Quite literally.

Let's face it: when someone decides to issue a cease and desist against children's party clowns, you just have - um - laugh. I can just see it now: instead of the cream pie, clowns will splat lawsuits in each others' faces. Oh, and instead of jumping in and out of a little Mini Minor car, clowns will get in and out of a large lawyers' briefcase.... oh, enough already. It's Friday.

 
Well well well. All the news today reports that Kazaa has settled with the American Music Industry, agreeing to pay $US115 million ($A151 million) and convert to a legal business model with licensing arrangements to be negotiated with record labels (see The Age here, Washington Post here, Techdirt here)

Now I can't help but wonder whether we have several Federal Court judges who, having spent quite a few days in February hearing the matter, and perhaps a bit of time writing a judgment, are now a little deflated.

Guess we won't be getting a Full Federal Court view on what constitutes authorisation of copyright infringement. The rather spare reasoning of Justice Wilcox will stand.

Sigh. And I was so looking forward to dissecting another big copyright judgment or two.

Update: more news from Techdirt: apparently some of the settlement is being paid by the Kazaa founders.

Update 2: I'm told by a reader that I shouldn't despair (yet). As one reader pointed out, the court can still publish reasons where there are 'principle[s] of general importance', and an appeal can only be discontinued with leave of the court (which presumably could be refused). And in any event, the appeal in Cooper - another copyright case also raising authorisation issues - is due to be heard in early August...

Update 3: I should have noted that Peter Black has commented too, at Freedom to Differ.

Update 4: First thing this morning: come in to work to find all the newspapers and US blogs reporting the Kazaa settlement. 8:24am: blog the story on Weatherall's Law, then LawFont. 10:30am: receive notice from the Australian Copyright Council regarding the settlement. 4:48pm: receive Freehills Intellectual Property Update notifying me of the settlement. Observations: (a) the 'more traditional' sources of IP news (law firms, Copyright Council) are pretty quick these days; (b) do you think blogs - as part of the 'always on' news and information cycle - have anything to do with this? (c) I'm going to be out of a blogging purpose if law firms become more like blogs... won't that be good!

Update 5: more rather amusing commentary on the settlement from Geeklawyer, and sensible points from Technollama - like, this is hardly a victory, right?

 
Yes, it's happening again. This time Dell has been accused of buying up a 'portfolio of competitor brands' in the form of Google Adwords - ensuring that when customers search for 'HP Ipaq' or 'Ipaq', Dell laptops come up in the sponsored links.

Sound familiar? Yes, well, back in April, Telstra was accused of the same thing.

And as in April, I'm just going to say: depending always on how the ad is drafted, I'm just not seeing what the legal problem is.

 
From IP Australia's news service:

'The Australian Institute of Criminology (AIC), Australia's pre-eminent national crime and criminal justice research agency, is currently conducting a study in relation to intellectual property crime and enforcement in Australia. As part of this research, the AIC is collecting data on the extent to which intellectual property (IP) crime exists and its impact. The research will identify options for the Federal Government's response to piracy and counterfeiting in the future.

If you wish to assist in this research by providing your informed views on the type, amount and impact of IP crime in Australia, we invite you to contact Alex Malik a consultant researcher with the AIC by August 4, 2006, at alex.malik@aic.gov.au In your note, please tell us about yourself and your organisation, and explain why you believe you may be able to contribute to this research.

It appears that all they want to know about for the moment is who you are and what information you have: presumably if you want to provide information, you'll have some time to do it after this rather short deadline...

 
Readers may recall that one of the big issues in Australia's FTA negotiations with the US was the issue of drug pricing, the pharmaceutical benefit scheme, and drug listing. This was one issue where the Australian government stood its ground - to some extent (of course, there's plenty of debates about whether the ground they gave was too great - see Peter Drahos' work on this generally, particularly this working paper for the Evatt Foundation).

