Larry Lessig gives his view on Grokster: "Ten years of Chilled Innovation"

Thanks to Matt Rimmer for sending me this link. Humble apologies for the horrible website with all its horrible and overbearing features and advertising.

 
More on Grokster

Actually, no, not really. I've been progressively updating the post below where I went through the case in more detail, and discussed what implications it might have for Australians (if you read it early yesterday, it's changed since - especially the bits on Australia).

So I'm not going to be going on and on more about Grokster. Someone this morning referred to the 'data smog' on the decision. Yup.

Personally, the more I think and read about the decision, the more I think that it's just a bit of a nightmare. Not because a huge victory was handed to the Record Companies. But because the judgment, in its pretend unanimity and polarised concurring judgments, has contributed to a legal smog in the area. It's not at all clear how the various factors to which the Supreme Court judgment points as indicating inducement fit together, and there's plenty of room for the lower courts to explore just how stringent a standard applies. More litigation is inevitable (in addition to a HUGE flood of academic articles, probably lots of them with 'footnote 12' in the title or abstract somewhere).

Anyway, if you're up for some more flailing about in the smog, here's some more links which might help as a starting point for finding commentary:

• Eric Goldman summarises what everyone else has been saying here
• Ernie Miller has a longer, and more detailed summary of what people are saying here
• Mark Cuban notes that Wall Street didn't react - just underlining what we all knew which was that the lawsuit itself won't make any difference to record company bottom lines. That old P2P genie is out of the bag.

In all that excitement, don't forget that submissions in the fair use inquiry here in the wonderful land of oz are due this Friday!!!!!

As I noted below, the kind of development we are seeing in Grokster just highlights how very important it is that the definition of 'infringement' must NOT be overbroad!!!!!

 
So the US Supreme Court has handed down judgment in Grokster

Judgment here (pdf)

Grokster is the case where the record companies sued the providers of P2P file-sharing software for contributory copyright infringement. The 9th Circuit gave summary judgment for Grokster (and another defendant), holding that they could not be liable on the basis of the Betamax case, in which the Supreme Court held that a technology provider cannot be liable for technology with substantial non-infringing uses.

Now the Supreme Court has handed down judgment. They have reversed (9-0) the decision of the 9th Circuit, and remanded the matter for trial.

Huh? It was unanimous?

The unanimity of the decision belies the very real disagreements between various judges on the Supreme Court. So much so that William Patry has suggested that the final form of the judgment - and the fact that it does not answer perhaps the central questions before it (Is Sony still valid, should it be amended, and can Grokster be liable under a Sony test?) is in fact a result of a failure by the judges to reach agreement - causing them to 'punt' and decide on a minor issue.


An inducement test

The Supreme Court has remitted this case on a theory of inducement - for full trial on that matter. I discuss the treatment of Sony below, but what exactly does this inducement test mean? Page 19 of the judgment has this description:

'one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties. We are, of course, mindful of the need to keep from trenching on regular commerce or discouraging the development of technologies with lawful and unlawful potential. Accordingly, just as Sony did not find intentional inducement despite the knowledge of the VCR manufacturer that its device could be used to infringe ... mere knowledge of infringign potential or of actual infringing uses would not be enough here to subject a distributor to liability. Nor would ordinary acts incident to product distribution, such as offering customers technical support or product updates, support liability in themselves. The inducement rule, instead, premises liability on purposeful, culpable expression and conduct, and thus does nothing to compromise legitimate commerce or discourage innovation having a lawful promise.'

There was sufficient evidence in this case to warrant full trial of this matter. What evidence? Well, the Supreme Court point to a few things:

• Both companies sought to 'aiming to satisfy a known source of copyright infringement - the market comprising former Napster users' (gosh, Groskter's name is even DERIVED from Napster, shock horror)
• Streamcast's executives monitored the number of songs by certain commercial artists available on their networks
• internal communications indicate that they aimed to have a larger number of copyrighted songs available on their networks than other file-sharing networks;
• Grokster sent users a newsletter promoting its ability to provide particular, popular copyrighted materials;
• in other words, there was "evidence of express promotion, marketing, and intent to promote further"
• the business models of Grokster and Streamcast, based as they were on advertising revenue, confirm that the principal object was use of the software to download copyrighted works;
• further, there is no evidence "that either company made an effort to filter copyrighted material from useres' downloads or otherwise impede the sharing of copyrighted files"
• they never blocked anyone from continuing to use its software to share copyrighted files.

Notably, the failure to develop filtering technology or other mechanisms to diminish the infringing activity does not appear to be enough in itself - this evidence, the Supreme Court held, 'underscores Grokster's and StreamCast's intentional facilitation of their users' infringement'. And in footnote 12, the court says that:

'Of course, in the absence of other evidence of intent, a court would be unable to find contributory infringement liability merely based on a failure to take affirmative steps to prevent infringement, if the device was otherwise capable of substantial noninfringing uses. Such a holding would tread too close to the Sony safe harbour.'

Nor would the fact that money was made from advertising be enough - it has import only when 'viewed in the context of the entire record.'


What about the Sony ruling?

The Supreme Court held that the 9th Circuit misapplied Sony. Sony, the court explains, was about when sale of a product (like a video player) could lead to imputed intent to infringe:

'In sum, where an article is 'good for nothing else' but infringement ... there is no legitimate public interest in its unlicensed availability, and there is no injustice in presuming or imputing an intent to infringe. ... Conversely, the doctrine absolves the equivocal conduct of selling an item with substantial lawful as well as unlawful uses, and limits liability to instances of more acute fault than the mere understanding that some of one's products will be misused. It leaves breathing room for innovation and a vigorous commerce.'

