nic.suzor.net

I’ve recently been working on a new copyright project. I really want to explore alternate models for supporting artists and encouraging the production of creative works that do not rely on exclusivity. In order to get there, I think there’s a particular need to address a fundamental issue of fairness: setting aside (for the moment) the utilitarian justification for copyright, what do authors of works deserve? This article maps out the project I want to look at over the immediate future.

This article has been accepted for publication by the Vanderbilt Journal of Entertainment & Technology Law. I would appreciate any feedback on the article itself or the broader project it introduces. I am acutely aware that this is just a scoping article at this stage – I don’t, of course, have the answers to the questions I raise.

You can get the accepted pre-print draft here.. Abstract follows:

This article provides a detailed critique of the incentives/access binary in copyright discourse. Mainstream copyright theory generally accepts that copyright is a balance between providing incentives to authors to invest in the production of cultural works and enhancing the dissemination of those works to the public. In this article, I examine the two dominant theoretical justifications for copyright, utilitarian economic theory and rights-based approaches, and explain how the opposition of these justifications operates to entrench the incentives/access binary. I argue, in particular, that the conjunction of these theoretical approaches obscures the possibility of developing a model of copyright that is able to support authors without necessarily limiting access to creative works.

In recent years, high speed Internet access has brought enormous change to the way in which creative works – books, music, films – are distributed. The Internet brings the potential to greatly increase the public’s access to cultural and educational works. It is now technically possible to envisage a world where the common wealth of human creativity and knowledge circulates freely in a virtuous cycle of re-expression, where citizens can freely learn, play with, and re-articulate cultural expression. In this article, I argue that increasing access to cultural works should be a fundamental goal of copyright policy.

A number of models have been developed which attempt to show how authors can be remunerated without relying on artificial scarcity. In general terms, these models variously propose creating a public download levy, relying on service-based business models, making use of ‘crowdfunding’ and voluntary tips, or creating a restitutionary obligation on commercial users of creative material. I show that each of these models fails to provide a cohesive and convincing vision of two main functions of copyright: instrumentally, how cultural production can be funded and, on fairness grounds, how authors can be adequately rewarded. I conclude with three avenues for future research to investigate the viability of alternate copyright models. First, we need a better theory of fairness in the rewards that creative producers are morally entitled to. We should begin to build consensus as to when uncompensated access, or free-riding, should be considered to be unfair, separately from the economic public goods problem. This dialogue is necessary in order to identify when uncompensated access can be appropriate and when access predicated on a property or liability rule is necessary to prevent exploitation. Second, we need a better conception of the consumer: classical economic theory explains that copyright is necessary to induce consumers to pay for access to expressive works, but many non-scarce models rely on the voluntary financial support of fans. We need to investigate the factors that influence fans to support creative production beyond exclusivity and whether that level of support could scale to sufficiently fund a diverse range of productions at varying degrees of expense. Third, we need to identify what other interests that copyright currently covers ought to be protected in the potential absence of scarcity. The most obvious of these are the moral rights of creators which, in the US, are mostly protected by the exclusive rights. Copyright is also used (and misused) to protect other interests, however, including reputation and privacy. If our reliance on exclusivity is to be reduced, we may need complementary increases in protection for these other interests of authors and copyright owners. In order to approach this question, we need a better understanding of whether these noneconomic harms are wholly subjective and heterogenous (such that they can only be protected by exclusivity), or whether a set of relatively universal authorial rights can be constructed.

This morning the High Court of Australia unanimously ruled that iiNet did not authorise the infringement of copyright by its users.

AFACT sent iiNet notices alleging that its users were infringing the copyrights of its members by downloading and uploading movies using Bittorrent. AFACT then argued that iiNet had a responsibility to do something to prevent further infringements by its users. In a unanimous judgment, the High Court ruled that iiNet had no positive duty to disconnect users.

On a quick initial reading, this is a strong, unanimous judgment that clearly limits the scope of authorisation liability in Australia. The High Court rejected the attempt to extend the concept of authorisation through the fairly loose dictionary definition of ‘countenance’, which threatened to encompass mere inactivity. The Court stressed that something else was required to give rise to authorisation. Importantly, the High Court did not examine whether the vague obligation to terminate in the safe harbours implies that the concept of authorisation should be expansively read to encompass ISPs.

Some interesting points:

• Section 112E “provides protection where none is required” or exists from “an abundance of caution” : AFACT argued that because iiNet knew of allegations of infringement, it was tacitly supporting (‘countenancing’) infringemnet on its network. Justices Gummow and Hayne pointed out that
  

  “The progression urged by the appellants from the evidence, to “indifference”, to “countenancing”, and so to “authorisation”, is too long a march.” ([146])

  Both judgments stressed that something more was required for iiNet to be ‘authorising’ infringement, reading the definition of ‘authorisation’ in light of s 112E: “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 an audio – visual item merely because anot her person uses the facilities so provided to do something the right to do which is included in the copyright.”

