A striking moment that leads to contemplation

Last night I had dinner at a friend's place. Just around the corner, while I was enjoying an extremely pleasant evening and some truly amazing food, a man wielding two swords was shot by police - and killed. Every now and then one gets a short, sharp reminder that life and order is more fragile than you generally assume.

 
More Discussion of the AUSFTA IP Issues in the Senate Select Committee

Pages 85-107 of this draft transcript (warning - pdf document) from the Senate Select Committee Hearings on the US-Australia Free Trade Agreement make for some interesting reading. The witnesses are individuals from the negotiating team, and they respond to some of the issues raised in the IP roundtable of the day before (pdf transcript), where I was present, and which I blogged earlier.

I like this comment from the Chair, Senator Peter Cook, which is both accurate and telling:

"The Americans have been the demander on this. We have accepted, after negotiation, a set of provisions as a consequence, but the impact on Australia is different from the impact on American citizens. That raises the question about whether this is a fair deal, I suppose, but that is a matter for some further consideration."

But that to one side, the most interesting stuff that comes out of this transcript relates to the TPMs - a matter of some discussion in the hearings of the day before where I was present.

My sense from the transcript, from the comments of Simon Cordina, and the comments of Chris Creswell and Toni Harmer, is that these negotiators seem to be envisaging, perhaps, playing around with the definition of a "technological protection measure", in order to avoid the situation where region-coding is protected.

Now I find that very interesting, as a possibility. I wish I could be confident that that will solve any issues, but I remain somewhat unconvinced - at least right now I do. Simon Cordina says (on page 91 of the transcript):

In terms of regional coding itself, if a person is playing a legitimate, non-priated product, the government's intention would not be for that to fall foul of the laws in relation to technological protection measures. This issue of regional coding is one of the issues that the government will be looking at in terms of the implementation of our obligations under the free trade agreement..."

There is then some discussion of exceptions to the anti-circumvention provisions, and then later (page 95) there are these comments:

Cordina: I think this is an implementation issue and related to how the definition of technological protection measures is implemented in our legislation.
Ms Harmer: In terms of the implementation, there is probably a two-step process: firstly, whether it would actually be caught by the prohibition; and, secondly, whether we would need to have an exception. But the point I would make in relation to all of these issues is that the provisions are designed to assist copyright owners to enforce their copyright and target piracy, not to stop people from doing legitimate things with legitimate copyright material.

Now, on a first reading, this really surprised me. Because I had always thought of the definition of a "technological protection measure" as being pretty clear on the face of the agreement - according to Art 17.4.7(b), this is the definition:

Effective technological measure means any technology, device, or component that, in the normal course of its operation, controls access to a protected work, performance, phonogram, or other protected subject matter, or protects any copyright

This text seems to divorce the definition of TPM from any act of infringing copyright. "Controls access" is broad - and bears no obvious relation to "prevents piracy by controlling access". Right?

But maybe the Government thinks things can be more flexible. Maybe they think they can do something like the ACCC suggested in their submission to the Digital Agenda Review - that is, say that something is not a TPM where the same mechanism or device or program is also used to impose regional playback control.

Interesting. Will have to think about this more. My gut reaction is that if they tried to do this the Australian government might end up with a dispute on their hands - but maybe I'm wrong. Will think....

Another thing about this hearing. They addressed a point that I raised in the hearing the day before: I said that, on my reading, the flexible provision for additional exceptions in Article 17.4.7(e)(viii) only allows Australia to create exceptions to the ban on USE of circumvention devices. I argued that it does not allow Australia to create exceptions to the ban on DISTRIBUTION of circumvention devices. The effect of this could be that Australia could create an exception - say, one for consumers to circumvent regional playback control - but that we could not create an exception for distribution - meaning no one would be able to sell the consumers the devices they needed to use the exception. That is, and remains, my reading of the Agreement because it mirrors the US text and that is how it has been interpreted in the United States.

Simon Cordina seems to dispute this point on page 97 of the transcript. But they give no reason for why they dispute it - they just say it's a matter of implementation. How????? If anyone out there can show me that I'm wrong on this I'd be really happy to hear it. My reaction on the text of the agreement is that we are seriously hampered on this particular provision. Please prove me wrong and make me a happier person.

 
links on AUSFTA

Roger Clarke on the effect of the IP part of the AUSFTA.