The 9th Circuit, however, read Sony as meaning that a defendant could not be liable for selling a product if that product had 'substantial non-infringing uses' - regardless of the intent of the defendant. This, the Supreme Court held, was wrong:

'Sony barred secondary liability based on presuming or imputing intent to cause infringement solely from the design or distribution of a product capable of substantial lawful use, which the distributor knows is in fact used for infringement. The Ninth Circuit has read Sony's limitation to mean that whenever a product is capable of substantial lawful use, the producer can never be held contributorily liable for third parties' infringing use of it; it read the rule as being this broad, even when an actual purpose to cause infringing use is shown by evidence independent of design and distribution of the product ...
This view of Sony, however, was error, converting the case from one about liability resting on imputed intent to one about liability on any theory.'

So, even if you meet the Sony requirement of 'substantial non-infirnging uses', you can still be liable for inducing infringement.

And here's the money quote:

'we do not revisit Sony further, as MGM requests, to add a more quantified description of the point of balance between protection and commerce when liability rests solely on distribution with knwoeldge that unlawful use will occur. It is enough to note that the Ninth Circuit's judgmetn rested on an erroneous understanding of Sony and to leave further consideration of the Sony rule for a day when that may be required.

In other words, we're not touching it! The concurring judgments, however, are a clear sign that this fight may well come, and when it does, the outcome is by no means clear up at this Supreme Court level.

The big question in people's minds is what would have happened in the absence of evidence of 'purposeful, culpable expression and conduct' on the part of the defendants? 3 judges say nothing on this issue, but there are two concurring judgments, each supported by 3 judges, that posit rather different positions.

The againsts: Ginsburg (Rehnquist and Kennedy joining)

These judges say that Grokster does not meet Sony because it was 'overwhelmingly used to infringe'. Ginsburg's judgment is clearly unimpressed with the findings of substantial non-infringing uses, referring to the reliance on declarations which 'include assertions (some of them hearsay)', and anecdotal evidence:

'In sum, when the record in this case was developed, there was evidence that Grokster's and StreamCast's products were, and had been for some time, overwhelmingly used to infringe... and that this infringement was teh overwhelming source of revenue from the products. ... Fairly appraised, the evidence was insufficient to demonstrate, beyond genuine debate, a reasonable prospect that substantial or commercially significant noninfringing uses were likely to develop over time.'

The fors: Breyer (Stevens and O'Connor joining)

These guys say that Grokster passes Sony. The judgment takes time to list the nature of the noninfringing files on Grokster's network, without detailed quantification, finding that 'The nature of these and other lawfully swapped filesis such that it is reasonable to infer quantities of current lawful use roughly approximate to those at issue in Sony:

'To be sure, in quantiative terms these uses account for only a small percentage of the total number of uses of Grokster's product. But the same was true in Sony, which characterized the relatively limited authorized copying market as 'substantial'.
Importantly, Sony also used the word capable, asking whether the product is capable of substantial non-infirnging uses. Its language and analysis suggest that a figure like 10%, if fixed for all time, might well prove insufficient, but that such a figure serves as an adequate foundation where there is a reasonable prospect of expanded legitimate uses over time. And its language also indicates the appropriateness of looking to potential future uses of the product to determine its 'capability'.

The Breyer judgment also goes to considerable trouble to affirm the value of the Sony judgment, arguing that:

• Sony's rule has provided entrepreneurs with needed assurance that they will be shielded from copyright liability as they bring valuable new technologies to market, partly because it is clear and allows people to know ex ante what they are able to do; it is technology-protecting, is forward looking, and mindful of the lmitations facing judges in technology areas;
• There is reason to believe that a modified Sony rule (as Ginsburg's judgment would provide) would weaken the law's ability to protect technology;
• It is not clear that a modified rule, which assisted copyright owners, would lead to 'gains on the copyright swings [which] would exceed the losses on the technology roundabouts' (p13). Copyright owners have many other tools available to them, including suing users.

In short, 'the evidence now available does not ... make out a sufficiently strong case for change'.

What is there in this judgment for an Australian audience in particular?

First, it is important to note that our law on authorisation is different from the law on secondary liability in the States. We don't talk about 'contributory infringement' and 'vicarious infringement' as they do. I also heard a rumour that Wilcox J in Kazaa thought that overseas cases were not relevant to the case before him, although I find that very hard to believe.

On one level, however, it's kind of true. Australian 'authorisation liability' is different from the US law. Authorisation under Australian law depends on showing:

• the extent (if any) of the person's power to prevent the doing of the act concerned
• the nature of any relationship existing between the person and the person who did the act concerned
• whether the person took any reasonable steps to prevent or avoid the doing of the act, including whether the person complied with any relevant industry codes of practice.

At the heart of these issues lies the question of control. Now, the Australian P2P case is different from Grokster in one very important respect, and that is - in Australia, they went to trial. We will have full information about the amount of control that Kazaa could exercise over the activities of its users. IF control can be shown, then Kazaa may be liable without anyone ever having to think about the issues of inducement discussed in the Grokster decision in the US.

Could there be 'inducement liability' in Australia?