Well, now it's apparently Korea's turn. According to bilaterals.org:

'In May, the Korean government announced to reform its drug pricing policy of the national healthcare system by adopting measures to positively list reimbursable prescription drugs rather than the current “negative list”, which only lists the exclusions. During the second round of the KORUS FTA, the US negotiators expressed its strong opposition to the positive list system and refused to attend the Pharmaceutical and Medical Device Working Group meeting.'

Concerns are now being expressed about what compromises Korea may have to make in order to go ahead with its positive list scheme. Read the whole thing here.

 
Here.

 
One of the things I said just recently, in the Unlocking IP Conference at UNSW, was that one issue for Creative Commons, in seeking acceptability for use in the public sector, is the rhetoric. I argued that sometimes, in their eagerness to convince 'the masses', Creative commons mateiral has a tendency towards rhetorical excess and a 'boosterism' that isn't a comfortable fit with either the public sector, or, indeed, with Australian culture more generally.

I wonder if other people agree with this point? I can't help but think the more rhetorical and ideological Creative Commons is, the more that putting a Creative Commons button on your material becomes a political act, and an act that indicates some 'allegiance' with a particular cultural or political view. The implication is that the political or rhetorical statements of Creative commons have the potential, at least, to alienate at least some potential allies.

Now, it may be that I'm wrong on this: according to Neale Hooper from the Queensland government, for example, acceptance levels within the public sector are high. The Common Information Environment report, too, seems to indicate a high level of acceptance in the public sector bodies in the UK.

So maybe it's a non-issue. On the other hand:

• according to Andres Guadamuz' presentation at Unlocking IP, the issue of a distinction between the 'cultural' versus the 'license geek' wings of Creative Commons was in evidence at the recent iCommons summit;
• The Common Information Environment report is, again according to Andres, sitting on a shelf in the UK, going nowhere fast.

And then there's this post from Lillian Edwards, which makes a similar point to the one I've been trying to make, albeit a little more eloquently. Lillian Edwards is making here a point about why 'digital rights activism', as embodied in people like Cory Doctorow or Lawrence Lessig isn't much in evidence in the UK, despite a strong open source community and a long history of association with freedom of speech:

'I think the problem is that we Brits just can't make grand statements with a straight face the way the Americans can. We haven't got the evangelical upbringing, the oral rhetoric of US culture. We're far less likely to be found saying things like "Digital rights are essential if we are to avoid being the DRM-ed slaves of the next Microserf generation" and more "That last episode of Dr Who last night was good wasn't it? Now, how about a cuppa, and er, about this ID cards business.."'

Food for thought.

 
There's something rather interesting going on at the Productivity Commission here in Australia. The Commonwealth Government has asked the PC to undertake a research study on public support for science and innovation in Australia, and specifically, to:

1. Report on:
   
   
   • the economic impact of public support for science and innovation in Australia and, in particular, its impact on Australia's recent productivity performance;
   • whether there are adequate arrangements to benchmark outcomes from publicly supported science and innovation and to report on those outcomes as measured by the benchmarks.
     
     
   The analysis should cover all key elements of the innovation system, including research and development, taking into account interaction with private support for science and innovation, and paying regard to Australia's industrial structure.
   
   
2. Identify impediments to the effective functioning of Australia's innovation system including knowledge transfer, technology acquisition and transfer, skills development, commercialisation, collaboration between research organisations and industry, and the creation and use of intellectual property, and identify any scope for improvements;
   
   
3. Evaluate the decision-making principles and programme design elements that:
   
   
   1. influence the effectiveness and efficiency of Australia's innovation system; and
   2. guide the allocation of funding between and within the different components of Australia's innovation system;
      
      
   and identify any scope for improvements and, to the extent possible, comment on any implications from changing the level and balance of current support;
   
   
4. Report on the broader social and environmental impacts of public support for science and innovation in Australia.

Although the Commission is not requested to review individual programmes, it can, where necessary, undertake case studies of particular types of public support for science and innovation. It should also draw on relevant international experience.