Comments from the open source people - Rusty Russell and Martin Pool.

 
Exploding the AUSFTA IP "harmonisation myth"

If there is an argument in favour of the IP chapter of the AUSFTA (other than the Real Politik argument that "we couldn't get a free trade agreement without one" - which of course is no doubt true, but is only a good argument if we got a good free trade agreement in other areas) - it is that there are benefits to be reaped from harmonisation of IP law.

The benefits of harmonisation would be reduced transaction costs for cross-border transactions. People would see IP law the same in the two jurisdictions, thus reducing the "lawyering costs" associated with any investment or purchase by the US of Australian material - and vice versa. In theory, I can see the benefits of this. I really can.

The issue I have with this argument is that, in reality, the AUSFTA does not represent harmonisation with US IP law. It represents acceptance of some of the rules from US IP law, but many other rules are not accepted.

To give just a few examples:

• we have a different level of originality. Things are protected by copyright law here that are not protected - or not protected to the same extent - by US copyright law. The most obvious example in this respect is compilations of facts - like the White Pages telephone book - copyright in Australia; refused copyright in the United States. In the United States, compilations of fact are only protected to the extent that they represent "creativity" in their selection or 'arrangement'. In Australia, we basically protect the effort that goes into collecting facts - meaning that not only do we protect a larger number of compilations, but we also grant more extensive protection to those compilations than the United States does.




• Actually, factual compilations aren't the only things we protect very differently from the United States: broadcast copyright - protection of the broadcaster's "signal" - is another area where our protections are, I believe, more extensive than anything in the United States




• We have different exceptions to copyright. In the United States, they have fair use - which applies where the court considers the use fair on the basis of its consideration of a list of factors; in Australia, we have a series of "fair dealing" defences that are limited to very specific purposes - research, criticism/review, news reporting, and judicial proceedings/legal advice.




• We have moral rights in our legislation: a right of attribution, and a right of integrity. The United States does not, except in a very limited way for visual artists.




• At a purely semantic level, we define our legal rights differently. So in Australia, we differentiate between "Part III works" (literary, dramatic, musical and artistic works) and "Part IV Subject matter" (sound recordings, broadcasts, films). For these two types of "subject matter", we define the rights differently, define the exceptions differently, and they are, generally, dealt with by different parts of the Act. In the United States, they talk about "original works of authorship".




• We treat works created by employees differently. In Australia, works created by employees do belong to the employer - but the duration of the rights is still governed by the life of the author. We don't think of the employer as being the "author" of the work. By contrast, in the United States, works created by employees are "works made for hire" and the employer is considered the "author" - and duration of copyright in works made for hire is 95 years.




• We define the rights in copyright differently. In the United States, copyright owners have, among other things, a right to prepare derivative works, to "display a work publicly", and for sound recordings, a right to "perform" the work by means of a "digital audio transmission". In Australia, a copyright owner does not have any of those rights. They do have, however, some rights the US copyright owner does not have according to their Copyright Act. An Australian copyright owner has a right to "communicate" the work to the public, and a right to make an adaptation.




• We have statutory licensing schemes for educational copying. The United States, as I understand, does not.

Why am I listing out all these many differences in copyright law between the two jurisdictions? Because these are all the ones that are not harmonised by the AUSFTA.

Now, you cannot tell me that all of these differences don't lead to difficulties in drafting contracts in cross-border transactions. Regardless of the AUSFTA, we will be left with the need for different contracts, different administration of rights, etc etc etc. The AUSFTA does not represent harmonisation of IP law between our two jurisdictions. It represents an acceptance of some US rules by Australia.

In other words, harmonisation is, to a very significant extent, a myth.

It seems to me that many of the benefits of harmonisation require real harmonisation - real acceptance of similar rights, similar durations of rights, similar subject matters for rights. To the extent that lawyers in the two jurisdictions will still have to grapple with all the complexities of the interactions between the two systems, whose differences are highlighted above, we will still have significant transaction costs in cross-border dealings.

