The rule of law and digital constitutionalism

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?

1)
Brian Fitzgerald, 'Software as Discourse: The Power of Intellectual Property in Digital Architecture' (2000) 18 Cardozo Arts & entertainment Law Journal 337, 382.
2)
Brian Fitzgerald, 'Software as Discourse: The Power of Intellectual Property in Digital Architecture' (2000) 18 Cardozo Arts & entertainment Law Journal 337, 384.
3)
Hon Sir Anthony Mason and S J Gageler, “The Contract”, in P D Finn (ed) “Essays on Contract” (1987) Law Book Company Ltd, 1, 2.
8)
Heydon, 'Judicial activism and the death of the rule of law' (2003) 23(2) ABR 110-2.

Digital constitutionalism the governance of virtual communities, part 2: contract

This post provides a brief outline of the contractual chapter of my PhD thesis. Comments appreciated. See Part 1 for the introductory and theoretical outline.


The term 'digital constitutionalism' is used here to denote the essential values which underpin the development of legal principle as it applies to the new technological age. It refers to the way in which private legal doctrine will be read in an environment which clearly does not support a sharp distinction between public and private spheres. By accepting the fundamental proposition that the interpretation and application of law is never value-neutral, we are able to ask whether and how we ought to embed public values in the common law so as to achieve the balance required by justice.

The law of contract is a logical first candidate through which to examine the balance required in the regulation of virtual communities. Access to most virtual communities is generally purported to be governed by contractual terms of service documents which are overwhelmingly drafted in favour of the proprietors. These standard form contractual terms of service can rarely be said to reflect the 'intent of the parties'. They are drafted by repeat players, who are able to properly evaluate risk, and are presented in dense language on 'take it or leave it' terms, with the expected result that participants are both unable to properly evaluate the terms and, in cases where they do find the terms objectionable, are unable to negotiate alternative terms. Competition in contractual terms is negligible, and participants are unable to adequately manifest demand for fairer terms. Furthermore, participants tend to discount the risk that they will be adversely affected by unjust or onerous terms, rarely realising the gravity of their mistake unless and until those terms are enforced. Through these standard form contracts, proprietors essentially appropriate all power and discretion to themselves and, through selective enforcement, are able to exercise control over the virtual community.

The common law, however, is by no means bound to give full legal force to the literal wording of these contractual documents; instead, judges habitually read down contracts in light of the deemed intent of the parties and public policy interests. Indeed, if these documents, by setting out standards of behaviour and constraints on the exercise of power in virtual environments, are to be seriously treated as forming the basis for a type of social contract between participants and proprietors, then a formal literal reading is likely to lead to substantially unjust outcomes. By taking a critical approach to the interpretation of contractual terms of service, judges are in a position to substantially ameliorate the imbalance of power and encourage the development of contractual norms which more closely reflect societal values, rather than the self-interest of proprietors.

This instrumental approach is not alien to contract law. As Sir Anthony Mason and S J Gageler recognised in a 1987 article,

[t]he 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.1)


Considerations of public policy find their way into contractual interpretation in a variety of different doctrines. First and foremost, the plain contractual terms are read not by their subjective meaning, but in light of what the parties are deemed to have agreed to. A degree of reasonableness applies here, in that parties will be bound by what a reasonable person would have believed that each was agreeing to. In the case of standard form contracts which are rarely read and never negotiated, there is a strong argument that terms which are overly onerous or surprising would not reasonably be believed to form part of the contract. Other limitations apply to the incorporation and enforcement of contractual terms, including estoppel, waiver and acquiescence, and an implied duty of good faith, among others.

The way that terms of service are currently drafted generally imposes very little obligation on the proprietors of virtual communities. The interests of participants are essentially ignored, and participants have little hope of being able to successfully sue on the contract. If we are to continue to assume that contractual documents form the basis of governance in virtual communities, then it would seem to be desirable to ensure that participants are able to extract and enforce promises from proprietors as appropriate. Courts may be able to encourage more fully formed 'social contracts' by refusing to enforce the more egregious terms and implying certain terms that the participants are unlikely to be able to demand. In this way, courts may be able to safeguard the interests of participants in a way which negates the involuntariness associated with the power imbalance in virtual communities and simultaneously encourages the diversity which an efficient and effective contractual model provides.

1)
Hon Sir Anthony Mason and S J Gageler, “The Contract”, in P D Finn (ed) “Essays on Contract” (1987) Law Book Company Ltd, 1, 2.

