in fact, reflect the public good, but rather reflects the wish-lists of the copyright industry. It may turn out that because Australia has already submitted to US copyright policy that the ACTA will not drive changes to local laws; nevertheless, it is still a fundamentally bad way to make law. We should be concerned that the transparent international organisations like WIPO are being increasingly marginalised (presumably because they are becoming increasingly interested in developing nations and increasingly resistant to the US agenda); we should also be concerned that we will become increasingly bound by international agreements to the extent that we no longer have the flexibility to determine what rules are best for Australia and Australians.

It has been said a number of times before, but it bears repeating now. If the ACTA is designed to provide necessary remedies for copyright infringement in order to ensure that there are adequate incentives to maintain investment in the creation of expressive material, we should be able to have a public debate about whether it achieves that goal. If our governments wish to engender trust in this process, more transparency is required. There are two conclusions we can draw from the lack of transparency here: either the ACTA does not achieve a copyright balance that is in the public good, or our government simply does not care about democratic discourse. A democratic process after the negotiation has been completed is a mere shadow of the democratic process that we should aspire to.

Stay tuned for any updates from the negotiations this week, and any news of how you can help to send a message that citizens worldwide don’t want to be neglected in the process to make the laws that they must live by.

MyTVR have now launched their Australian service, which allows Australians to schedule free-to-air television programmes to be recorded by the company and stream the recording to their home PCs or mobile devices.

The interesting question is whether MyTVR’s service is legal for Australians to use (and, of course, legal for MyTVR to offer) under Australian copyright law. I assume here that MyTVR is not licensing the right to provide the service from television broadcasters, but is instead relying on the protection granted to Australians to ‘time-shift’ free to air television. (This conclusion is supported by the lack of mention in the terms and conditions of any licence granted by MyTVR to its users from the Broadcasters or holders of underlying rights.)

This is an issue that has been important in Australian copyright doctrine for quite a while. In the US, a flexible fair use defence exists that allows innovators to investigate and begin to offer a service without immediately being prevented from doing so by copyright owners. This is how the VCR was developed, for example; in the US, Sony was able to argue that it was fair use for users to record television programs for their own personal use. In Australia, by contrast, there is no broad ‘fair use’ exception, which means that if the personal use does not fit into a category like ‘research and study’, ‘criticism and review’, ‘news reporting’, or, now, ‘parody or satire’, it is immediately prohibited. It took twenty years for the law to catch up and add an exception for time-shifting television broadcasts; at least ten years to allow people to make digital copies of music they own to play on their own devices; and it still isn’t legal to make a copy of a DVD you own to either backup or play on a portable device.

So, lets have a look at the clause that allows time-shifting of television, s 111:

Recording broadcasts for replaying at more convenient time
(1) This section applies if a person makes a cinematograph film or sound recording of a broadcast solely for private and domestic use by watching or listening to the material broadcast at a time more convenient than the time when the broadcast is made.

Note: Subsection 10(1) defines broadcast as a communication to the public delivered by a broadcasting service within the meaning of the Broadcasting Services Act 1992 .

Making the film or recording does not infringe copyright

(2) The making of the film or recording does not infringe copyright in the broadcast or in any work or other subject‑matter included in the broadcast.

Note: Even though the making of the film or recording does not infringe that copyright, that copyright may be infringed if a copy of the film or recording is made.

Dealing with embodiment of film or recording

(3) Subsection (2) is taken never to have applied if an article or thing embodying the film or recording is:

(a) sold; or

(b) let for hire; or

(c) by way of trade offered or exposed for sale or hire; or

(d) distributed for the purpose of trade or otherwise; or

(e) used for causing the film or recording to be seen or heard in public; or

(f) used for broadcasting the film or recording.

Note: If the article or thing embodying the film or recording is dealt with as described in subsection (3), then copyright may be infringed not only by the making of the article or thing but also by the dealing with the article or thing.

(4) To avoid doubt, paragraph (3)(d) does not apply to a loan of the article or thing by the lender to a member of the lender’s family or household for the member’s private and domestic use.

Notice what this section allows you to do: you can record a broadcast “solely for private and domestic use by watching [...] the material at a time more convenient than the time when the broadcast is made.” As long as that is done, you will not infringe any copyright in the broadcast or underlying material.

The section makes no reference to space shifting – you must watch the broadcast at a more convenient time, but it does not necessarily require that you watch it in the same place; it is at least arguable that it allows you to record television to watch at a different time on your mobile devices.

The exceptions

There are exceptions made – you cannot sell or distribute “an article [...] embodying the film or recording” – which partially explains why the MyTVR terms are so careful to prohibit you from doing anything to “reproduce, duplicate, archive, distribute, upload, publish, modify, translate, broadcast, perform, display, sell, transmit or retransmit any media recorded through the myTVR Platform” (the other reason being that if you infringe copyright, MyTVR could be held liable).