The real effect of the AUSFTA is to increase IP protection in certain important areas of Australian law. And the benefits, or costs, of that should be assessed on their merits as they apply in Australia - without pretending that this is harmonisation for the better flow of trade between the two jurisdictions.

A second point that should be made about what harmonisation we can see in the AUSFTA is that to the extent that we harmonise with these restrictive and specific US rules, we create a serious problem for the future, it seems to me.

And that problem is as follows: we place barriers to further multilateral harmonisation of IP law. If you think that IP harmonisation is a good thing, then it needs to be pursued multilaterally, so that everyone can accept the harmonisation, and we can all move to similar standards.

But we have a problem with this AUSFTA. I think that these provisions are not going to be acceptable to many countries. They are only acceptable to nine-pound weaklings with supine PMs like Australia and powerless players like the developing world. They will be unacceptable, I think, to major players like Europe. If we seriously wanted harmonisation around the world, we would need to put in place provisions that are going to be more acceptable around the world. To the extent that we lock in globally unacceptable provisions, we face a reality of "IP blocks". Will it be wise in the future to be in the US "block"? I think that's highly questionable.

 
Final Text of the FTA is up - here.

 
The FTA and the Pharmaceutical Benefits Scheme

Interesting story here, which claims that over the next 5 years or so, drug prices could rise 30% as a result of the FTA.

 
IP in the FTA: Roundtable and other developments

Time for a few notes on the Senate Select Committee's IP Roundtable, which occurred on Monday. I was present at the session on Monday morning, which was in Canberra. The draft Hansard of the Session - and the sessions of the same day which dealt with open source issues (Rusty Russell) and ISP liability issues (Peter Coroneos from the IIA) and the EFA appearance - is available online (pdf).

It was a particularly interesting session. Present were:

• Maurice Gonsalves from Mallesons for the BSAA;
• Libby Baulch from the Copyright Council;
• Anne Flahvin from Bakers for the AVCC
• Michael Fraser from CAL
• Matt Rimmer from ANU

And me, and Dale Clappterton from the EFA.

The main issues discussed related to:

• the Centre for International Economics purported "economic modelling" of the effects of the Agreement;
• The anti-circumvention provisions of the AUSFTA
• the question of whether Australia should have a fair use exception rather than our current fair dealing exceptions;
• copyright term extension

Matthew Rimmer, in my view, destroyed the pretended analysis of the IP chapter by the CIE. Frankly, I agree with Matthew. The IP chapter of the CIE report is a joke. It makes no attempt to try to model the impact of the IP provisions, and, having said, basically, it is just too hard, it assumes the effect is neutral. Which simply cannot be right, and is a cop-out option. These things should be seriously considered and seriously modelled - or some attempt made. But to assume the costs are minor or marginal is simply not accurate.

It seemed to me that the labour members of the panel (and the democrat member, Senator Aden Ridgeway) were making a genuine effort to understand the potential effects of the agreement, particularly on competition and on the "average consumer" who wants to record stuff and watch DVDs bought overseas. This was clear from the beginning, when the Chair (after asking for brief initial presentations) asked a series of questions he was interested in. Basically, the initial questions that he wanted to raise were:

1. if the agreement were implemented, would it be illegal to modify a DVD player to allow it to play disks from any region?
2. If the agreement were implemented, would it be illegal to sell a DVD player that played disks from any region?
3. If the agreement were implemented, would it be illegal to bypass some of the copyright protection measures applied to music CDs designed to prevent them from being played on a computer?
4. If the agreement were implemented, would it be illegal to modify or remove the rights management information contained in a digital media file?
5. If it were implemented, would it be illegal to use software which allows the decription and extraction of video files from DVD disks - that is, DeCSS software?

Sounds like they are concerned about

• the mums and dads issues (can I tape my digital broadcast?)
• the competition issues,
• and the innovation issues (are we going to lose innovative industries

Rightly so. I think aspects of this agreement do threaten real problems in all of these areas.

The fair use/fair dealing debate was also kind of interesting - if only for the very strange things that Michael Fraser said. Michael Fraser takes the view (and I've heard him take it before) - that fair dealing and the exceptions under Australian law for copyright infringement are broader than the exceptions in US law. I don't think this is right, honestly - and I think it is a little misleading, because he tends to conflate our exceptions (fair dealing - narrow) with our statutory licensing schemes. Mind you, our statutory licensing schemes - like the universities one - is a rather lucrative little "exception" for CAL, so I'm not sure how they can be complaining that we just allow too much. We need to think about real fair use.