Australian law does recognise liability as a joint tortfeasor in some circumstances (and infringement of copyright is a tort). According to Halsbury's, 'a person who directs or procures another to commit a tortious act or who participates with another enterprise pursant to a comon design in the course of which a tort is committed will be liable for the commission of the tort. This is a different ground of liability than the ordinary ground that we think of - 'authorisation' of copyright. Directors of companies that infringe are often held liable as joint tortfeasors, but the principle has also been mentioned by Gummow J in WEA International v Hanimex Corp Ltd which is a case about the liability of a seller of blank cassette tapes and one of the few cases in this space in Australia. One would have to assume that it would be HARD to show that someone like Kazaa was 'directing or procuring' infringement, but I guess it all depends on how broadly those terms are understood. All these kinds of arguments, and conspiracy, and every other legal argument under the sun, as well as authorisation, were argued as I understand it.

If I had to put money on the outcome in Australia, right now, I would say that the joint tortfeasor argument, and issues of 'inducement' of infringement won't be considered or determined in the Kazaa case. The primary case in Australia is about authorisation of infringement, and the primary question that the court will look at there will be control. If Kazaa had control over the infringing activity - if the evidence is strong enough for that - then issues of inducement and joint tortfeasor liability won't need to be reached.

It is to be hoped that the court will find a way to condemn egregious and dodgy behaviour without putting a kybosh on technological innovation.

But how's this for another thought experiment. Let's think for a moment about how the US test would apply in an Australian context. According to Ernie Miller's notes from an RIAA press conference on the decision, the RIAA said that;

'"What the court is doing is setting a commonsense standard. If you're Apple, you're fine. If you're Grokster and StreamCast, it is clear from any number of things that they are inducing, you're not going to be fine. We don't think it will be difficult to determine what is an illegitimate or legitimate business."'

Of course, here in Australia, if the same standards applied, it is not at all clear that Apple would be fine. All the uses of the iPod that they currently encourage in their advertising are infringements of copyright. This is one of the live issues in the current Fair Use Review (as to which, see the links at the top of the sidebar on this site).

So the problem in Australian law at the moment is that infringement is way overbroad. A test like that in Grokster is perhaps ok in the US partly because many things are not infringement there which would be here, and because their fair use defence is sufficiently uncertain that in many cases, it would be hard to show that parties were intentionally promoting infringement when some uses were at least arguably fair use rather than infringing.

In Australia, copyright infringement is radically overbroad, as the current Fair Use review indicates. SO many, many people could be intentionally encouraging or promoting copyright infringement just by encouraging (and providing the means to) make personal copies of things. Apple for example with its iPod campaign (note that ripping is arguably NOT infringement in the US, or at least so, it seems, the RIAA would argue).

So in Australia, an intentional inducement type theory, even one which imputes liability to a party who 'distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement', would have very different effects here. Which makes it all the more important that something comes out of the current Fair Use review.

Other conclusions and links

As we could have predicted, the responses are mixed, although from the technologists/activists' side, there appears to be a fair bit of relief amongst the criticism. The RIAA are obviously hailing it as a win. The EFF are pretty unhappy with the uncertainty. And there is no doubt that, regardless of the comforting words about Sony, the result is far more uncertain for technology providers and promoters than the 9th Circuit's bright line 'this is innovation and it is protected if it is capable of non-infringing use'. Here are some links to the most important commentators:

• Ernie Miller (varied)
• Ed Felten (who reckons that bits of it are really scary from a technologists' point of view, and also technologically incoherent. Thoughts anyone?)
• Susan Crawford (who reckons it's pretty balanced)
• SCOTUS Blog Forum (varied)
• EFF - Lohmann and press release (not happy, people)
• William Patry (who reckons the Supreme Court didn't decide the issue before them, decided something not before them, and punted - because they couldn't agree!)
• Michael Geist (for a Canadian perspective, and comments on the implications for BitTorrent)
• Washington Post forum
• Volokh Conspiracy (just what can technology companies say in their ads now?)
• New York Times article
• Layman Australia's view: Barker's Byte
• Wired - 'Grokster Loss Sucks for Tech' (no prizes for guessing what these guys think)

I will continue to update the links above as and when I see good posts or comments on the case.

Update: Grokster and the Induce Act

I received an email from a colleague, who said that he saw the decision as an judicial effort to write an Induce Act to save Congress the trouble of such legislative reforms.' The Induce Act was a proposed legislative reform in the United States some time ago, introduced by Orrin Hatch, in an attempt to impose liability on those who induce infringements of copyright law. The Act was never passed - it stalled in the face of massive disagreements and opposition from technology companies in particular. For more about the Act, see Napthali's article in the AIPJ, or start with Ernie Miller's obsessively annotated version online (and his links) and explore from there.

I agree, an Induce Act is not needed in light of Grokster. It doesn't look like, at least in the near term, the copyright owners will be going to Congress looking for new legislation. And frankly, I think that is a good thing. Better to leave this issue to the courts rather than have the legislature step in.

One feature of the Induce Act that became really, really scary was all the attempts to define when liability would attach - in particular, what would count as 'inducement'. In this particular space, where technology is moving so quickly, it is better (as David Lindsay has pointed out) to have standards, not detailed rules. But we all know how copyright legislation drafting goes - they don't believe in writing standards. They write rules in the vain hope that it will lead to certainty. Only to end up in long fights like the Stevens v Sony litigation where the court was attempting to divine the meaning of a very incoherently drafted definition of 'technological protection measure'.