AFACT v iiNet copyright infringement suit


Not really pirates. Pirates of the Caribbean: At World's End is one of Disney's films at the centre of the law suit. Image © Disney.

As you may have heard, the movie industry has sued iiNet for copyright infringement. iiNet have responded that they will 'vigourously defend' the case. EFA released a press release here. Kim Weatherall has a detailed post on the case here.

AFACT allege that they have evidence that iiNet users have downloaded copyright films without permission. Lets assume that they do, no big surprise here. Implicit in the BitTorrent protocol is that users are sharing as they download the film. It AFACT used DtecNet to download video files, and logged the IP addresses in the pool that belonged to iiNet users. On this basis, AFACT alleges that iiNet users 'made available' and 'electronically transmitted' the films to other persons. As part of this, AFACT has to show that even if it received some data from iiNet IP addresses, that data formed a 'substantial part' of the film. Because torrents typically have hundreds of peers, it would be possible to believe that each peer generally does not, by itself, transmit a 'substantial part' of the film. I imagine, however, that each peer would be liable as a joint tortfeasor. Still, it's an important question of fact.

AFACT also alleges that users made physical copies of the films onto DVDs to watch, although it's not clear how they obtained this evidence.

Edit: APC Mag have made the full statement of claim available.

Inducement liability

AFACT allege that iiNet is liable for copyright infringement on two alternative theories. The first is based on the inducement test that we saw in Kazaa. AFACT allege that iiNet

  • knew or should have known that iiNet users engaged in filesharing of infringing material
  • took no action in response to emails sent by AFACT alleging infringement
  • 'offered encouragement' to iiNet users to engage in illicit filesharing
  • failed to enforce iiNet's terms and conditions which prohibit using iiNet to infringe copyright
  • continued to offer internet access to customers who AFACT alleged engaged in filesharing; and
  • 'through its own inactivity and indifference permitted a situation to develop and continue where iiNet Users engaged in, or continued to engage in' illicit filesharing.


In Australia, authorisation liability requires that the person 'sanction, approve, or countenance' (UNSW v Moorhouse. Section 101(1A) of the Copyright Act 1968 (Cth) provides a non-exhaustive list of factors to be taken into consideration when determining authorisation:

(a) the extent (if any) of the person's power to prevent the doing of the act concerned;

(b) the nature of any relationship existing between the person and the person who did the act concerned;

(c) whether the person took any other reasonable steps to prevent or avoid the doing of the act, including whether the person complied with any relevant industry codes of practice.


AFACT argue that iiNet, by failing to terminate users accounts in response to allegations of infringement made by AFACT, 'sanctioned, authorised or countenanced' those infringements. This is where it gets interesting. AFACT allege knowledge, but since iiNet is only given notice of allegations of infringement – infringement was never proven in court – this may be enough to negate knowledge. So the question is whether iiNet 'through its own inactivity and indifference' effectively passively encouraged infringing acts, or, alternatively, actively encouraged infringement by offering support to filesharers.

Section 112E means that a person who merely provides the facilities for infringement does not 'authorise' that infringement. This means that iiNet has to do something more than merely providing internet access. In Kazaa, this was established by exhortations to 'join the revolution' and at least partly premised on the fact that there were few non-infringing uses of Kazaa in evidence. [404-5].

In the case of iiNet, this is a bit harder to see. I don't think that anyone can make out that “a major, even the predominant” use of internet connections is to infringe copyright. AFACT allege that iiNet, by failing to take any steps to discourage copyright infringement, passively encourage any infringements which do occur. AFACT also allege that iiNet actively encouraged its users to infringe 'by not suspending or terminating' their internet service, and by not shaping or restricting P2P downloads. This seems to be a pretty far stretch from the Kazaa advertisements that were decisive in that case. Primarily, both internet use in general and BitTorrent use in particular have substantial non-infringing uses, so it is hard to see that a decision not to restrict all BitTorrent use could 'authorise' infringement. So the real question here is whether, by not suspending or terminating accounts based upon allegations of infringement provided by AFACT, iiNet were 'encouraging' any illicit filesharing that was, in fact, carried out. This is a question of fact, but it also imports significant issues of public policy. If the court finds that not terminating subscriber accounts upon allegations of infringement is 'encouraging' (meaning 'sanctioning', 'authorising', or 'countenancing') that infringement, it will mean that ISPs will effectively be under a positive duty to investigate and police allegations of infringement.