Now, I'd heard some muttered cynical comments that one of the purposes of this particular inquiry might be to give government some reasons to reduce public funding for innovation (I'm not sure why giving a review to an independent body like the PC would further this kind of aim: I'm just reporting scuttlebut here).

But there's some interesting submissions going up now, that make for interesting reading if you are interested in innovation and the drivers of innovation:

• My IPRIA colleague Joshua Gans has a submission up (and see his blog here), in which he examines the relationship between basic research and commercial research, refutes empirical findings from a PC working paper (with Gans showing that Australian domestic R&D stock does have a positive and significant impact on productivity), and talks about his work on national innovative capacity. There's some interesting stuff in this one, pointing out the weaknesses of a 'linear model' of how innovation works, and discussing the importance of cumulative innovation;
• My IPRIA colleagues Paul Jensen, Alfons Palangkaraya and Beth Webster have a submission up, in which they examine the economics of innovation, and results of their research on public policies relating to science and innovation;
• My neighbour while I'm visiting at ACIPA, Charles Lawson has a submission up about patent licensing. It's a very specific issue, and I'm not entirely clear about how it really relates to the inquiry. Nevertheless, if you've ever been interested in the relationship between patents and competition, it's an extensive discussion of those issues.

Enjoy!

 
The machinations over the Cadbury claim for the colour purple go on and on. Now that the costs order has been handed down, and the first instance decision is all done and dusted, we have news that Cadbury has appealed Justice Heerey's decision that Darrell Lea did not do any 'passing off' when it used the colour purple (hat tip: Dale Clapperton).

It will be interesting to see whether the appeal is confined to the final judgment issues - or whether some of the evidentiary rulings which much confined Cadbury's case will also be appealed.

It's also worth noting that this Cadbury case is only one of the two pending ones. The other, the opposition to Cadbury's application to register the colour, was also decided at around the same time as Heerey J's decision (see my comments here, and the decision here (pdf)). In that decision, the TM Office basically handed a significant win to Cadbury. This case, too, would appear to be pending before the Federal Court: according to the IP Australia ATMOSS database, a court action is pending (I assume this means that someone has appealed the opposition decision to the court).

 
I should note my own little bit of personal news: I'm in sunny Queensland for the next few months, based at UQ and enjoying the wonderful hospitality of the friendly folks at the Australian Centre for Intellectual Property in Agriculture. And let me just say, it is a LOT warmer up here than it was down south in Melbourne. I'm here on leave from Melbourne, to get a couple of research projects done. So if there are any readers out there in Brisbane interested in catching up for coffee or lunch sometime, get in touch!

 
IPRIA and the Melbourne Business School have an event coming up which would be of interest to readers of this blog: David Levine and Eric Von Hippel will be giving a seminar on Intellectual Property and Innovation: A Different Perspective.

David Levine is is Professor of Economics at Washington University in St. Louis. He is known in IP circles for his work with Michele Boldrin, 'Against Intellectual Monopoly'. It generated a bit of controversy when it came out, and when you read the abstract, I'm sure you can see why:

't is common to argue that intellectual property in the form of copyright and patent is necessary for the innovation and creation of ideas and inventions such as machines, drugs, computer software, books, music, literature and movies. In fact intellectual property is not like ordinary property at all, but constitutes a government grant of a costly and dangerous private monopoly over ideas. We show through theory and example that intellectual monopoly is not neccesary for innovation and as a practical matter is damaging to growth, prosperity and liberty'

To read the whole thing, click here.

Eric Von Hippel is also pretty significant. He is Professor and Head of the Innovation and Entrepreneurship Group at the MIT Sloan School of Management. His 2005 book, Democratizing Innovation, is all about end-user innovation in all kinds of different fields: in other words, it emphasises the importance of users being able to tinker and alter and add to the tools and products that they buy. And you know what else? you can download his book from his homepage, here.