 

• Power to prevent: French CJ, Crennan and Kiefel JJ found that iiNet had no ‘direct’ power to prevent infringement ([65]). Both judgments stressed that iiNet’s power is limited to terminating the account of alleged infringers, which did not appear to be a relevant power to prevent ([65], [137]). Justices Gummow and Hayne pointed out that termination would go much further than preventing infringement: “it would deny to the iiNet customers non-infringing uses of the iiNet facilities.”

 

• Reasonable steps: Both judgments found that the power to terminate was not a reasonable one to exercise, for a number of reasons:
  1. users can easily get a new ISP ([73], [139]);
  2. iiNet would be required to investigate the allegations itself, which would be difficult ([74]-[75]);
  3. the information provided by AFACT “did not provide iiNet wi th a reasonable basis for sending warning notices to individual customers containing threats to suspend or terminate those customers’ accounts”; (see also [138]) This is probably the weakest part of the judgment – the High Court at times seems to suggest that the details that AFACT subsequently provided about the DTecNet process and notices was of much higher quality than original notices. However, the High Court certainly did not go as far as Emmett J in providing an extensive list of steps that could be taken to found the obligation (FCAFC at [210]);
  4. any wrongful termination would render iiNet liable to users ([75]).
  5. “the width of the terms in which the proposed duty is cast would present iiNet and other ISPs with an uncertain legal standard for the conduct of their operations” (Gummow and Hayne JJ, [116])
  6. any such duty “would achieve for copyright owners, but at the expense of the ISP, the suspension or disconnection by their ISP of subscribers from the internet, a remedy which would not be available to the copyright owners were they themselves to sue the subscribers” (Gummow and Hayne JJ, [116])

Where does this leave us? Probably with some lobbying for legislative change. In the US, ISPs have voluntarily enacted some form of private graduated-response or notice-and-notice scheme. Importantly, the strength of this decision should give Australian ISPs a large degree of certainty in the scope of authorisation, which should mean that they will not be easily pressured to enter into a similar contractual regime. That will leave the struggle to the legislative arena, and it’s anyone’s guess where that goes from here. (For more information on graduated response schemes, Brian Fitzgerald and I have a paper about the difficulty of asking ISPs to impose penalties on users in the UNSWLJ)

Edit: I think what troubles me most about this decision is what it doesn’t cover. It’s a strong decision on the law of authorisation, but it continues to characterise the essential copyright debate as between technology companies and copyright owners. Users and their interests are almost wholly left out of the picture. The High Court mentioned, briefly, the potential impact of termination on users, but certainly did not build it into the test of reasonable steps in any clear way. Until we see a real framework to evaluate copyright tensions in a way that is inclusive of user interests, I think copyright law will continue to struggle with a serious legitimacy problem.

In a recent publication with Ericsson, we call for more principled development of copyright law and, particularly, greater emphasis on creating cheap, easy, and quick legal distribution channels (as opposed to harsher, cheaper, and quicker enforcement mechanisms).

Most of this is pretty straightforward – we need more evidence in our policy development. Importantly, however, we need to think harder about how we can create efficient and attractive solutions for people to actually access copyright content, rather than focusing on three-strike regimes and similar developments.

A one sided approach which enforces copyright at the expense of all other stakeholders and the digital competitiveness of nations is not the cure for the problem nor a treatment of the symptoms. Economic history has already taught us well that a monocausal explanation of complex processes and hence one-sided solutions will not work.

Any future copyright enforcement policy should be developed from a clear and evidence-based approach. An approach that carefully balances the incentives and rewards provided to economic rights holders against fundamental rights of privacy, self-expression, due process and the user rights embodied in copyright law to protect
access, learning, critique, and reuse.

Future enforcement policies should be proportional and flexible recognizing that historical rates of copyright infringement and the decline in physical sales, may also be a reflection of market conditions, various forms of access barriers, failed strategy and increased competition from; lawful digital distribution services, other platforms such as Music in TV and Gaming) and live performances – all legitimately displacing physical sales.

This paper suggests that, adequate enforcement measures are certainly part of a solution to a well functioning lawful digital market. However, enforcement alone can never
solve the root cause of unlawful file-sharing, since it utterly fails to address supply-side market barriers. Focus on enforcement measures alone continues to leave out a
legitimate but un-served market demand, susceptible to unlawful alternatives. A competitive and consumer friendly digital content market and an appropriate legal framework
to enable easy lawful access to digital content are essential preconditions for the creation of a culture of lawful, rather than unlawful, consumption.

Rene Summer, Nicolas Suzor, and Patrick Fair, ‘Copyright Enforcement in the Networked Society: Guiding Principles for Protecting Copyright’ (2011, Ericsson).

In an attempt to curb online copyright infringement, copyright owners are increasingly seeking to enlist the assistance of Internet Service Providers to enforce copyright and impose sanctions on their users. Commonly termed ‘graduated response’ schemes, these measures generally require that the ISP take some action against users suspected of infringing copyright, ranging from issuing warnings, to collating allegations made against subscribers and reporting to copyright owners, to suspension and eventual termination of service.

