And with one tweet, iiNet CEO Michael Malone announces the result that we’ve all been waiting for:

IiNet did not authorize the infringements #iitrial

More analysis will follow when the full written judgment is handed down, but it is apparent that the Judge was convinced that iiNet has no control over bittorrent and is not responsible for the acitons of its users in the circumstances alleged by AFACT. From the preliminary information available, this sounds like a decision that is absolutely consistent with the theory of secondary copyright liability developed in the US case of Sony v Universal: the lack of control over the system means that iiNet has no legal responsibility over its users, despite knowledge that some users are obviously infringing copyright. In terms of the decision in Moorhouse, iiNet could not be seen as ‘approving, sanctioning, or countenancing’ the infringing acts of its users. This decision seems to fill the gap with the Kazaa and Cooper decisions in Australia, which both found that the intermediary in question facilitated and encouraged the infringements that occurred.

This provides important certainty for ISPs in Australia: “the mere provision of access to internet is not the means to infringement”. It also seems that more generally, this has important ramifications for innovation in Australia; in contrast with Kazaa, if you provide facilities that assist in infringement, but do not have control and do not act in bad faith, you will not be liable for secondary copyright infringement.

AFACT has been ordered to pay iiNet’s costs. Expect an appeal, but this first instance decision seems quite strong in favour of iiNet.

Stay tuned for further analysis.

Tonight I’ll be speaking at the Stop Internet Censorship meeting in Brisbane. If you’re interested, my minimal slides are here.

My friend Dan at Ausgamers has a great review of Call of Duty: Modern Warfare 2. Lots of interesting information, but what strikes me is the way that Infinity Ward / Activision have worked to seize a lot of control over PC gaming – a trend we may be seeing more. Dan says:

Lastly, no dedicated servers for Modern Warfare 2 also means no more modding so we're not likely to see anything like pro mod – leaving tournament play to rely only on the features provided by IW out of the box. It's not like it was a trivial matter for Infinity Ward, they've had to create the IWNET system specifically for this purpose. As for why? The official word is that it's too hard for new players to figure out how to join a server from an in-game browser list. Nothing to do with the fact that the only way for players to get new maps and content now is to pay for downloadable content, right? It's not like it's even going to do much to stop cheating – instead of Punkbuster, MW2 now uses Valve Anti-Cheat, but without dedicated servers there's no localised moderation so the community has no ability to police itself.



No matter where you purchase the game from, you'll still need to activate with Steam and once you do that, the game is tied to your Steam account just as if you had bought it from Steam in the first place. Now I'm not sure of the technicalities on that, but I presume this effectively knocks out the secondhand market for the game. Who is going to want to buy a disc that is linked to someone elses Steam account? For no good reason they've also removed the drop-down console for PC users that like to type in their in-game commands. The game is in complete lock-down, the ultimate consolification.

This 'consolification' is another example of what Zittrain calls a loss of generativity (see his article in (2006) 119 Harvard Law Review 1974 or his great book, The Future of the Internet and How to Stop It (ars review) (full text for both available).)

This trend, as Zittrain explains, is pretty unfortunate, for a whole host of reasons. I'm interested in another point, however – Dan talks about the loss of a sense of community that is harder to maintain with this locked down model. The dedicated servers for games allowed innovation, in that people could create mods and new maps to their tastes – obviously, this gave us Counter Strike and a bunch of tournament mods, to name just a very tiny fraction – but it also allowed communities to grow around those servers, something which seems to be lacking in the console model. It's harder to form lasting relationships in the random pick-up console multiplayer games (although when you find someone who isn't a jerk, you can add them to your friends list and seek them out later). Dan makes this point really well:

Another big issue for me personally is what it does to the sense of the game's community. I admit I'm probably biased on this point since my employment with AusGamers was a direct result of years of gaming with the guys that pay my salary – people I may never have met had it not been for those late nights on PowerUp Quake and Quake 2 CTF dedicated servers. With dedicated servers, it's a trivial task to do a quick check and see who's playing and jump in the same game as them. You get to know people that frequent the same servers and rivalries, friendships and communities form. With the peer to peer model, it's still easy enough to play with friends already on your list but everyone else is just a random seed. Sure, this is how console platforms have done things for a long time and they're used to it (arguably because they know no better), but for PC stalwarts it's really not good enough.

I think that this loss of community is a bit saddening. If it is a trend, I hope that gamers are able to realise the importance of community before it gradually becomes phased out.