So, if you're interested in innovation; and in different perspectives on innovation; if you're interested in open source and creative commons type stuff, or just innovation more generally - looks like a pretty amazing opportunity to hear some pretty significant thinkers in the field.

So here are the details:
Title: Intellectual Property and Innovation: A Different Perspective
Speakers: David Levine and Eric von Hippel
Date: Friday, 11 August
Time: 4-6pm
Place: Melbourne Business School, Rio Tinto Theatre
To Register: Click Here.

 
The Full Federal Court has handed down its decision in the case of Grant v Commissioner of Patents. I've blogged about the case before (here, and here): in essence, it's about patentability of a 'business system or method' - where the particular business system or method is a legal scheme, to protect assets in the case of bankruptcy. Something that got a little controversial recently, of course, when the Supreme Court decided to punt in a case that might have dealt with the issues - see here.

So what happened? Well, probably to no one's surprise, the Full Court decided this scheme wasn't patentable. And probably to no one's surprise, the full court rejected the very odd reasoning that Branson J had used to reject the patent (that the patent 'did not satisfy the requirement “that its value to the country is in the field of economic endeavour”). The Full Court also doubted Dave Herald's reasoning in the Patent Office (that the patent did not involve some material element that relates to science or technology').

Warwick Rothnie has already offered pretty extensive - and in my view, correct - commentary on the case. I've little more to add, except to observe that:

• the case confirms the trend in Australian case law that we've seen since CCom and Catuity: to allow patents for business systems so long as they are implemented via some technical means - eg via computer/database/software;
• the most amazing thing about the whole case is the way that the court/patent office is bending over backwards not to use any ground based on public policy or 'general inconvenience'. In essence, it seems our courts/the office don't want to reject anything on the ground that it is simply against public policy. Note the quote:

'It is not relevant, in our view, that some may think that a method or product will not advance the public interest. Once a product or process has been patented, its use is subject to the laws of the land, such as (to take but a few examples) those concerned with environmental protection, pharmaceutical product approval and occupational health and safety'

Could it be any clearer?

update: BDW patent expert David Clark, who has written on the Grant case before, has published commentary: click here (note pdf).

 
The OzDMCA Countdown

It's time for another post on the OzDMCA - that is, the forthcoming Australian law implementing Article 17.4.7 of the Australia-US Free Trade Agreement - an article based very closely on the (in)famous US law, the DMCA. I'm prompted to write by a recent Slashdot thread on this, as well as the recent Linux Australia campaign seeking to highlight the dangers of a DMCA-style law in Australia. The Linux Australia pages have a general explanation of the issues on DVDs (see iownmydvds.org here), and on some of the issues in music (see iownmymusic.org here).

I'm also prompted by the fact that it is now July, 2006, and we have not seen any exposure draft of the legislation. Given the timeline, I think we can only assume that either (a) the Department have decided to consult only with some limited set of stakeholders, or (b) that any consultation is going to be extremely brief.

Now, as I’ve said numerous times before (see my submission, 2 years ago, to the Senate Select Committee, and my submission, last year, to the LACA Inquiry) – anti-circumvention law is hard. It also has really strong potential to have nasty effects if implemented badly. And the risks of bad implementation are high, because the AUSFTA text is really problematic – it has a structure that has some ‘lamentable and inexcusable’ flaws (the quote is from LACA).

I’ve been wondering for some time whether we need to enact laws that look like the DMCA. I think there are areas where the AUSFTA text does have space to do things that are sensible.

So in this post, I'm going to outline two things Australia could do in implementing the OzDMCA, which would reduce its bad effects. I will do a bit of explaining first, then I'll get to the text issues.

[By the way, this will be quite a long post. It’s so long, I’m going to use headings even. The next post is here, if you’re you want to move on.]

What are anti-circumvention laws, and why should we care?