Now, as Ed Felten has noted in his comments on Grokster, some of the stuff that the Supreme Court judgment says about technology, and in particular about designing technology without filters, are rather disturbing from a technologists' point of view. But at least the open texture of a judgment has some advantages in allowing future courts to play around in working out whether the evidence has established enough for liability to attach (enough 'purposeful, culpable expression and conduct'). A statute, however, would be much less free and is likely to lead to more of a chilling effect on technological innovation than this judgment will.

 
Blog birthdays

Quiggin recently noted that his blog had its 3 year 'blog birthday'.

I've just realised that Weatherall's Law passed its third birthday, yesterday. Of course, I'm not sure if I'm allowed to count it, having taken a hiatus in the middle between October 2003 and February 2004 (when the FTA got me started again). And looking at the archives, the blog has changed a bit - I tend to write longer, more analytical posts now than I used to.

Nevertheless, happy birthday to me, happy birthday to me, happy birthday to meeeeeee, happy birthday to me.

 
And in other news:

A few quick pointers to things other than the Copyright Exceptions Review (as to which, see the previous post):

• The Submissions on the Directors' Copyright Bill (which grants pretend copyright rights to directors) are all online. There was a totally overwhelming response to the review (8 submissions). Methinks there is just too much going on at the moment.
• Canada has published a Copyright Amendment Bill, which looks to implement the WCT and WPPT (ie, will introduce anti-circumvention laws!). Sigh. Time was when Australia could be looked to for a model of good (or at least, not so bad) practice in this space. Then we signed an FTA. For all the latest analysis of the Canadian situation I suggest you follow Michael Geist's Blog. This quote today:

'The music and software industries are generally happy (CRIA, CAAST), the ISPs are thrilled (CCTA), education is very disappointed (CMEC, CTF), public interest groups troubled by the lack of balance (CIPPIC) and the security research community is concerned about the bill's implications (Digital Security Coalition).
A notable exception is the Entertainment Software Association which says that it is disappointed with a bill that "falls far short of providing adequate protection." Their concerns, which focus on the anti-circumvention and ISP provisions, are echoed in gentler language from CRIA and CAAST. CAAST in particular uses the wonderful phrase of "supplementing the notice and notice system with a notice and takedown system." If only their members' software products were as creative.
As for individual Canadians, there are lots of blogs and discussion groups with disgruntled and disappointed individuals. My favourite headline comes from one blog that says "Bill C-60: Drop Your MP3s and Back Away With Your Hands Over Your Head.'

• Rusty Russell got mentioned on Lessig's blog. Cool!
• The Supreme Court decision in Grokster (on the liability of providers of file-sharing software for the copyright infringements of their users) is expected within a week or so. Watch this space. Oh, and this one too.
• Congratuations to Graham Greenleaf and all his friends on a successful Linkage Grant Application. Here's the summary of what Graham and friends will be studying:

'This research investigates how Australia's digital commons, comprising both the public domain and public rights created by open content and open software licensing, can be expanded and protected. It focuses on 'self help' actions within the existing statutory context, in Australia's distinct legal and cultural context, and on comprehensiveness. Its significance is that healthy commons-based production of information is essential to Australia as an innovative country and a democracy. The principal outcomes will be better understood and more efficient public rights licences, incentives to copyright owners to create them, and technical aids to allow users to find commons content. '

I very much look forward to seeing the fruits of this significant grant, and wish the participants every possible success!!!! Should be fascinating.

Hey, and if I've missed anything significant that is going on, drop me a line.

 
Progress in the Fair Use/Fair Dealing Exceptions Review

Well, there's a week to make submissions, if you were planning to. So get your act together!

Last week, in Sydney (15 June) and in Melbourne (16 June) IPRIA and CMCL held seminars on the copyright exceptions review.

I've already published a background paper (pdf) on the Review; now there's more - the paper I gave last week on the private copying issue. The paper's called A Comment on the Copyright Exceptions Review and Private Copying, and it's available as a pdf here. In the paper, I consider issues like - should we have a defence like fair use, or fair dealing, or a private copying levy, to get rid of the ridiculous situation where Australians are 'serial infringers'? (see also my past posts on this issue, conveniently collected here). Here's the abstract of the new paper:

The issue of private copying, and how it fits with copyright law, has hit front and centre of the current copyright exceptions review. While copying is widespread, and iPods are popular, under current Australian copyright law, almost all private copying - including time-shifting and format-shifting (or ‘space-shifting’) is an infringement of copyright. It appears that one aim of the current copyright exceptions review is to address this mismatch.

The relationship between copyright and private copying is a highly complex issue, particularly in a digital environment. A brief paper cannot hope to cover all the relevant issues involved in a manner which is anywhere near comprehensive. The aim of this paper is twofold. First, it provides a set of seven premises for assessing any proposed solution. Second, it uses these premises, and some information about systems in other countries, to offer comments on three major issues in reaching a solution. In general terms, the attitude of the writer is that specific fair dealing defences will be less useful than a more general, open-ended exception based on the principles of fair use, and that a private copying levy is unlikely to offer the best solution, involving, as it would, significant costs and opportunities for rent-seeking with little likely benefit for consumers as the use of digital rights management increases.

Comments of course are welcome, since some of this material will be making its way into any submission I make to the Review.

