Tuesday, 12 February 2008

Internet Piracy, Contraband and Counterfeit Products

It may often occur that works offered over on the Internet, either by a service provider or its subscribers, is included within the copyright owned by a third party who has not sanctioned the works distribution. In some instances, a service provider may be liable for a copyright infringement using its service and systems.

In the UK, copyright law is governed through the "Copyright, Designs and Patents Act 1988 (the “1998 Act”) and the ensuing decisions of courts. The Australian position[i] mirrors that of the UK where protection of a work is free and automatic upon its creation and differs from the position in the US, where work has to be registered to be actionable. While some divergences may be found, Australian copyright law largely replicates the frameworks in place within the US and UK. The copyright term is shorter than these jurisdictions in Australia being the creator’s life plus 50 years whereas the UK has a term of 70 years from the end of the calendar year in which the last remaining author of the work dies for literary works. As co-signatories to the Berne Convention, most foreign copyright holders are also sheltered in both the UK and Australia.

The 1988 Act catalogues the copyright holder’s exclusive rights as the rights to copy, issue copies of the work to the public, perform, show or play in public and to make adaptations. An ephemeral reproduction that is created within a host or router is a reproduction for the intention of copyright law. Though, there appears to be no special right to broadcast a work over a network, a right is granted in Section 16(1)(d) to broadcast the work or include it in a cable program service. The notion of “broadcast” is restricted to wireless telegraphy receivable by the general public. Interactive services are explicitly excluded from the designation of “cable program service” (S.7 (2)(a)). A proviso making an individual an infringer of the act in the event of remote copying has been defined to encompass occasions where a person who transmits the work over a telecommunications system[ii] knowing or reasonably believing that reception of the transmission will result in infringing copies to be created.

The law contains provisions imposing criminal penalties and civil remedies for making importing or commercially trading in items or services designed to thwart technological copyright protection instruments, and sanctions against tampering with electronic rights management information and against distributing or commercially dealing with material whose rights management information has been tampered with.[iii]

There are several legislative limitations on the scope of exclusive rights under UK law. Liability is also possible for secondary infringement including importing and distributing infringing copy prepared by a third party. The scope of the exclusive rights of the copyright owner is extensive enough to include an ISP or ICH that utilises or consciously allows another to its system in order to store and disseminate unauthorized copies of copyright works. This situation would create the risk of civil action. A contravention could constitute a criminal offence if a commercial motivation for copyright infringement could be demonstrated.

The Australian High Court decision in Telstra Corporation Ltd v Australasian Performing Rights Association Limited[iv] imposed primary liability for copyright infringement on Telstra in respect of music broadcast over a telephone “hold” system. A large part of the decision concentrated on the definition of the diffusion right in Australia.[v] It follows from this decision that if an ISP broadcasts copyright works to in the general course of disseminating other materials through the Internet, that diffusion is a “transmission to subscribers to a diffusion service” as defined by the Australian Copyright Act. It consequently emerges that an ISP may be directly liable for an infringement of copyright caused by that transmission under Australian common law for the infringements of its customers.[vi]

A determination as to whether a message using telecommunications is “to the public”[vii] will likely hinge on whether the message is made “openly, without concealment”[viii] to a sufficiently large number of recipients. No case has attempted to quantify a specific cut-off point.

In Moorhouse v. University of New South Wales,[ix] a writer initiated a “test case” asserting copyright infringement against the University of New South Wales. The University had provided a photocopier for the function of allowing photocopying works held by the university’s library. A chapter of the plaintiff’s manuscript was copied by means of the photocopier. The library had taken rudimentary provisions to control the unauthorised copying. No monitoring of the use of the photocopier was made. Further, he sign located on the photocopier was unclear and was determined by the Court to not be “adequate”[x]. The Australian High Court held that, whilst the University had not directly infringed the plaintiff’s copyright, the University had sanctioned infringements of copyright in that the library had provided a boundless incitement for its patrons to duplicate material in the library.[xi]

In July 1997, the Attorney-General published a discussion paper[xii] that proposed a new broad-based technology-neutral diffusion right as well as a right of making available to the public[xiii]. This provides the position where direct infringement by users of a peer-to-peer (P2P) file-sharing network would be covered in Australian law in a manner comparable to the US position in both Napster and Grokster[xiv].