We also need to realise, however, that fair use won't fix the major problems with this agreement. Because it won't fix the anti-circumvention provisions which are an absolute nightmare and very bad policy. They're complicated, they're uncertain, and they don't allow the creation of new exceptions for fair dealing or other important uses. To the extent that they allow the creation of new exceptions, they only allow us to create exceptions for the act of circumvention. Not for the act of distributing circumvention devices. So we could create an exception for home taping, but not any exception to allow people to sell devices that would allow home taping. Ludicrous. A problem they are trying to fix in the US and that we should not be importing into Australia.

By the way, the government representatives of the committee were not present for much of the morning. Some were present at some times. Senator Brandis, in particular, was not present for much of the morning, although he was around in the afternoon when the open source person was speaking.

The other thing that emerged from conversations around Monday does seem to be that those with concerns about how these provisions are going to be drafted in the end must make submissions to the Attorney-Generals Department. Since the drafting is already happening, this is important.

 
ALERT - FTA, OPEN SOURCE ISSUES - OPPORTUNITIES TO PUT YOUR VIEW

[Update: It's been pointed out to me that the OSSIG do not represent "open source". If it looked like I was saying that all open source people are one bunch, and that this is a representative body - I do apologise - not the intention! I saw this event as an opportunity for people to speak to Senator Kate Lundy about these issues. So sorry if I offended anyone, or just stuck my big foot in my even bigger mouth!!!!]

This is important.

I was at the Senate Select Committee Hearings yesterday, where a roundtable was held on IP issues, and other IP issues were raised in individual seminars in the afternoon.

There are some really, really important issues here for open source developers - as you have probably been made aware already.

What was eminently clear at the hearing on Monday was that some members of the Committee are very concerned, rightly so, about the implications of accepting the FTA IP Chapter for competition and innovation in Australia. But they need information about just what the implications for competition and innovation are - because many of the submissions they heard from copyright-related peak bodies claim that there will be significant benefits for innovation. Rusty Russell did a good job of highlighting these issues, but more may well be needed.

These issues are being aired at a seminar this Thursday 20 May in Sydney, in the afternoon. If you are in Sydney, and you are interested in these issues, and particularly if you are an open source developer/programmer who is afraid of the DMCA, or has concerns about its implementation in Australia, you should attend this meeting being organised by the Open Source Special Interest Group.

Please get informed about these issues, and attend the meeting.

 
US Congress Discussions about possibily amending the DMCA

There's some slightly, very qualifiedly hopeful little comments (see also on Copyfight here) coming out of Washington about some interesting Committee Hearings. They've been discussing the possibility of amending the DMCA to ensure that fair use is allowed (the Bill is called the DMCRA: (HR 107: the Digital Media Consumers' Rights Act of 2003). According to Fred Von Lohmann,

"[Congress Committee] Members repeatedly asked why it should be illegal to make a single back-up copy of a DVD. They asked why it should be illegal to edit a DVD you own to remove "smut." They asked whether this impasse was the product of the entertainment industry's failure to deploy new business models. And Rep. Davis went so far as to ask Larry Lessig whether we should be thinking about alternative systems that would compensate rightsholders without insisting on digital lockdown or mass prosecutions."

Interesting. And just shows why the AUSFTA provisions are a bad thing - they impose on us a system that even the US wants to change.

Of course, as I pointed out before, if the US do change their law, they will be violating a trade agreement with Singapore. If it happens after they sign off on an AUSFTA with us, they will be violating their trade agreement with us. This could, of course, be a really good thing - it would enable us to do the same....