What impressions did I get from the Seminars we held? Here's a few thoughts:

• In essence, what happened was this. Some government people got a bit worried about how Australians were mass infringers of copyright. Understandable I guess. Anyway, they got told (at FTA hearings last year) that fair use (like they had in the US) might be a solution to this issue. So, they decided to have an inquiry about whether fair use was a good idea.
• The problem is that there's a couple of mismatches going on here.
• The first mismatch is between problem and solution. Problem: private copying. Solution: fair use. But fair use is about a whole lot of things other than private copying. Most of which are ignored in the Issues Paper (as David Lindsay has pointed out, one of the most striking things about the Issues Paper is that it completely fails to mention freedom of expression - not even once!).
• The second mismatch is between what the Attorney-General's Department want to do and what they've put in the Issues Paper, and also between what the Attorney-General's Department is thinking about, and what people out in the rest of the world are thinking about. What AGs really want to do is just focus on this private copying thing. But there are questions in the Issues Paper about other kinds of exceptions (are fair dealing defences enough?). Look at those last two questions in the Issues Paper, which are essentially, 'Is there anything else you want to propose or complain about?').
• The Issues Paper thus leaves it open for people to raise all kinds of things (libraries exceptions; museums; free speech issues that come up in fair dealing) - none of which, unfortunately, are canvassed in the Issues Paper itself.
• The unfortunate result of that (from the government's perspective) is that the Attorney-General's Department is not directing the debate on these broader issues, and it's not at ALL clear what the relevance of any submissions on these broader issues will be.
• Complicating this issue is all the previous reviews which have made recommendations on copyright exceptions which are still sitting on the government's shelf gathering dust.
• Will submissions on broader issues (like orphan works) disappear into the ether? It's really not clear. On the one hand, the AG's Department has a really clear, limited focus. On the other hand, if people don't raise the broader issues (in response to the broader questions put in the Issues Paper) the government can turn around some time in the future and say - well, you didn't raise these issues when we gave you the chance to complain.

Did I come away from the IPRIA/CMCL seminars any the wiser on the thrust of what is going on? Not really. We did have a representative of the AG's department speaking. He made it clear that private copying was the big issue. He also suggested that people wanting other exceptions changed would have to make a strong case. But that leaves us in the same position: there is one narrow focus, but with a whole lot of other issues on the periphery.

So, we have:

• some of the big issues in copyright today being raised (how broad should exceptions be; should they be overridden by contract);
• in a rather strange process that pretends that the issues are narrower (no, it's just about home taping and iPods!), but
• still leaves enough space open that you have to put some of your claims to broader exceptions in or you risk losing any chance you had of raising the problem (those last two questions in the Issues Paper are inescapable: '9. The Government seeks your view on other options for implementing reform, and the costs and benefits of those options. 10. The Government seeks your view on any other matters arising out of this Issues Paper.'

I'm confused (can you tell?).

 
Did you miss me?

Regular visitors to this blog know what I'm like. My blogging comes and goes in waves. I will blog madly for a few weeks, then realise that I have other work to do and go silent, and then I'm back.

People who are aware of the academic cycle will also note that I always become a little inactive just before exams (because of student demands on time) and then rather active once the exams and essays are in (as I procrastinate madly, avoiding that big scary pile of essays in the corner of my office).

Well, I'm back. And there's a few things to report. They deserve their own posts.

 
Fair use - should it or should it not cover private copying?

One of the reasons why some people support the idea of a fair use defence for Australia is because they hope that if we have fair use, it will excuse some personal copying - things like taping television, and copying your CD collection to your iPod - all of which, currently, infringes Australian law. This would change, some believe, under a fair use defence. See, for example, the ADA/ALCC Joint Statement on Fair Dealing after the FTA (rtf file), which seems to assume that time-shifting, at least, would be covered by a fair use defence.

This view is based, of course, on decisions given by some US courts, in particular. The first (and probably most important) is a holding by the US Supreme Court, in the Betamax case (Sony Corp v Universal City Studios 464 US 417 (1984) that when a person tapes a television program, or movie, to watch later on (ie, 'time-shifting'), that is a fair use (at page 455).

The second important holding was a decision of the 9th Circuit Court of Appeals in the Recording Industry Association of America v Diamond Multimedia Systems Inc 180 F.3d 1072 case that some 'format-shifting' (as our Attorney-General's Department prefer to describe it) is fair use. That case concerned the "Rio" - a portable MP3 player. The RIAA (Recording Industry Association of America) that came with software (the Rio Manager) that allowed users to download MP3 files from their computer onto their Rio, and then listen to them 'wherever'. I know, I know - gee, like this is considered normal today. Remember this is a 1999 case - it's even pre-iPod. The revolution of the Rio was that suddenly downloaded music was portable (I know, I know - that sounds really normal now. In fact, by today's standards, the Rio was very primitive - it only stored an hour of music).

The RIAA sued, arguing that the Rio was a digital audio recording device, and, under the Audio Home Recording Act of 1992 (AHRA), was required to institute 'SCMS' - a Serial Copyright Management System that allows 1st generation, but not second generation copying (that is, if SCMS is employed, copying from your purchased CD is ok, copying from a copy of a purchased CD is not).