Vicarious liability

The second grounds for liability alleged by AFACT is US-style vicarious infringement, as developed in Cooper. AFACT allege that iiNet:

  • had to power to prevent the infringements of its users;
  • had a direct and commercial relationship with iiNet customers that allowed it to 'take action' against those customers who engaged in illicit filesharing; and
  • did not take adequate steps to prevent or avoid the infringements.


AFACT allege that iiNet have the power to prevent infringement by terminating or suspending internet accounts. The problem with this allegation is that iiNet itself may be liable to its users if it begins terminating accounts based upon unsubstantiated allegations from copyright owners. It would have to undertake significant investigation on its own initiative, and there again it may face liability or at least significant pressure for invading the privacy of its users. Finally, AFACT allege that iiNet could have taken 'other reasonable steps', including sending a notice to iiNet customers that AFACT had identified their accounts as potentially infringing and 'requesting that [they] cease such conduct'. Given that the copyright industry has not had the best track record of accurately identifying infringers, and in fact, has no real incentive to do so, iiNet may not be acting unreasonably by refusing to issue such notices. If appropriately construed, this type of behaviour could also conceivably come dangerously close to prohibited groundless threats of legal proceedings.

Finally, as with the other allegation of liability, any claim is limited by s 112E, which goes some way to immunising ISPs if they do nothing more than provide the network link. We have to reconcile the alleged grounds for authorisation liability above – that the ISP did not take 'adequate steps' – with the statutory provision that an ISP will not be liable “merely because another person uses the facilities so provided to do something the right to do which is included in the copyright.”1) Section 112E, on its face, appears to justify the position that an ISP which is doing absolutely nothing to either encourage or discourage copyright infringement will not be liable. It is not really clear how AFACT intend to make out that, even if the ISP has a 'power to prevent' and a 'direct commercial relationship', it would be positively required to act in oversight, despite s 112E.

These are all interesting questions of fact – to be determined by a judge at first instance – that will have to be proved by AFACT. Their resolution will depend largely upon what actions would be deemed 'reasonable' to prevent alleged infringements. This is really a public policy argument – to what extent do we want internet service providers to be responsible for identifying and terminating the accounts of alleged infringers, outside of the scope of proper judicial oversight?

What about the safe harbours?


Something we haven't spoken about yet are the safe harbours introduced in 2004 as a result of the Australia – US Free Trade Agreement (commenced 01 January 2005). Section 116AG, read with 116AC, provides that courts may not award monetary remedies against ISPs that are only “providing facilities or services for transmitting, routing or providing connections for copyright material”. Remedies are limited to “an order requiring the carriage service provider to take reasonable steps to disable access to an online location outside Australia” and “an order requiring the carriage service provider to terminate a specified account.”2)

Interestingly, it does not appear that AFACT have yet dealt with the conditions of the safe harbours. Assumedly they are waiting for iiNet to raise the safe harbours in defence, at which time they may decide to argue that iiNet are not eligible on the basis that iiNet has failed to “adopt and reasonably implement a policy that provides for termination, in appropriate circumstances, of the accounts of repeat infringers.”3) If AFACT is able to show that iiNet's policy is either not appropriate or not reasonably implemented, then the claims of authorisation liability may go ahead. How exactly, however, AFACT plan to do this, is anyone's guess.

Assumedly, iiNet will claim that it has an reasonable and enforced policy to deal with repeat infringers, in that once ordered to do so by a court, it will terminate access. AFACT is likely to counter that iiNet's policy is neither reasonable nor enforced, and that iiNet should instead be investigating allegations of infringement proactively, rather than waiting for either the AFP or the copyright owner to bring (and prove) an action for infringement. The resolution will likely come down to whether the text of s 116AH ('repeat infringers') requires proof of infringement or merely a reasonable suspicion (or some other test?).

Conclusion


This case raises some pretty important public policy questions. As I highlighted in EFA's press release, “ISPs are not in a position to monitor and terminate internet access to users based upon unsubstantiated threats from copyright owners, and should not be asked to do so.” I think that basic principles of procedural fairness and due process would in fact prevent iiNet from suspending and terminating accounts based upon allegations made by AFACT. iiNet has said that it will terminate in response to a court order, and I think that this is reasonable. Copyright infringement is not infringement until proved, and the courts are able to exercise judicial oversight and care in their binding findings of fact. These safeguards do not exist when private corporations are making the decisions. A system which required termination of internet access based upon untested allegations would be likely to result in substantial hardship to internet users. If ISPs are liable for not terminating user accounts, the power imbalance between individual users and ISPs and copyright owners would generally mean that rational, risk averse ISPs are more likely to terminate access based upon unsubstantiated allegations, and innocent individuals are more likely to be adversely affected.