Anti-circumvention laws are the laws which apply to the technologies (called ‘technological protection measures, or ‘TPMs’, a.k.a. DRM) used by copyright owners to prevent infringement of copyright and to control uses of copyright material. I’ll use DRM because that’s the more common ‘English’ word for what we’re talking about. Anti-circumvention laws are supposed to protect copyright owners by limiting the use and distribution of, technologies which ‘hack’ or avoid DRM. Examples of DRM include:

• CSS (Content Scrambling System) – used to encrypt (and prevent copying of) movies distributed on DVD
• Anti-copying protection on music CDs; and
• Apple’s FairPlay system, used to limit what you do with music purchased from the iTunes store.

Anti-circumvention law is controversial, because DRM isn’t just used to protect copyright owners’ copyright rights. DRM can cause problems for consumers, because they can be used to prevent consumers doing things they expect to be able to do with stuff they’ve bought. For example:

• Buy songs from iTunes and you can’t use it on players other than iPods;
• CSS will prevent you from making a back-up copy of your purchased DVDs;
• If some companies have their way, future digital video recorders might, on demand by copyright owners, disable the fast forward button – so you have to watch the ads!

Copyright owners argue this allows them to experiment with new business models and to provide more choice (buy a ‘once only’ version cheap, or a more expensive ‘keep forever’ version). Quite possibly. But there’s no doubting that the effects of contemporary DRM gets in the way of consumers: and the only real limit on what copyright owners can do here is consumer acceptance. We don’t really know how much of a limit that is. There is certainly no requirement on copyright owners to implement all the features that are possible or desirable.

DRM can also be used to extend copyright owners’ control beyond what copyright provides. The classic consumer example here is region-coding. Part of the CSS ‘system’ (and it’s been explained here by my LawFont colleague, Sarah) is regional playback control (region-coding) which prevents Australian-bought DVD players from playing US-bought disks. [and yes, before all you lawyers out there point out parallel importation laws, remember that buying a movie overseas and bringing it back for personal use is not illegal].

Finally – and most disturbingly – TPMs can be used in ways that limit competition in hardware and software markets. Why? Well, let’s take that iTunes/iPod example again:

• Buy music from iTunes, and music is encrypted using FairPlay;
• Only iPods have the key to decrypt FairPlay. That means that only iPods (and not iAudios, iRivers or any of those other MP3 players) will play iTunes music;
• Thus we get barrier to entry in market for MP3 players. The more music people buy from iTunes, the higher the ‘switching costs’, and the more ‘locked in’ they are to a particular device (a story in The Economist this month sought to argue that this wasn’t true, that ‘[t]he market is young and customers' commitment may not yet be deep… a rival to the iPod, were it good enough, could tempt audiophiles to abandon their iTunes collections’. Maybe. But doesn’t it depend on how much you’ve bought?)
• And we have a barrier to entry in the online music market. Apple iPods only recognise FairPlay (and unprotected files – ie MP3s). That means that other prospective sellers of music online can’t use DRM and still sell music that people can listen to on iPods.

Here’s the basic point. If the maker of a device (like a DVD player), or software has to get authorisation, or permission, from copyright owners before they can make their device, then competition in the device market is reduced, because copyright owners may impose some defined set of features on all producers of devices. A condition of permission can be that your device won’t have certain features or won’t do certain things. For example, if you have to get permission from the movie studios to make a DVD player, they can impose conditions, segment markets, impose (or prevent) features being introduced. And, by the way, the market does not take care of this. If you want to make a DVD player, it needs to play Hollywood movies. If the Hollywood movie owners insist on certain features, you ain't got a choice, and you can't prove in some alternative 'market' the benefits of your player. As I said: the only real limit on conditions is consumer acceptance.

What law we have now

OK. So far, I've talked about why DRM - especially when backed up by law - can be problematic. How problematic - well, that depends on what the law does.

