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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).

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.

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:
Read more…

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.

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?
Read more…

[ 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.

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.

Read more…

[ 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.