Kim very aptly summarises the dangers of forcing disconnection without trial:

[I]f individuals were sued, rather than disconnected, (a) the cost of enforcement would lie on the copyright owners, and (b) consumers, and media, and everyone else, would be clear on what was happening, who it was initiated by, and, in fact, that it was happening. And in the case of Australia, unlike the US, damages are linked to the harm suffered by the copyright owner, so the threat of exorbitant fines of the Jammie Thomas variety would not be there. The advantage of the lawsuit option is that it is public and that everyone takes responsibility for their action. That is not necessarily a bad thing, on all sides. In other words, if MIPI decides to sue individuals, it will, in so doing, at least have to articulate its reasons, justify them to the Australian population at large, and to politicians. Politicians, too, would need to observe the effects of copyright laws and to justify them to the Australian people. I think that’s only appropriate, rather than going through the back door of managing it all second hand through the ISPs.


To this, I would just add that although copyright suits brought against end users may be better in aggregate than 'back door' enforcement through ISPs, they are likely to bring significant hardship to individuals. We have seen the extraordinary pressure that the copyright industry is able to bring to bear on individuals accused of copyright infringement, essentially forcing a settlement for several thousand dollars rather than the high risk and extreme expense of a drawn out legal process. We have to realise that this is not a dichotomy between enforcement at the ISP level and mass individual suits. If they are our only two choices, I would suggest that there is something fundamentally flawed about the way our copyright system is organised. There are certainly other ways in which we can compensate (or incentivise) investment in the creation of copyright expression that do not involve either making examples of individuals or forcing ISPs to police subscriber accounts. We are always able (at least in theory) to redraw the boundaries here, as to what, exactly, will constitute infringement, and how incentives can be distributed – a tax on internet usage being the apparent current best option,4) with an exclusion of liability for non-commercial or private use running a close second.5)

This case also raises important questions as to the appropriate penalty for copyright infringement. Personal small scale infringement is not a crime in Australia. As such, the proper remedy is damages, not punitive. Disconnecting an entire household's internet access, even if it is able to be proved that a member of the household downloaded copyright material, is a punitive measure that will in many cases greatly outweigh any harm done to the copyright owner. It will prevent children from researching school assignments, or video calling their grandparents. It could prevent others from telecommuting or working remotely. It would indeed prevent all forms of internet mediated communication – something upon which we have become increasingly reliant. It would in most cases involve a significant financial burden for reconnection fees.

Remember that claims for damages in copyright cases are generally hyper-inflated. We have seen the music industry calculate damages per song by taking the album price and dividing by the average number of tracks on an album, and then multiplying that number by a punitive factor. The introduction of statutory damages (proposed for ACTA: beware) is designed to do just that, and has resulted in absurdities like a US jury award of $222,000 in damages for infringing copyright in 24 songs.

If AFACT succeeds in this case, the result is likely to be disastrous for internet users in Australia. ISPs will be terrified of being sued, and will likely disconnect individual users without taking the care to determine the merits of allegations of copyright holders. There will be no court processes, so individual users will have no ability to contest the allegations, short of suing their service providers. There will be no court processes, so the media will not fully report on the issues, and a lot of the injustices will go unnoticed. Copyright owners will have extra judicial justification for their flawed tracking processes, resulting in a likely increase in the number of spurious and oppressive claims.6) And, importantly, thousands of individuals are likely to be severely punished for small-scale copyright infringement in an environment where the copyright industry shows an almost complete lack of respect for its legitimate customers. In short, not good news.

2)
s 116AG(3).
4)
see proposals by Prof Terry Fisher and Peter Eckersley, amongst others
5)
For a detailed examination of the scope of copyright in Australia, see Ben Atkinson, The True History of Copyright.
6)
See, for example, the 'Dancing baby' suit, where a 29 second home movie clip of a baby dancing to a song on the radio was removed from YouTube: http://www.eff.org/cases/lenz-v-universal

Digital constitutionalism: the governance of virtual communities, part 3: principles of …

This is an outline of the third part of my thesis. Comments appreciated. See Part 1 and Part 2 for more background.