These exceptions do not seem to apply to the standard use case for MyTVR – the physical ‘article’ embodying the recording are the MyTVR hard drives, and nobody is distributing the physical copy. So far, so good.

The first problem – streaming the video

The exception in s 111 exempts the recording of television from copyright infringement. Because no copies are made when you play a video cassette in your VCR (remember those?), playing a recording has never been an infringement of copyright. When you stream a video from one place to another, however, you are potentially infringing copyright – you are ‘communicating’ the work. There are exceptions for any technical copying that happens along the way; as long as the original copy is not infringing, the caching and copying that happens on a network level or on your computer for playback will not infringe (ss 43A, 43B, 111A, 111B). So, streaming a video you legitimately own to yourself is, in most cases, non-infringing. This means, for example, that you are entitled to stream a video you record and encode on your desktop PC for playback on your HTPC.

The problem comes if the communication from the MyTVR servers is done ‘to the public’. This ties in to the second question: who’s doing these acts?

The second problem – who’s making and communicating the recording?

So far, it seems that recording and streaming video to yourself for later playback is not an infringement under Australian copyright law. The central problem here is whether, in MyTVR’s model, it is the client who ‘records’ and ‘communicates’ the free to air broadcasts, or whether it is MyTVR who does both of those. This is critically important – if MyTVR is responsible for doing both these acts, the recording copy will be an infringing copy (because MyTVR are not recording for their own ‘private and domestic use’; the communication may well be ‘to the public’ (see Telstra v APRA, where playing music on hold to subscribers was ‘to the public’); and the incidental temporary copies will also be infringing copies (thanks to a wonderful change to the definition of material form).

We know that the argument that MyTVR are doing the recording on the user’s behalf won’t work – the court in De Garis v Neville Jeffress Pidler Pty Ltd (1990) 37 FCR 99 held that a company that made copies of newspapers for a clippings service could not rely on the fact that their clients were engaged in ‘research or study’ to avoid liability.

This leaves two real arguments that MyTVR could make:

• MyTVR are merely the agents of the user, so any acts are carried out, in a legal sense, by the user;
• MyTVR only provide the facilities – the user is the one who, by pressing ‘record’, actually makes the recording and initiates the communication.

I see no evidence of the former construction in the terms of use. This leaves a relatively uncertain argument about who, really, is carrying out actions when a platform like this is used. This is a difficult question of fact: does MyTVR record programs in response to user requests, or does it merely provide the service through which users can record and transmit their own programs? This question is unanswered in Australian law.

Kylie Pappalardo has addressed a similar question in relation to the Google Book Search project in an unpublished research paper:

[I]f it can be shown that Google’s users are using the service under the fair dealing exceptions for research or study or criticism or review, then Google may be able to argue that its service is simply a part of or an extension of the user’s activities and as such Google is communicating the works for the purpose of research or study or criticism or review. In CCH Canadian Ltd v Law Society of Upper Canada, the Supreme Court of Canada had to decide whether the Law Society of Upper Canada, which maintained the Great Library at Osgoode Hall in Toronto, had infringed copyright because it provided a request-based photocopy service for Law Society members, members of the judiciary and other authorised researchers. Under this ‘custom photocopy service’, legal materials were reproduced by library staff and delivered in person, by mail or by facsimile transmission to requesters. Publishers sued the Law Society, alleging copyright infringement. The Law Society denied liability on the basis that the copies were made for the purpose of research and were therefore covered by the fair dealing defence. In finding for the Law Society, the Chief Justice (who delivered the judgment of the court) stated:

“The fair dealing exception, like other exceptions in the Copyright Act, is a user’s right. In order to maintain the proper balance between the rights of a copyright owner and users’ interests, it must not be interpreted restrictively…The fair dealing exception under s.29 is open to those who can show that their dealings with a copyrighted work were for the purpose of research or private study. “Research” must be given a large and liberal interpretation in order to ensure that users’ rights are not unduly constrained. I agree with the Court of Appeal that research is not limited to non-commercial or private contexts…Although the retrieval and photocopying of legal works are not research in and of themselves, they are necessary conditions of research and thus part of the research process.”

Relevant to the court’s finding was that the library had an access policy which stated that only single copies of materials would be provided for the purposes of research, review, private study and criticism as well as use in legal proceedings, and that any requests for copies in excess of 5% of the volume would be referred to the Reference Librarian and might be refused. Additionally, the service was provided on a not for profit basis. Also relevant was that there were no apparent alternatives to the custom photocopy service – the court considered it unreasonable to expect that patrons would always conduct their research onsite, particularly as 20% of the library’s patrons lived outside the Toronto area. The court held that the availability of a licence is not relevant to deciding whether a dealing has been fair and that it was not incumbent upon the Law Society to adduce evidence that every patron uses the material provided in a fair dealing manner – reliance on a general practice would suffice.