The court held that the Rio was not governed by the AHRA - largely because the AHRA was so technologically specific that the language just couldn't be stretched to cover this new situation. But, more importantly for our purposes were these comments of the Court:

'In fact, the Rio's operation is entirely consistent with the Act's main purpose - the facilitation of personal use. As teh Senate Report explains, '[t]he purpose of [the Act] is to ensrue the right of consumers to make analog or digital audio recordings of copyrighted music for their private, noncommercial use.' S.Rep 102-294, at *86 (emphasis added). The Act does so through its home taping exemption ... which 'protects all noncommercial copying by consumers of digital and analog musical recordings.' H.R. Rep. 102-873(I) at *59. The Rio merely makes copies in order to render portable, or 'space-shift,' those files that already reside on a user's hard drive. Cf Sony Corp of America v Universal City Studios 464 US 417, 455 (1984) (holding that 'time-shifting' of copyrighted television shows with VCR's constitutes fair use under the Copyright Act, and thus is not an infringement.) Such copying is paradigmatic noncommercial personal use entirely consistent with the purposes of the Act.

Given these decisions, which have supported the legality of timeshifting, and format-shifting, in the US, it is not surprising that many hope the same results would be seen here if fair use were introduced.

Such a result is by no means assured. First, both cases are arguably time dependent (ie, timeshifting did look harmless back in 1984) and dependent on the particular laws (the existence of AHRA in the US bolstered an argument that format shifting was ok, by clearly making some personal copying consistent with the Act. And note that these comments in Rio case are arguably obiter anyway, and not binding).

Second, there is no guarantee that our courts would reach the same conclusions, or hold that timeshifting was fair use, or that format-shifting was. They might hold that, but then again, they might not. As Robert Burrell has pointed out in his excellent new book, Copyright Exceptions: The Digital Impact, one of the most important issues in a fair use defence is how the courts would react to their new found freedom:

'‘everything depends on the likely judicial response to the introduction of a fair use defence – and [case history should give us pause to think] about what the reaction to a general fair use defence is likely to be' (p.269)

And we do have reason to be concerned here. First, our courts have frequently emphasised the need to interpret copyright owners' interests 'beneficially' (see, for example, Sega Enterprises v Galaxy), and for all the rhetoric in the Panel case about interpreting fair dealing 'generously', the results speak louder than the words, as Handler and Rolph have pointed out.)

Third, the times they have a-changed on us. It would have been a lot easier to argue, in 1984, that time-shifting caused no harm to copyright owners - at a time when no monitoring or enforcement in the home was possible, and copies were of a lower quality - than it would be to make the same case now. That doesn't necessarily mean that a US court confronting the Sony case would rule differently today - but it should be enough to give proponents of exceptions for private copying pause about putting blind faith in the likely breadth of a fair use defence.

Fourth, however, and the reason that inspired this post in the first place - there's a debate even in the US about whether and to what extent personal copying is covered - in a recent bloggy debate, some commentators have been exploring whether a specific personal copying exception is required - and whether trying to stretch fair use to cover personal copying distorts it from its real mission - to protect expressive, and transformative, and public interest uses of copyright materials. So see these comments from Dennis Kennedy, and this response from Ernie Miller, as well as this later response from Miller). Ironic, given our current debate.

But in the end, it matters little what US courts would hold now about time shifting or format shifting. It matters little whether the US majority in Sony was a slim one or a resounding affirmation of fair use rights to time-shift. It even arguably matters little how our courts would react if given a blank slate fair use defence - because they won't be given that. If there's a change, there will be a report/legislative history with it. And it's pretty inconceivable, from this point, given all the discussion about private copying, and all the stuff in the Issues Paper - that there won't be a position taken, one way or another, in that history, on whether private copying is ok or not. And our deferential courts are unlikely to ignore clear statements in legislative history.

So two things really matter here:

• First, the personal copying issue is, frankly far less important than whether the existing exceptions in our Copyright Act are sufficiently flexible to allow important, socially useful and creative/transformative/expressive uses of copyright material. There is a very compelling case that our current exceptions are narrow, and narrowly interpreted, and on many levels, just impractical. We have the opportunity to fix some of those issues - even without radically overhauling the Act.

• Second, insofar as the personal copying issue matters - the problem here is that the law just looks stoopid. Ultimately, a law that makes thousands of ordinary acts by ordinary people using ordinary consumer technology infringements makes no sense - especially when it looks meaner and nastier than US law. But I don't get the sense that anyone denies we have a problem here. The real issue is whether we can reach sufficient agreement on how to fix it. Now there's a challenge and a half.

 
A Fair Use/Fair Dealing Story

At this time, with the Fair Use Issues Paper out there, and submissions being written, new fair use stories from the US are always interesting.

The Trademark Blog has alerted me to this story from those wonderful generators of copyright issues and copyright theory - the Grateful Dead. We have a new US decision (pdf) (of the Federal District Court, SDNY) on fair use in relation to artistic works as used in nonfiction books.

The case concerned the use of 7 images of Grateful Dead posters. As it appears from the judgment, the defendant in the case had written a kind of band biography of the Grateful Dead

The court (SDNY) describes the use as follows. Each image - originally a full-sized concert poster, was reduced to a size of about 2 inches by 3 inches. Each was reproduced in its entirety, although they individually and collectively formed only a tiny proportion of the work itself - a book giving the history of the Grateful Dead, with hundreds of other images and substantial amounts of text. The thumbnails were used in chronological order, in the book which was in the form of a kind of 'timeline'. In other words, 'The Grateful Dead posters are used, in conjunction with other pieces of visual art and photographs in a creative layout.'

The court found fair use, after considering the 'four fair use factors' - the purpose and character of the use (transformative; different to the original); the nature of the copyrighted work (creative, but at least published); the amount/substantiality of the amount taken (all of it, but reduced in quality/size), and the effect on the potential market for the work (since use was transformative, this was not a market the plaintiff was likely to exploit).