Contract law may be the most prominent area of law which affects the governance of virtual communities, but it is by no means alone in this category. The way that courts interpret and apply the law of copyright, property, defamation, assault, and other innumerable laws will necessarily alter the relationships between participants and proprietors. In each case, if the common law is insensitive to the subtleties which differentiate participation in virtual communities from simple consumer transactions, then it is likely to come to decisions which are substantially unjust.

This is an exceptionalist point of view. It is premised on the assumption that there are real qualitative differences between participation in virtual communities and participation in the many different relationships which occur in real space. This assumption may not be entirely true. What appears to be true, however, is that there is a real gap between the rhetoric of the legal discourse and reality, and this gap is in the virtual domain. This gap is evidenced in the assumptions that courts make in their interpretation and application of the law – particularly, that because individuals are self-sufficient, rational actors who enter into private transactions at arms-length fully aware of any inherent risks, any limitations which apply to public actors are neither necessary not desirable in the private sphere. To the extent that this assumption has ever been correct, it is much more open to challenge in a virtual context, where access to services which have become, if not strictly necessary, then at least extremely important to all aspects of everyday life, is controlled not by public governments but by private actors.

The exceptionalist argument can be made in two different ways. The first is an internal critique, an economic argument that there are market failures which ought to be corrected. This approach recognises that individuals are particularly disadvantaged in negotiations with the large commercial proprietors of virtual communities, are unable to properly evaluate risk, and are unable to adequately manifest demand for fairer terms. It also recognises that significant network effects and high switching costs inhibit competition by disincentivising new entrants and discouraging participants from leaving established communities. In these situations, it may be desirable to introduce safeguards to ensure that there is an efficient and competitive market.

The second approach, an external critique, goes further. By stepping back from the market rhetoric, we are able to suggest that there are certain interests which should not be left to determination solely by the market. We may recognise that there are certain public values which we do not wish to be negotiated in the society we are striving to create. We may decide that these interests, like the ability to communicate with friends and family, to speak freely, to express oneself, and to form communities and associate with whom we choose, are important enough that we do not want to necessarily subject them to the vagaries of the marketplace. In these circumstances, we may decide that some of the types of limits we normally associate with restraints on the actions of public actors are appropriate to impose upon private actors.

From either point of view, current legal doctrine does not adequately recognise the realities of participation in 'private' virtual communities. In either case, if the law is to arrive at just results, judges must be able to better recognise the interests which are at stake. I believe that in most cases, the common law is flexible enough to arrive at results which are appropriate and just in the circumstances. Principles of statutory interpretation and the development of precedent provide a mechanism through which judges are able to read the law in accordance with principle and reality, rather than continuing to entrench the established interests by ignoring the ideological content of law.

Australia does not have a bill of rights. Rather, it has long been said that the interests of all Australians are appropriately safeguarded by the legislature and the development of the common law. Where the legislature is unable to adequately protect the interests of individuals or groups, Australian courts have historically been willing to read both legislation and precedent in the light of public interest principles. It is these principles which provide the greatest hope of balancing the interests of participants and proprietors in a context which is at the same time partly private and commercial and partly public and partly personal.

Digital constitutionalism: the governance of virtual communities, part 1

I am finally beginning to write up my thesis. What follows is the first half of the argument I plan to present. This will hopefully provide the structure for identifying the problem and the context of the argument.



Comments welcome – what have I missed so far?


The internet provides the medium for a wealth of virtual communities, each with its distinct set of norms and values. Individuals all around the world participate in these networks to play, to socialise, to learn and teach, to express themselves, to do business, to communicate with friends and loved ones, to engage in political discourse and political process, and for innumerable other activities. These communities provide not only a 'space' for people to interact but also the promise that each individual will be able to find a community whose norms and values align with her own. Since the internet became popular in the 1990s, this libertarian idealism has proved extremely powerful. It argues that freed from physical scarcity and spatial barriers, individuals will finally be able to choose to associate with other, like-minded, individuals, and these communities will be able to determine the rules which best fit their society, rather than the clumsy approximations that often result from national democracies.

The main problem with the governance of virtual communities is that our legal system operates in such a way as to vest overwhelming power in the hands of those who create and maintain the platforms. These people, whom we call 'proprietors', for they own the code that defines the platform and servers upon which the code runs, exercise almost complete discretion as to who may access and who may continue to access 'their' community. The law, by giving primacy to these property rights, marginalises the interests of participants in these communities. Further, by casting any disputes or tensions which arise as belonging wholly in the 'private' sphere, we deligitimise any change to the current allocation of entitlements.