 
US Congress Discussions about possibily amending the DMCA

There's some slightly, very qualifiedly hopeful little comments (see also on Copyfight here) coming out of Washington about some interesting Committee Hearings. They've been discussing the possibility of amending the DMCA to ensure that fair use is allowed (the Bill is called the DMCRA: (HR 107: the Digital Media Consumers' Rights Act of 2003). According to Fred Von Lohmann,

"[Congress Committee] Members repeatedly asked why it should be illegal to make a single back-up copy of a DVD. They asked why it should be illegal to edit a DVD you own to remove "smut." They asked whether this impasse was the product of the entertainment industry's failure to deploy new business models. And Rep. Davis went so far as to ask Larry Lessig whether we should be thinking about alternative systems that would compensate rightsholders without insisting on digital lockdown or mass prosecutions."

Interesting. And just shows why the AUSFTA provisions are a bad thing - they impose on us a system that even the US wants to change.

Of course, as I pointed out before, if the US do change their law, they will be violating a trade agreement with Singapore. If it happens after they sign off on an AUSFTA with us, they will be violating their trade agreement with us. This could, of course, be a really good thing - it would enable us to do the same....

 
US considering amendment of the DMCA?

Congress is apparently holding hearings on 12 May regarding proposals to amend the DMCA, according to a story on Copyfight.

The funny thing is, I'm not sure the United States can do this without breaching obligations it's taken on in various free trade agreements: including the (already signed) Singapore Free Trade Agreement, and the (yet to be signed) Australia Free Trade Agreement.

For example, apparently they are considering amending the DMCA to allow users to circumvent copyright controls for legitimate purposes - eg to make fair uses.

Interestingly, this is something that the Digital Agenda Review Report and Recommendations have suggested.

But has anyone told the US that they've agreed to various FTAs, recently, which explicitly LIMIT the power of BOTH parties (not just Australia, or Singapore - but the US too) to introduce new exceptions to anti-circumvention provisions? Article 17.4.7(e) of the AUSFTA requires the parties to confine exceptions only to those listed, or those determined in a quadriennial review style process - ie any new exceptions would have to be reviewed, under the AUSFTA, in four years time....

The Australian FTA is not accepted yet - but the Singapore one has been, and I believe it has a similar provision.

Of course, this is the funny thing about putting detailed obligations in FTAs - it can lead to ridiculous situations where Congress is going to end up breaching international trade obligations, just by amending very domestic law.

 
John Quiggin on the FTA

here.

 
Matt Rimmer - JSCOT Star

If anyone out there wants a lesson in clear, concise, compelling, convincing presentation to a Committee on the Australia-US Free Trade Agreement, and its IP parts - I suggest you go to this transcript (pdf) and look at pages 58-68 (of the pdf; pp49 - 62 of the Transcript).

Magnificant effort by a real star of the Australian IP academy.

 
Progress Report: Senate Select Committee on the Free Trade Agreement

Some more submissions are up to this Committee. They've got a LOT of submissions, it seems: there's 150 up there now and I just spoke to someone at the Committee who said there's another 150 or so still to be put up on the website.

Happy reading!

 
Intellectual Property and Competition

David Starkoff has picked up on my recent post on the interaction between intellectual property and competition. Head on over there - he's got more links and more details than I had!

 
Peter Gallagher on the AUSFTA

Peter Gallagher has put up on his blog his submission to the Senate Select Committee - in support of the AUSFTA.

I'm gratified, however, to note that he's got a comment on his blog saying that he finds my criticism of the IP Chapter, expressed in my JSCOT Submission (pdf), to be convincing.

 
And..... back to the Free Trade Agreement

Sadly predictable. Just a quick note that a whole lot more submissions have gone up on the JSCOT site here. Notably, from an IP perspective, these include:

• The Australian Wine and Brandy Corporation; (pdf)
• The Australian Record Industry Association (ARIA); (pdf)
• The Australasian Performing Right Association (APRA) (pdf);
• The Australia Council for the Arts (pdf)
• The Australian Film Industry Coalition (pdf)
• The Australian Screen Directors' Association and the Australian Writers' Guild (pdf)

More when I've had a look at these submissions. I've been watching the Senate Select Committee's Site as well (their submissions closed Friday) - they've only got a very small list of submissions up so far.

 
Hmmmm... a post that's NOT about the AUSFTA: Developments in IP and Competition

One of the big issues in IP law is its relationship to competition. We all know that IP rights have become stronger, and have expanded to cover more material. We all know that IP has become not just an output - something put out there and sold by its creators - but also a more important input to many businesses.