[ Reposted from EFA blog ]

The new round of Anti-Counterfeiting Trade Agreement (ACTA) negotiations has started in Seoul. This round sees the introduction of the long-anticipated internet enforcement measures, which the US has drafted in secret. Michael Geist reports that the draft text is modeled on the US – South Korea free trade agreement, and focuses on five issues:

* Baseline obligations inspired by Article 41 of the TRIPs which focuses on the enforcement of intellectual property.



* A requirement to establish third-party liability for copyright infringement.



* Restrictions on limitations to 3rd party liability (ie. limited safe harbour rules for ISPs). For example, in order for ISPs to qualify for a safe harbour, they would be required [to] establish policies to deter unauthorized storage and transmission of IP infringing content. Provisions are modeled under the U.S.-Korea Free Trade Agreement, namely Article 18.10.30. They include policies to terminate subscribers in appropriate circumstances. Notice-and-takedown, which is not currently the law in Canada nor a requirement under WIPO, would also be an ACTA requirement.



* Anti-circumvention legislation that establishes a WIPO+ model by adopting both the WIPO Internet Treaties and the language currently found in U.S. free trade agreements that go beyond the WIPO treaty requirements. For example, the U.S.-South Korea free trade agreement specifies the permitted exceptions to anti-circumvention rules. These follow the DMCA model (reverse engineering, computer testing, privacy, etc.) and do not include a fair use/fair dealing exception. Moreover, the free trade agreement clauses also include a requirement to ban the distribution of circumvention devices. The current draft does not include any obligation to ensure interoperability of DRM.



* Rights Management provisions, also modeled on U.S. free trade treaty language.

So, there's a lot of material here, and it becomes abundantly clear that the ACTA is not focused on counterfeit goods, but on copyright. Its greath strength will be in further entrenching the WIPO+ treatries in the same way that the recent US-driven bilateral trade agreements have done. Geist points out the crux of this issue: national states lose the sovereignty to determine appropriate copyright laws for themselves, losing even the relatively minor flexibility available under the WIPO agreements.

How this treaty would impact on Australian law is not clear at this stage. Australia's agreement to the AUSFTA already binds us in to a significantly higher standard of protection than that required by the international conventions. Much will depend on the actual text of the treaty and the way in which Australia determines to implement it, if we end up signing. Australia already complies with TRIPS, already restricts the safe harbour for ISPs, already implements a notice and takedown procedure, and technically has a requirement to terminate 'repeat infringers'. Australian anti-circumvention law already prohibits actual circumvention and the distribution of circumvention devices, and has very limited exceptions to liability.

The Department of Foreign Affairs and Trade (DFAT) has maintained for a while that they do not expect to see major domestic changes to Australian law as a result of the ACTA. Since Australia already assumed quite onerous copyright measures as a result of the AUSFTA, the ACTA is more likely to be used to lock other states in to the US-driven copyright agenda. DFAT has also said that they are participating in the ACTA to 'be in the tent', and have not yet determined to sign the ACTA; politically, though, it may be quite difficult for Australia to avoid signing a treaty that we have been actively negotiating.

As always, the devil will be in the details. DFAT may be correct in saying that the ACTA will reflect no major changes to Australian law. If this is the case, there is still a very real concern that we are limiting democratic processes and national sovereignty by setting minimum copyright standards through secret trade negotiations driven by particular interest groups. This is rarely a way to make good laws, and will almost certainly result in laws that do not reflect the needs of different nations.

If the text of the agreement does require Australia to change its copyright laws, however, there are some serious concerns. It's still not clear whether statutory damages are on the agenda; Australia does not have statutory damages, but the US does, and there has been a push in recent years to export this particularly onerous and inequitable policy to other states.

Proposed changes to the safe harbours are also quite worrying. Gwen Hinze from the EFF is extremely concerned about the potential for the ACTA to introduce graduated response requirements. The US – South Korea FTA requires states to provide “legal incentives for service providers to cooperate with copyright owners […] in deterring the unauthorized storage and transmission of copyrighted materials”. This could just mean the introduction of a notice and takedown scheme, which Australia already has, or it could be more sinister. Australian law is in a state of flux at the moment – we do establish third-party liability for copyright infringement, and we do have safe harbours, but we also have a huge uncertainty, as demonstrated by the AFACT v iiNet case, as to whether or not ISPs (a) are liable for the infringing acts of their users; and (b) are obligated to terminate their subscribers in response to repeated allegations of copyright infringement. We're all watching this case progress; no doubt copyright owners will push for increased ISP liability if the safe harbours to prove effective in immunising iiNet from liability.