The result so far has been that the technologically deterministic claims of the cyber-libertarians have not held up, at least not in the largest virtual communities. The suggestion that individuals will vote with their feet (or their wallets) and choose to leave communities that do not reflect their own values breaks down as individual communities become more important. Network effects act to restrict both entry of competitors and exit of participants. As the value of many communities is proportional to the number of participants, new communities have trouble reaching a critical, sustaining, mass. Participants are less likely to leave an established community for a fledgling community, even if that smaller community has more appropriate norms or values. This means that proprietors do not have to be very responsive to the demands of participants in order to retain their custom.

There are, no doubt, limits on the behaviour of proprietors. A proprietor who is not responsive enough to the demands of the community will, eventually, begin to lose participants. In the various commercial models, this usually means a drop in subscriber revenue or in revenue derived from advertising. The relationship between participants and proprietors is accordingly seen to be market-based, and proprietors have an incentive to be just responsive enough not to lose too many participants. This model, in practice, is far removed from the idealism of the cyber-libertarians. Governance is essentially reduced to business decisions about the most profitable way to manage the virtual community.

There is a significant problem when the interests of participants are reduced to a market rhetoric. The activities of participants in virtual communities cannot be understood as the activities of mere consumers of entertainment product, and treating them as such leads to substantial injustices. For participants, there is much more at stake than access to a service – that access underpins their ability to communicate with friends and family, to express themselves, to carry out trade and commerce, and to participate in political discourse. Thus, for example, when a participant is threatened with expulsion from the strongly heteronormative World of Warcraft for advertising for a guild that is friendly to those with alternate gender or sexual identities, she risks losing not only access to a recreational pastime, but access to her rich social networks, her personal identification with her avatar, her virtual possessions, and the rest of the benefits that attach to participation in the community.1)

Similarly, when an individual is banned from a social networking site, she loses a significant ability to connect with her friends, family, and distant associates. The more effective the social networking platform is at changing the way that groups organise events and remain in contact, the more acutely she will feel this disconnection. The same disconnect occurs when an individual is denied access to cloud computing platforms and is no longer able to access her email contacts or stored documents.

In the corporeal world, these concerns are often seen as public concerns, and constitutional and administrative law principles have developed to restrain states from arbitrarily or capriciously taking away the ability of individuals to be secure in their property, their ability to communicate, and their freedom of association. In the privatised environment of the internet, however, there are very few guarantees. The limits of a proprietor's power are established by the bounds beyond which certain actions will become unprofitable. At its worst, this model approaches the worst failures of majoritarian or populist rule, where individuals and minority groups are often subject to harsh treatment and discrimination.

It follows that as the internet becomes more vital to the ways in which we communicate, do business, express ourselves, live, love, and learn, then the risk posed to individuals and groups dramatically increases. The law does not currently have the adequate vocabulary to deal with these risks. Constitutional action, particularly in Australia, provides limits on governmental action, but provides no individually assertable rights against private actors. This negative model assumes that, in the absence of governmental action, citizens will be free. To the extent that this model was ever accurate, it is certainly flawed in a context where access to crucial social networks and forums for self-expression requires access to another's 'property'.

In this context, the distinction between positive and negative restrictions becomes confusing. In the absence of particular government interference, we are left with the base rules of property and contract, which are nonetheless public constructs. A proprietor's right to exclude may come from the fact that they are in control of the software code which runs the platform, but that power is reinforced through the rules we choose to apply to protect that code and the servers upon which it runs and the interpretation we give to the contracts which condition access to the platform. At each of these stages we are embedding certain values in the legal system, and it is wrong to suggest that they form part of a natural state of affairs in which the government ought not interfere. There are clearly choices to be made.

Fundamentally, our legal system should develop to arrive at just results. This means that we must be careful to consider the interests of participants and refrain from marginalising those against the interests of the proprietors. This is a balancing exercise, however, because we must be careful not to destroy the vibrant and diverse nature of these spaces through over-regulation, and equally careful not to undermine the commercial viability of platforms which are provided through private sector investment.

This balancing process is the essence of digital constitutionalism. The rest of this thesis will consider how public values can be applied to the laws which govern virtual communities.