In this decision, the Canadian Supreme Court took a very broad interpretation of the exceptions to copyright infringement (particularly, the exception for research and study). It is unclear whether an Australian court would take such a broad interpretation, and whether it would do so for the less important right to time-shift. There are, however, similarities that can be drawn between MyTVR and the Canadian service; particularly that MyTVR apparently do their best, in their terms and conditions, to ensure that users only use the service to record free to air programs for later personal use. It would seem that MyTVR have an arguable case – strong enough for them to risk a possible infringement suit, although I would not want to take bets on its likely success. It would be likely to come down to a tough examination of the facts – MyTVR would have to be extremely careful, for instance, to create a new copy every time someone requested a particular broadcast, rather than recording everything and parcelling it out later (mp3.com lost when it tried to do that with CDs).

TL;DR: conclusion

Because Australian law is very unclear on this issue, there is no easy way to tell whether use of MyTVR is legal or not. If a court were to find that it was MyTVR who are doing the recording and not each particular client, then MyTVR will be infringing, and so will every customer. Luckily, customers are unlikely to get sued; a broadcaster or a television producer who is sufficiently annoyed will be more likely to sue MyTVR. Unluckily, however, the MyTVR terms of use explicitly say that their customers will be liable if they are sued:

YOU AGREE TO DEFEND, INDEMNIFY, AND HOLD HARMLESS THE MYTVR PARTIES FROM AND AGAINST ANY AND ALL LIABILITIES, CLAIMS, DAMAGES, EXPENSES (INCLUDING REASONABLE ATTORNEY’S FEES AND COSTS), AND OTHER LOSSES ARISING OUT OF OR IN ANY WAY RELATED TO YOUR BREACH OR ALLEGED BREACH OF THESE TERMS OR YOUR USE OF THE MYTVR PLATFORM.

This is particularly worrying. I would be extremely hesitant in signing up to MyTVR without some sort of guarantee of its legality (unsurprisingly, MyTVR provides no such guarantee). In an absolute worst case scenario, MyTVR could gobble up the houses of its users to pay for its legal defence if it is sued for secondary copyright infringement. That’s not a very probable scenario, but their terms of use really do nothing to allay my fears.

Implications for innovation in Australia

Copyright owners have a history of attempting to stifle innovation by suing the developers of new technologies that they fear. In recent times, they lost against the manufacturers of VCRs, which allowed the huge VHS sales and rental industry and opened the door to CD recorders and iPods. They won against filesharing networks – but decentralised protocols like Bittorrent are relatively legally impervious. They won against MP3.com, which would have allowed people to access their music collections anywhere in the world. They won against RealNetworks, who wanted to do the same for DVDs. They even won against Google, to an extent, who wanted to provide millions of people with access to tiny snippets of books and build a real digital library. These are the fronts in an ongoing struggle over control in new technologies.

There’s a lot of uncertainty here, and Australian law has typically not been very useful at providing the leeway that innovators need before we can decide whether their products will be socially beneficial or not. Recent decisions from our High Court, however, give just the slightest hope that that may be changing. It certainly seems to be changing in Canada, with whom we share a relatively strong legal link. The decisions in Sony v Stevens (allowing PlayStation modchips, under now-outdated law) and Channel Nine v IceTV (allowing the creation of electronic program guides) signal some hope that the interests of users and innovators will be given more respect in future Australian cases. It may just turn out that MyTVR is legal in Australia, if it is very careful.

The biggest problem is the uncertainty. It costs a lot for a startup to be able to defend copyright infringement claims; many very interesting ideas get vetoed because of the legal risk. This is a huge problem – a lot of innovation exists in the grey areas where we simply don’t know how the law should apply – at a time when we certainly don’t have the information to have a public debate (who could have told how useful VCRs would have been in 1980? Or photocopiers in 1970?) These legal decisions are extremely difficult. We have started to realise that innovators need some room to move, but we really aren’t there yet. This is one of the greatest challenges facing copyright law in the immediate future – how will we be able to innovate in areas where we can’t even conceptualise whether our actions should be permitted or not?

I will certainly be watching MyTVR with interest; if they manage to pull it off, it will certainly change the way we can access free to air; more importantly, however, their pioneering legal steps provide the incremental certainty that the next innovator needs.

This week I was interviewed by Phil Dobbie for ZDNet's Twisted Wire program. Also interviewed were Peter Coroneos from the Internet Industry Association and Adrianne Pecotic from AFACT. You can listen to the podcast (direct link (mp3)).

One thing I found disturbing about this interview was AFACT's suggestion that the law was clear and that iiNet had a clear responsibility to monitor its subscribers' internet use and disconnect users who infringe. This is obviously a contested issue, and the law certainly is not clear. The particular requirement of the Safe Harbours are largely untested – both here and in the US – and particularly against ISPs. We have mostly assumed that ISPs were more like common carriers than the P2P networks that have been found responsible for secondary copyright infringement. The iiNet case challenges that assumption, but it is misleading to argue that the law is clear in any meaningful way.