A graduated response, or three-strikes regime, if implemented, risks greatly threatening the access of individuals to the internet, essentially holding internet access to the ransom of copyright owners. The dangers that such a scheme poses to due-process are enormous; requiring ISPs to investigate, enforce, and punish copyright infringements is anathema to our system of accountability and judicial authority.

It's not clear whether a three-strikes regime is on the table, or what domestic changes we are likely to see. As Kim Weatherall points out, the secrecy makes it impossible to know what to trust, and means that we tend to fear the worst.

There is a real danger here that Australia may abdicate its ability and responsibility to determine appropriate domestic copyright laws. If the text of the ACTA requires changes to our law, we risk being once again locked into the US-driven copyright agenda, without either public discussion and debate or proven benefit to Australia. The level of secrecy in these negotiations, for measures that could potentially drastically alter our copyright balance, is completely unacceptable. There is no rational reason that such negotiations need to be kept secret – copyright laws are assumed to be enacted to achieve a balance for the benefit of society; it is only if they do not achieve this balance that their details would need to be kept from the public.

Kim Weatherall sums up the dangers of Australia signing the ACTA even if it does not drive domestic changes:

From an Australian perspective, I suspect that the temptation for negotiators will be to say that since we are already committed to such rules in the AUSFTA, there is ‘no harm’ in signing up to similar ACTA terms. I think that would be a serious mistake. When Australia signed to such terms in AUSFTA, it did so in a trade deal, where there were other ‘benefits’ (however illusory some might have been). And it retains the freedom to step away from the AUSFTA at some future point if the costs outweigh the benefits. Signing up to such terms in an ACTA would be agreeing that these are to be general international standards: removing any remaining flexibility we have and giving a whole new set of people the right to complain if we want to resile.

We will keep you updated on developments. Hopefully more detail emerges over the next few days.

When I cross-post from other sites to this blog, I need to reformat the HTML to Dokuwiki syntax. I wrote a quick script to make that process easier. The script is by no means complete, but others may find it useful. You can get it here: Convert HTML to DokuWiki (Ruby Script)

Participation in virtual communities is said to be governed by the contractual documents written by the proprietors and 'agreed' to by the participants. In a system where governance is controlled by contract, then the limits of contract are essentially constitutional principles. Where, then, can we find the limits that we will impose on contractual governance?

This question marks the beginning of the next chapter of my PhD thesis. I am still working my way through these concepts, but my starting point is Brian Fitzgerald's argument that

[t]raditionally, constitutionalism (which means the regulation of power) has focused on regulating or limiting the vertical exercise of government or public power over the citizen. On the other hand, the horizontal exercise of power between citizens has occurred in the private sphere and has been rarely analyzed in terms of power or constitutionalism, although the (largely common) law has played a mediating role.”¹⁾

Fitzgerald concludes that “[p]ower relations in the private sphere […] are fundamental constitutional issues that should be informed by fundamental constitutional principles”.²⁾

Coming back to the question of interpretation and enforcement of standard form contracts, Fitzgerald's argument echoes the point made by Sir Anthony Mason and S J Gageler in a 1987 article in P D Finn's collection Essays on Contract, where the authors argued that the limits of contract were fundamentally important questions of public policy:

The role of public policy in the formulation and application of contract rules has also tended to be understated. At root, public policy is inherent in the notion of legal adjudication. A court order for the enforcement of a contract does not simply allow the parties to pursue their own freely chosen course of conduct. It brings the full power of the state to bear against one party in the service of another. When and how this should be done are necessarily important questions of public policy.³⁾

Margaret Jane Radin argues that the rise in contractual governance has led to the public law of the state being replaced by the private law of powerful corporations.⁴⁾ In virtual communities, this is largely true; as virtual communities become more important as the places where individuals live their lives, their lives are essentially governed by the terms of the proprietors of those platforms. In these circumstances, it may be appropriate to impose limits on the exercise of power by those proprietors in line with our fundamental constitutional values.