The result of these developments is that IP has an ever-stronger potential to be a real barrier to competition. Holders of important IP can really use that power in all sorts of potentially nasty ways.

Fairly recently, we've had a pretty good evidence of the potential problems here, in the Desktop Marketing Systems Case. In that case, the Australian courts have found that Telstra has copyright in the phone book. This is so, even though no one else out there can possibly gather the information that Telstra puts into its phone books. Telstra is, quite literally, the only source of this information. Telstra's assertion of copyright, therefore, has potential to be a barrier to all sorts of other companies wanting to make use of this information, or present this information in different ways. The case wasn't about competition, but you only have to think about it for a few moments to see the potential problems we have here.

Other evidence of the importance of this issue comes from the IP and Competition Review Committee Report of 2000, and the ACCC's concern about these issues as expressed, for example, by its participation in the Sony v Stevens case. Oh, and there was that little case about Microsoft....

For years it seems, in Australia, there has been talk of dealing with these issues in a more formal way, through the issue of guidelines by the ACCC regarding when conduct by an IP owner, particularly conduct in their licensing practices of important IP, will be considered anti-competitive: maybe something like the DOJ has already issued in the United States.

If you are interested in these issues at all, the decision by the ECJ in the IMS case should be of interest to you. The case is actually about a database. According to the ECJ summary of the facts of the case,

"IMS Health and NDC Health are involved in the tracking of sales of pharmaceutical and healthcare products. IMS Health provides pharmaceutical laboratories with German regional sales data on pharmaceutical products, formatted according to a structure of 1860 or 2847 bricks which each correspond to a designated geographical area. The development and improvement of those structures is the subject of working groups in which IMS Health and its clients have participated. According to the national court, IMS Health not only sold but also distributed its brick structures to pharmacies and doctors? surgeries free of charge. That practice helped to make those structures become a model to which clients adapted their information and distribution systems. In 1988, a director left IMS Health and set up Pharma Intra Information (PII) also in order to sell German regional sales data for pharmaceutical products presented on the basis of another brick structure of 2201 bricks. Having tried in vain to sell the data presented on the basis of that structure, PII decided to work with the 1860 or 3000 brick structures, which are very similar to IMS Health?s structures. PII was acquired by NDC Health."

So there's a bit of a competition question here: is IMS acting anti-competitively if it refuses to allow NDC to use its brick structure? The Brick structure is IP - specifically, it's copyright. Generally, the exclusive right to reproduction forms part of the copyright-holder?s rights, so a refusal of a licence cannot, in itself, constitute an abuse of a dominant position. BUT, the exercise of an exclusive right may, in exceptional circumstances, give rise to abusive conduct. This is all pretty uncontroversial. The really hard question is: just when is the refusal to license going to be illegal/abusive conduct?

In broad summary, the ECJ has taken a pretty narrow view of when refusing to license IP is going to be anti-competitive. In other words, copyright owners have little to fear from this decision. Those wanting access to IP have a lot more to fear. Those people who want to present IP material in a database in a different, perhaps more useful way (like the Desktop Marketing Systems people) have LOTS to fear.

The ECJ has found that in order for a refusal to license IP to be anti-competitive and illegal, "it must prevent the emergence of a new product or service for which there is a potential demand, be without objective justification and be capable of eliminating all competition on the relevant market." Basically, then, a European Court will only find that a refusal by a company which owns a copyright to give access to a product or service indispensable to carry on business, is abusive if 3 conditions are fulfilled:

1. the company which requested the licence must intend to offer new products or services not offered by the owner of the copyright and for which there is a potential consumer demand;
2. the refusal cannot be justified by objective considerations, and
3. the refusal is such as to reserve to the undertaking which owns the copyright the relevant market, by eliminating all competition on that market.

As IP Kat has noted, it really doesn't look like those conditions are going to be fulfilled very often.

Obviously, the case is European law, not Australian law. But I'm not sure we would reach a different result.

 
The Cyberspace Law Centre at UNSW has a good collection of links on the AUSFTA

You can have a look at it here.

 
Copyfight has some stories on the Australia-US FTA, with some good links

The Copyfight post is here; mirrored at EFF's Deep Links Blog here.