Mann and Belzley’s[xv] position holds the least cost intermediary liable is likely to be upheld under existing UK, US and Australian law. The positions held by the court in Telstra v Apra[xvi] and Moorhouse v UNSW[xvii] Define the necessary conditions to detail public dissemination and infringement through a sanctioned arrangement. The public dissemination of music clips on a website could be seen as being analogous to the copying of a manuscript with the ISP's disclaimer being held as an inadequate control. It is clear that the provision of technical controls, monitoring and issuing of take down notices by the ISP would be far more effective at controlling copyright infringement than enforcing infringements against individuals.

Several cases have occurred in the US involving ISPs or other service providers that hosted copyright material made available to those accessing the site. A significant decision was made in Religious Technology Center v. Netcom On–line Communication Services, Inc[xviii]. The case involved the posting of information online which was disseminated across the Internet. The postings were cached by the hosting provider for several days, and robotically stored by Netcom’s system for 11 days. The court held that Netcom was not a direct infringer in summary judgment[xix]. It was held that the mere fact that Netcom’s system automatically made transitory copies of the works did not constitute copying by Netcom. The court furthermore discarded arguments that Netcom was vicariously liable.

In the UK, “fair dealing” exceptions are a great deal more restricted than the US “fair use” exceptions. Netcom[xx] if tried in the UK would have to deal with the explicit requirements of Section 17 of the 1988 Act that entails copying to include storage by electronic means and also covers the creation of transient or incidental copies. These provisions make it probable that the result in the UK would have varies from that in the US at least in the first instance. The inclusion of storage differentiates ISPs and ICPs from telephone providers aligning them closer to publishers.

AN ISP or ICP could attempt to argue a similarity to a librarian over that of a publisher. The statutory provisions providing certain exemptions from liability for libraries under the 1988 Act and accompanying regulations are unlikely to apply to an ISP as the ability for a librarian to make copies is controlled under strict conditions. It is doubtful that these conditions could be met by either an ISP or ICP.

Modern peer-to-peer networks have eliminated separated the network from software with a decentralised indexing process[xxi] in an attempt to defend themselves from an exposure to vicarious liability as in Napster.[xxii] The methods suggested by Kraakman’s analysis of asset insufficiency,[xxiii] have led ICPs and ISPs to become judgment proof, thus restraining the effectiveness of sanctions even against the intermediaries. It seems natural to expect as the technology develops that it in practice will be so decentralized as to obviate the existence of any intermediary gatekeeper that could be used to shut down the networks.[xxiv]

The success of modern peer to peer networks has resulted in the content industry targeting those individual copyright infringers who use peer-to-peer networks to disseminate or download copyrighted material.[xxv] Existing peer-to-peer networks and software permits the capture of sufficient information concerning individuals who attach to the network to identify the degree of infringement and possibly who is responsible[xxvi]. Recent advances to the P2P networking protocols have allowed users to screen their identity removing the ability for copyright holders to bring their claims to court[xxvii]. As copyright infringement evolves, it will become more improbable to expect a solution through prosecuting individual users[xxviii].