The case is kind of interesting for two reasons. First, because it illustrates differences between Australian and US law. This does not look to me like the kind of use which would be excused under any of our fair dealing defences. There was no real 'criticism or review' of the images (as far as I can tell from the judgment); nor is this really 'reporting news'. We have no defence that protects 'transformative uses' more generally.

Second, because the reasoning of the court highlights something that we do need to bear in mind in current media age, where image is everything - and that is, the different nature of audio-visual works compared to most copyright material:

' Defendants’ use was meant to commemorate certain landmark shows in the Grateful Dead’s history. While the fact of these shows could be demonstrated without the use of the thumbnail reproductions of the work, the creative nature of the relevant promotional materials could not be conveyed as effectively without the use of several samples of the work in their entirety.'

 
Patent Reform Bill introduced in the United States

For the Patent mavens: the US has introduced its Patent Reform Bill. It is available in pdf form here and here. The Bill includes:

• Change to a first-to-file system (thus changing the definition of ‘prior art’)
• Changes to the duty of candor (violations will be adjudged by the PTO rather than in court);
• Damages to be limited to the inventive contribution rather than calculated on the selling price of an entire product
• Limitations on the right of a court to impose treble damages for willfulness - in particular, a provision that will mean that entities with a good faith, informed view (eg, from legal advice) that the patent is invalid or not infringed will not be subject to treble damages
• Automatic stay of injunctions for appeals
• Limits on scope of continuation applications (to be made by PTO); and
• Introduction of a post-grant opposition procedure and submission of prior art by third parties.

The last is particularly interesting, because their proposed opposition procedure is quite different from the pre-grant procedure we have here, and from the post-grant procedure in Europe. In Australia, oppositions can be launched in a 3 month period after publication of acceptance but before grant. In Europe, there is a 9 month period for oppositions at the EPO level, after grant.

The US Bill proposes a 9 month period after grant, but also two other times when oppositions can be launched (proposed section 323, on page 46 of the pdf):

• during the 6 months immediately following receiving notice from the patent owner alleging infringement; and
• any time during the term of the patent, with the consent of the patent owner in writing.

It's interesting to think about the ways in which that 6 month re-opened window after an allegation of infringement might change the calculus of costs/benefits for a patent owner. Clearly they've decided on a compromise between the 'limited period' and the 'unlimited period' system for oppositions.

For a wonderful set of background resources on patent reform in the US, see this library produced by Promoting the Progress.

To monitor discussion on the Bill, I recommend:

• The Patently-O Blog
• The Promote the Progress Blog

 
No more appeal stages in Lexmark's DRM DMCA case

According to this story, the US Supreme Court has declined to hear an appeal from the decision (pdf) of the 6th circuit court of appeals in the Lexmark case. For those who joined us late, this case has been well described by Ed Felten:

Lexmark-brand toner cartridges contain a short computer program (about 50 bytes). Software in a Lexmark printer checks whether newly inserted toner cartridges contain that program, and refuse to work with cartridges that don’t. Static Control makes a chip containing the same short program, so that third-party cartridges containing the Static Control chip can work in Lexmark printers. Lexmark sued, claiming copyright infringement (for copying the program) and DMCA violations (for circumventing the program-verification step). The original trial court issued a preliminary injunction against Static Control, which the Sixth Circuit overruled

The DMCA is the US copyright law which makes it illegal to break or avoid technological protections used by copyright owners on their works to control use and prevent infringement. Our equivalent here in Australia is currently s 116A of the Copyright Act, although the form of Australian law must change by 1 January 2007 as a result of the Australia-US FTA (Article 17.4.7), to look more like the US law.

The decision was a pro-competition ruling, and also ensured that the DMCA was not used for a purpose well outside the purpose of preventing large scale copyright infringement which the DMCA was meant to achieve.

Interestingly, Lexmark are sticking to their guns: they really want to stop this behaviour by Static Control:

'Lexmark says Static Control is interfering with its relationship with customers.
``We will continue to ask the courts to enforce existing laws governing contracts and intellectual property so that our laser cartridge customers can get the benefit of full and fair competition,'' Lexmark said in a statement.'

ain't competition grand?

 
Some quick pointers

Things have been a bit hectic, what with preparing for the IPRIA/CMCL Fair Use seminar next week, making a submission to the Senate Committee on Legal and Constitutional Affairs on the film directors' bill (submissions are available here online; mine doesn't appear to be up yet, but I guess it will be), and dealing with the usual end of semester dramas. So apologies for a bit of light blogging.

Anyway, some more pointers and quick thoughts are apposite this morning.

First, the Attorney-General's Department has released the latest edition of its enews on Copyright (June 2005). The usual stuff: notes on the current reviews (2 of them); report on the Francis Gurry visit. But this bit attracted my attention (and the attention of some of my correspondents):

On 20 May 2005, the Attorney-General announced at a copyright consultative forum that, for budgetary reasons, the work of the Copyright Law Review Committee would not continue.

At the forum, the Attorney-General indicated that the Government remained committed to consultation and proposed that there would be similar consultative forums in the future.

Now, I blogged a little while ago about the abolition of the CLRC after I heard about what was said at the "Consultative Forum". As I noted back then,

I find this very disturbing as an idea. While I may not think that constant reviews are necessary, to make the independent body defunct at the very time when so much is going on in copyright land is, I think, pretty short-sighted.