Australia already has anti-circumvention laws. But at the moment, those laws have some important limits:

• There is no ban on the technical act of circumvention; and
• DRM, to be protected by the law, has to be designed ‘to prevent or inhibit the infringement of copyright in a work’ (not just any old access control fits)

The first is quite important. At the time the Australian laws were originally drafted, system administrators pointed out that they circumvent protections all the time, just to make things work. Parliamentary Committees pointed out they weren’t going to be liable for circumventing. The first point also ensures the law doesn’t go too far into the private domain – what you do in your own home is your own business. The second one is important too: it stands in the way, in Australia, of the kind of cases we have seen in the United States, where garage-door openers and printer cartridges have been the subject of DMCA litigation.

The US doesn’t like our current law. That’s one of the reasons we got landed with what we did when we negotiated a Free Trade Agreement with them.

Why there is a problem with the AUSFTA

Implementing the AUSFTA will make big changes to Australian law. We have to:

• Protect access controls – seemingly more generally;
• Ban the act of circumvention, as well as the sale of circumvention devices; and
• Limit exceptions to a narrow list.

Back in February, a House of Reps Committee Report (LACA) expressed all colours of concern about the law. The text of the AUSFTA is really complex, and I’ve gone through parts of it in my writings: see the submissions cited above. But in summary, there are two key concerns about the AUSFTA text.

1. It seems to require that all technical access controls – not just those relating to copyright infringement – will be given the protection by law. So yes, that includes the no-fast-forward rules, or just any old encryption – anything at all that controls any act of access.
2. it seems that exceptions will be completely ineffective. In particular, we have a complicated system of exceptions that has more limited exceptions to the ban on distributing circumvention tools, than the ban on circumventing.What’s really weird is that the text of the Agreement suggests that Parliament can create exceptions to allow people to circumvent access controls – but Parliament cannot create an exception that would allow anyone to supply a tool to do so.So, you can imagine that Parliament decides that blind people should be able to circumvent access controls to use their reader software. No one could set up or advertise a service to help the blind person circumvent.On a scale of stupid to ludicrous, that rates as monumentally ludicrous.

Why it doesn’t have to be like that: the language of AUSFTA is not cut and dried

I’ve spent quite a lot of time, in the past, pointing out how wonderfully inflexible the AUSFTA language is (see my piece in Policy here, and my supplementary submission here).

But can we do something else? Can we avoid the nastiest, most stoopid effects? It’s clear we don’t have to have every bit of the DMCA (as Mark Jennings from the International Law Office in AGs pointed out to LACA) – it is the treaty language, not the DMCA, that we need to enact. But is there any flexibility here?

I want to suggest there is. Of course, the problem with trying to 're-interpret' the AUSFTA is that the US will object if they don't like it, right?

Flexibility Number 1: Linking circumvention to infringement of copyright

The first thing Australia could do is to enact the laws in a way that links liability to the nefarious act – that is, copyright infringement.

How could we do that?

Well, if you look at the text, we have to ban circumvention and circumvention technologies – but circumvent itself is not defined. In the DMCA, ‘circumvent’ is defined basically as a technical act – just ‘avoiding’ the DRM. Problem with that is it captures a whole lot of perfectly legitimate stuff.

So why not define circumvent to include only those acts that infringe, or facilitate infringement of, copyright? In other words, the acts that would be banned would be:

• Bypassing/avoiding DRM to infringe or facilitate infringement;
• Selling devices/services that are primarily designed, marketed, or have no significant commercial purpose other than to bypass DRM for infringement or to facilitate infringement.

Why would this help? Well, let’s see:

• It would avoid the really stoopid cases that have arisen in the US – you know, the garage door opener cases, or printer cartridge cases;
• It would avoid the problem of the chilling effect on research: where people like Professor Ed Felten being threatened with DMCA consequences if he published or spoke on some of his encryption research. If the banned acts are those that facilitate infringement, researchers could act with more confidence;
• It would mean that if you produced, say, a device or program that just played a DVD – without allowing copying – then you would be ok. Your device would not be facilitating infringement. This helps the competition issue, right?

Most notably, this method of implementing the law would target the actual wrong that the provisions are meant to target: copyright infringement and piracy – without creating a general ‘access right’ or right of absolute control in copyright owners.