[i] Australian Act is modeled on the 1956 UK Act.
[ii] This does not include broadcasting or cable
[iii] See also, UK Intellectual Property Office (http://www.ipo.gov.uk/), Australian Copyright Council Online Information Centre (http://www.copyright.org.au/) and the US Copyright Office (http://www.copyright.gov/)
[iv] Telstra Corporation Limited v Australasian Performing Rights Association Limited (1997) 38 IPR 294. The Majority of the High Court (with Justices Toohey and McHugh dissenting) upheld the Full Court that music on hold transmitted to users of wired telephones represents a transmission to subscribers over a diffusion service. The Court further unanimously held that music on hold transmitted to users of mobile telephones involves a broadcast of the music.
[v] Section 26 of the Australian Copyright Act 1968.
[vi] This decision has created apprehension amongst authors. E.g. Simon Gilchrist “Telstra v Apra –Implications for the Internet” [1998] CTLR 16 & MacMillian, Blakeney “The Internet and Communications Carriers’ Copyright Liability” [1998] EIPR 52.
[vii] Ibid; See also Goldman v The Queen (1979), 108 D.L.R. (3d) 17 (S.C.C.), at p. 30. It would therefore appear that it 70 is the intention of the sender of the message which is determinative of the private or public nature of the message
[viii] Supra note 3
[ix] [1976] R.P.C. 151.
[x] This is similar to the findings in RCA Corp. v. John Fairfax & Sons Ltd [1982] R.P.C. 91 at 100 in which the court stated that “[A] person may be said to authorize another to commit an infringement if he or she has some form of control over the other at the time of infringement or, if there is no such control, if a person is responsible for placing in the hands of another materials which by their nature are almost inevitably to be used for the purpose of infringement.”
[xi] [1976] R.P.C. 151 “[A] person who has under his control the means by which an infringement of copyright may be committed - such as a photocopying machine - and who makes it available to other persons knowing, or having reason to suspect, that it is likely to be used for the purpose of committing an infringement, and omitting to take reasonable steps to limit use to legitimate purposes, would authorize any infringement that resulted from its use”.
[xii] See Attorney-General’s Discussion Paper, “Copyright and the Digital Agenda”, July 1997 at 71. The goal of this paper was to indicate the method by which Australia could implement the international copyright standards agreed at the December 1996 WIPO meeting.
[xiii] See Attorney-General’s Discussion Paper, note 11.
[xiv] A&M Records Inc v Napster, Inc 114 F Supp 2d 896 (ND Cal 2000) & A&M Records Inc v Napster, Inc 239 F 3d 1004 (9th Cir 2001); Metro-Goldwyn-Mayer Studios Inc v Grokster Ltd No.s CV-01-08541-SVW, CV-01-09923-SVW (CD Cal, 25 April 2003) ('Grokster') (available at http://www.cacd.uscourts.gov/) & Grokster Nos CV-01-08541-SVW, CV-01-09923-SVW (CD Cal, 25 April 2003), 21-2.
[xv] Mann, R. & Belzley, S (2005) “The Promise of the Internet Intermediary Liability” 47 William and Mary Law Review 1 at 27 July 2007]
[xvi] See Supra note 3
[xvii] See Supra note 8
[xviii] 907 F. Supp. 1361 (N.D. Cal. 1995)
[xix] See also, System Corp. v Peak Computer Co., F.2d 511 (9th Cir. 1993), in which it was held that the creation of ephemeral copies in RAM by a third party service provider which did not have a license to use the plaintiff’s software was copyright infringement.
[xx] 907 F. Supp. 1361 (N.D. Cal. 1995)
[xxi].Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 380 F.3d 1154 (9th Cir.) (Refusing to find liability for Grokster even though it aided end-users in copyright infringement because the service. This case is fundamentally different than Napster), cert. granted, 125 S. Ct. 686 (2004).
[xxiii].Kraakman, Corporate Liability Strategies, supra note 88, at 869.
[xxiv].See generally Tim Wu, When Code Isn’t Law, 89 Va. L. Rev. 679 (2003) (explaining that peer to peer networks have removed the intermediary on which copyright enforcement requires).
[xxv].See Amy Harmon, Subpoenas Sent to File Sharers Prompt Anger and Remorse, N.Y. Times, July 28, 2003, at C1. See also Brian Hindo & Ira Sager, Music Pirates: Still on Board, Bus. Wk., Jan. 26, 2004, at 13. See J. Cam Barker, Grossly Excessive Penalties in the Battle Against Illegal File-Sharing: The Troubling Effects of Aggregating Minimum Statutory Damages for Copyright Infringement, 83 Texas L. Rev. 525 (2004).
[xxvi].See Alice Kao, Note, RIAA v. Verizon: Applying the Subpoena Provision of the DMCA, 19 Berkeley Tech. L.J. 405, 408.
[xxvii].Scott Banerjee, P2P Users Get More Elusive, Billboard, July 31, 2004, at 5.
[xxviii].Perversely, what probably has in fact reduced the frequency of copyright infringement is more crime: using P2P systems subjects a computer to the threat of viruses that are spread inside the files obtained. Wendy M. Grossman, Speed Traps, Inquirer (U.K.), Jan. 14, 2005, at ___ , available at http://www.theinquirer.net/?article=20718 (last visited Jan. 15, 2005). Another dissuasion has been the systematic effort by the recording industry to saturate P2P systems with dummy files that make getting the music a user actually wants quite difficult. See Malaika Costello-Dougherty, Tech Wars: P-to-P Friends, Foes Struggle, PC World, Mar. 13, 2003, at __ , available at http://www.pcworld.com/news/article/0,aid,109816,00.asp (last visited Jan. 15, 2005) (documenting the practice and attributing it to a company called Overpeer, which is apparently an industry anti-piracy company).

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