Radin and Wagner, in a separate article, suggest that there is an urgent question of legitimacy in the trend towards private governance:

The ideal of “private ordering” in cyberspace excites many people. Because the commercial environment is now global, but legal sovereignties are still territorial, it is unclear how (or if) cyberspace will be structured and governed. In these circumstances, because of the continued force of laissez-faire ideology, some people hope to finesse the question of territorial jurisdiction – sovereignty – with global “private ordering.” If private ordering means legally enforceable contract, this hope is chimerical. The hope flourishes because the legal realist insight has been suppressed. But once the legal realist insight is revived, we can see there is an urgent question of how the institutions of contract and property in cyberspace will be shaped and patrolled. There is an urgent question of sovereignty: who will do the shaping and patrolling?⁵⁾

Radin and Wagner go on to suggest that the limitations we require in governance “such as duress, fraud, and due process – have to come from somewhere and be enforced somehow. By now we know (or should know) that they do not come from self-enforcing natural law.”⁶⁾

Radin and Wagner are concerned about the increasing lack of legitimacy in relationships governed by private contract, and the corresponding risk to vulnerable citizens.1 Essentially, the concern seems to be that governance by private institutions, which increasingly resembles law, is not subject to the rule of law. Radin and Wagner conclude that

Internet proponents' best hope is for a process of evolution toward a regime in which there is enough harmony about the minimal standards of background due process and public policy limits so that all players, on and off the Internet, will understand and accept them. If such harmony could emerge, it would allow stable self-enforcement on the Internet, in the shadow of possible appeal to territorial sovereigns. We certainly have not reached such harmony yet. The needed background baseline of due process and public policy limits has a better chance of developing if participants do not obscure the understanding that contractual ordering cannot exist without it.⁷⁾

If we believe this argument, it becomes important to determine where the 'baseline of due process and public policy limits' comes from. To an extent, I think it comes partly from the rule of law. Lon Fuller, in the Morality of Law, provided eight principles that he believed were necessary for a society aspiring to the rule of law, including that the rules be clear and consistently enforced.

One of the greatest problems I see with governance of virtual communities is that the rules are not clear and consistent – they fail the procedural requirements for a morally legitimate system. I don't think that this means that virtual communities necessarily ought to be held to the same standards as legal systems – I am always reminded of Richard Bartle's warning that we need to allow completely arbitrary games. But for some communities, we may expect some degree of procedural fairness, of clarity and consistency. Justice Heydon described the rule of law as tightly linked with preventing private coercion – “as a bar to untrammelled discretionary power”:

Under the ‘rule of law’ as the expression is used below, it is not possible, at least without explicit parliamentary legislation to the contrary, for most important material or personal interests of one citizen to be radically damaged against that citizen’s wishes by another citizen, a corporation, or an arm of government unless some independent person holds that that is right. The rule of law prevents citizens being exposed to the uncontrolled decisions of others in conflict with them. Powerful citizens are not permitted to use self-help against other citizens so far as their arbitrary might permits. […] The rule of law operates as a bar to untrammelled discretionary power. It does so by introducing a third factor to temper the exposure of particular citizens to the unrestrained sense of self-interest or partisan duty of other citizens or institutions — an independent arbiter not affected by self-interest or partisan duty, applying a set of principles, rules and procedures having objective existence and operating in paramountcy to any other organ of State and to any other source of power, and possessing a measure of independence from the wrath of disgruntled governments or other groups. These independent arbiters are usually judges. The rule of law preserves for citizens an area of liberty in which they can live their lives free from the raw and direct application of power. It creates a framework within which the creative aspects of human life can thrive. The rule of law dilutes power; it diffuses it; and yet it also makes it more efficient.

[…]

The more ineffective a State’s laws are against private coercion or anarchy or government power, the less they can be described as representing the rule of law.⁸⁾

I think that this is correct. I agree with Radin and Wagner that the diverse rulesets of virtual communities can be empowering and useful if they are backed by limitations based upon our best judgments as to when we need to act to prevent harm to participants. I think that, at least to an extent, and at least for some communities, those limitations can be inspired by our understanding of what is required by the rule of law, in order to ensure that participants are not exploited by stronger proprietors.

I think it is very interesting that sites like Facebook are now finding themselves constrained in the imposition of terms of service by the will of their subscribers. I think that this is heartening – it certainly shows that participants do have power in aggregate. I don't think that this, however, proves the cyber-libertarian assumption that regulation is unnecessary because proprietors will be forced to be responsive to the demands of their users or that the users will be able to find other, more suitable communities. There will always be cases where the community is not sufficiently offended by the terms to force a policy change – particularly when terms are only enforced against minority groups or weaker individuals, for example. For these cases, for legitimate governance, we need some limits. I'm not sure that our conceptions of the rule of law is the best source for those limits, as it is obviously not directly transposable, but it provides an interesting starting point. What do you think?