I'm still of that view. What really worries me about this particular statement in the enews is that the AG is proposing that there will be "similar consultative forums in the future". Let's be clear - this was an invitation only forum, to which some groups who attended had to ASK to be invited. The message that the enews sends, therefore, is that the Government is only interested in hearing from certain groups on these issues, and only considers certain viewpoints important. I think that is unfortunate.

In other copyright news, the two decisions of Federal Magistrate Driver - first denying transfer of the Swiftel/BitTorrent case (in March 2005), then transferring it (in May 2005) are now available online. It looks to me like the case did need to be transferred - because we are talking a one-two week hearing, with very detailed consideration of some complex facts, on important questions of law. What is interesting is FM Driver's comments that transfer was vigorously opposed by the applicants. Why? [where are my manners? Hat tip: David Starkoff]

The Australian have picked up the news, which I blogged and Alex Malik covered, about the Melbourne teenager charged with criminal copyright infringement for his online activities.

 
The problem of the indecipherable patent

This morning on the Patently-O Blog, a US (perhaps the US) patent blog:

The June 2005 Corporate Legal Times [note: not available online although included in Westlaw and Lexis] includes an interesting roundtable discussion on patent reform. The participants were all in-house patent counsel. In the discussion, Richard Rodrick of S.C. Johnson raised an issue that has not been touched by any of the proposed patent reforms.

You can write a patent application today that is almost indecipherable, and you’ve got a good chance of getting it out of the patent office with a patent.

Anyone who regularly reads patent documents knows that Rodrick is right on the money.

Patently-O asks: should the Patent Office be issuing more rejections based on a lack of clarity in the specification based on the requirements of Section 112?

I ask: is the same issue true here, and, if so, should IP Australia be issuing more rejections based on section 40 of the Patents Act 1990 (Cth)?

On the same topic, see the IP Litigation blog (espousing the basic line: there's nothing we can do about it; experience demands indecipherable patents, just give up).

 
Just got this notice : WIPO Online Forum!!!!!

And thought I should bring it to my readers' attention:

This message is to inform you about the launch by the World Intellectual Property Organization (WIPO) of the WIPO Online Forum on Intellectual Property in the Information Society, which will run from June 1 to 15,
2005.

The Online Forum is at http://www.wipo.int/ipisforum/en/ and includes full texts and discussion lists.
The attached document lists 10 themes on which participants are invited to comment. These themes are designed to encourage open discussion on issues relating to intellectual property and the information society, in light of the World Summit on the Information Society (WSIS). Please feel free to submit comments and if possible to bring this Online Forum to the attention of your colleagues and other contacts as you deem
appropriate. Your and their participation in the WIPO Online Forum from June 1 to 15, 2005 will be most welcome.

World Intellectual Property Organization (WIPO)
Geneva, Switzerland
www.wipo.int

Go forth and participate, oh ye readers!

 
Four quick pointers this morning

Four quick pointers to other peoples' interesting stuff this morning:

• Copyright: For those following the Kazaa/Grokster/are P2P software providers liable for secondary infringement of copyright debate, a fascinating post (with the promise of more to come) over at The Patry Copyright Blog about the machinations behind the development of the majority/minority judgments in the US Supreme Court decision in Sony Corp v Universal City Studios (the Betamax decision);

• Copyright 2: Rothnie again - has noted that on 27 May 2005, the Attorney General's Department released a Discussion Paper (pdf) seeking views on whether certain types of unauthorised access to subscription broadcast services that are not currently criminal offences should be made criminal offences. They're not particularly serious about wanting feedback it seems - the date for responses is 17 June 2005.
  The short timeline may have something to do with Article 17.7.1 of the FTA with the US, which says that we will make it a criminal offence 'wilfully to receive and make use of, or further distribute, a programme-carrying signal that originated as an encrypted programme-carrying satellite signal knowing that it has been decoded without the authorisation of the lawful distributor of the signal'. As the Parliamentary Library paper noted at the time the USFTA Implementation Act was being passed, this always looked like a bit of a gap in our implementation of the FTA. On the other hand, criminalising things that may happen in the home looks, frankly, nasty and unnecessary until real damage is proved. Of course, I've not read the paper yet - perhaps they have proved such damage.

• Patents: Warwick Rothnie notes that the Australian Government has responded (pdf) to the ACIP Report on Patents for Business Systems (pdf). I'll comment more on this one when I get a moment;

• Free Trade Agreements: Yesterday, the inimitable Peter Drahos gave a paper here at the University of Melbourne Law School (jointly organised by IPRIA and the Centre for Comparative and International Law) on the Dispute Settlement implications of the bilateral 'web' of FTAs currently being created around the world. Drahos' interest is in what the effect of the proliferating Dispute Settlement Mechanisms, and choice of forum clauses in those agreements is for weaker players. The paper is available online at the moment here (pdf). It's worth a read if you are interested in the effects of the growing, complex web of FTAs - in which Australia is such an enthusiastic participant right now.

 
Criminal Copyright Enforcement against Melbourne Teenager

According to this story by Alex Malik on themusic.com.au, a Melbourne teenager is being prosecuted by the Australian Federal Police for copyright infringement online.

According to the story, the teenager had a website which linked to the WMA Land website, and to files on that site. WMA Land is, as readers may recall, the website which led to several Sydney uni students being arrested and charged and convicted and sentenced in 2003.

Again according to Malik, the charges are for distributing infringing copies of a work, and for aiding and abetting distribution of infringing copies.

I'm very surprised that anyone would be prosecuted for linking, although of course, I know little about the more detailed facts of the case.