This article highlights fundamental tensions between graduated response schemes and the rule of law, a fundamental tenet of the Australian legal system. Graduated response schemes shift the task of adjudicating upon and enforcing copyright away from the courts and onto intermediaries. This shift is designed to reduce enforcement costs and avoid the public relations problems associated with the large scale litigation campaigns the copyright industry has previously adopted in the United States. The weakening of judicial oversight, however, poses significant problems for legitimacy. In most common forms, graduated response schemes are highly problematic with regards to due process, the proper exercise of the judicial power of the Commonwealth, and respect for the rights of Australian internet users.

Nicolas Suzor and Brian Fitzgerald, “The legitimacy of graduated response schemes in copyright law” (2011) 34(1) University of New South Wales Law Journal 1.

Kylie Pappalardo and Nicolas Suzor, “Standardisation and patent ambush: Potential liability under Australian competition law” (2011) 18 CCLJ 267, here.

This article examines the problem of patent ambush in standard setting, where patent owners are sometimes able to capture industry standards in order to secure monopoly power and windfall profits. Because standardisation generally introduces high switching costs, patent ambush can impose significant costs on downstream manufacturers and consumers and drastically reduce the efficiency gains of standardisation.This article considers how Australian competition law is likely to apply to patent ambush both in the development of a standard (through misrepresenting the existence of an essential patent) and after a standard is implemented (through refusing to license an essential patented technology either at all or on reasonable and non-discriminatory (RAND) terms). This article suggests that non-disclosure of patent interests is unlikely to restrained by Part IV of the Trade Practices Act (TPA), and refusals to license are only likely to be restrained if the refusal involves leveraging or exclusive dealing. By contrast, Standard Setting Organisations (SSOs) which seek to limit this behaviour through private ordering may face considerable scrutiny under the new cartel provisions of the TPA. This article concludes that SSOs may be best advised to implement administrative measures to prevent patent hold-up, such as reviewing which patents are essential for the implementation of a standard, asking patent holders to make their licence conditions public to promote transparency, and establishing forums where patent licensees can complain about licence terms that they consider to be unreasonable or discriminatory. Additionally, the ACCC may play a role in authorising SSO policies that could otherwise breach the new cartel provisions, but which have the practical effect of promoting competition in the standards setting environment.

Every time I log on to Amazon’s website, I’m presented with a Kindle advertisement that seems quite simple and stresses the ‘bestselling’ nature of the device. When Kylie logs on, her Kindle advertisement is covered with pink love hearts.

The 9th Circuit has reversed the MDY v Blizzard (WoW Glider) case on the secondary copyright infringement grounds (but not one of the DMCA claims).

This is important; the district court had held that players infringe Blizzard’s copyright in WoW by playing the game in breach of the rules, primarily because the prohibition on botting was sitting next to a prohibition on reverse-engineering etc. The district court held that it was a condition of the licence grant, and that therefore players infringed when using glider, and that MDY was liable for their infringement.

The 9th Circuit held instead that the prohibitions on botting were contractual covenants. I think this reading fits much better with Sun v Microsoft and common sense (they’re clearly gameplay rules, not rules designed to protect Blizzard’s copyright interests).

“Were we to hold otherwise, Blizzard — or any software copyright holder — could designate any disfavored conduct during software use as copyright infringement, by purporting to condition the license on the player’s abstention from the disfavored conduct. The rationale would be that because the conduct occurs while the player’s computer is copying the software code into RAM in order for it to run, the violation is copyright infringement. This would allow software copyright owners far greater rights than Congress has generally conferred on copyright owners.” ([11])

In the long term, I think this is important because copyright provides remedies for infringement that become punitive when used to enforce game rules, whereas the more compensatory remedies available under contract do not, in general. (I have a pre-print of an article on this point, if anyone is interested I can send it through.)

In the direct circumstances of the case, though, this is not a big win for MDY. They’re still liable on one of the DMCA circumvention claims (access) and will likely be found liable for tortious interference with contract.

On Terra Nova, Greg Lastowka announces that his new book, Virtual Justice, is on bookshelves now. I had the opportunity to read the manuscript a little while ago, and can highly recommend the book to anyone interested in the regulation of virtual worlds.

As I mentioned in an earlier post, and as you can probably see, I’m turning this site into more of a personal blog. If you want to only see legal updates, you can subscribe to this law only RSS feed (or view here).

— nic

[ from the allocation-of-resources dept ]

You may have noticed I haven’t said much around here lately. I’ve been putting most of my energy into my academic writing – first my dissertation, and now a book and some articles. This leaves little time to blog.

Over the next few weeks, I’m going to transition this site to more of a personal homepage and less of a blog. I’ll still have the occasional writeup of particular issues or events I’m interested in, but the rest of the content will become more (explicitly) static and may include a greater mix of my other interests, like photography. Accordingly, if you don’t want to see pictures of kittens, you may want to unsubscribe from the feed.*

* I don’t actually expect to be posting many pictures of kittens. But you get the point – content is likely to be more personal and less academic from here on.