Oh, and there are two other benefits to this approach. First, it avoids the ‘pointless exception’ problem. Where a narrower range of devices are banned, a narrower range of exceptions is required.

Imagine for a moment that the Parliament enacts the exception that is in the AUSFTA to allow people to circumvent in order to prevent collection of private information (the privacy exception – Art 17.4.7(e)(v)).

Now, the problem identified by LACA as a 'lamentable and inexcusable flaw' is that it seems that the government can’t create an exception that will allow anyone to sell devices or programs, or provide a service to do that. It looks like an ineffective exception, right (or a geeks-only exception).

But what if we take the approach of defining circumvention as an act that infringes or facilitates infringement of copyright? Then, if you can provide the service, or device, in a way that doesn’t then allow everyone to break open the DRM and widely distribute copies, you are allowed to do that. So the bad guys of the world – the Kazaas, who say their technology has substantial non-infringing uses, but who are really in it for the infringement – get caught. But your honest down the street computer expert who just wants to help their client protect their privacy? They’re ok. Seems to make sense, right?

A further benefit would be that this method of interpretation would encourage copyright owners to use TPMs to control infringement, rather than any use. You see, under this rule, the more tightly the TPM is tied to controlling infringement (rather than other things, like playing games bought in another country), the more likely it is that circumventing the TPM would be illegal.

Ah, but can we do this? Would it be consistent with the text of the AUSFTA? It’s not entirely straightforward, but there is an argument here, I think.

Firstly, we have to interpret the treaty in accordance with the ordinary meaning of the text (the main principle of treaty interpretation). Most of the dictionary definitions of ‘circumvent’ to be found in the Macquarie Dictionary refer to ‘surrounding or encompassing as by strategem’, or ‘gaining advantage by artfulness or deception, outwit, overreach’. [These aren't the only meanings in the dictionary. But they are there] That is, the meanings here incorporate an element of wrongdoing. That’s consistent with this argument – nefariousness is what gets targeted.

We also have to interpret the treaty in a way that is consistent with its ‘object and purpose’. Well, this interpretation arguably does. Repeatedly, during consultations on AUSFTA, government officials noted that:

'The anticircumvention provisions really go towards piracy rather than viewing what is a legitimate copy of copyright material. The anticircumvention provisions I think have to be seen in that context. They are not really aimed at stopping people from carrying out legitimate copyright activities
(Toni Harmer, quoted in Senate Select Committee final report, here)

There’s also arguably some foundation in the text for this approach. AUSFTA Article 17.4.7 says the protection is for measures ‘that authors … use in connection with the exercise of their rights and that restrict unauthorised acts’ (again, as Jennings pointed out, ‘unauthorised’ means not just ‘unauthorised by copyright owners’, but also ‘unauthorised by law’). Again, that link to infringement.

It’s not what the DMCA says, of course, as I’ve already noted. BUT it is arguably consistent with US cases, like Storage Tek, which held that ‘[t]o the extent that [the defendant’s] activities do not constitute copyright infringement or facilitate copyright infringement, [the plaintiff] is foreclosed from maintaining an action under the DMCA’.

I have to underline that such an implementation would be different from what the US have done. And, it would be opposed by most copyright owners, because it would enable ‘unauthorised’ devices that play, for example, DVDs or other TPM-protected media – and unauthorised devices might not obey all the rules set by a copyright owner (like, ‘no skipping no-fly zones’, or ‘no playing outside the region’). By tying the wrong to infringement, this implementation would not enforce a general right of control for copyright owners.

So the biggest barriers to this interpretation are probably the political ones: that is, the US reaction. Not, of course, a barrier to be underestimated. But if you want a ‘bad guy’ rule, rather than a ‘everyone not authorised by copyright owners’ rule, this might be one way to do it.

One final point while I'm on this line. If the government decides not to go the whole way, and define circumvent to be linked to infringement, I would argue that circumvent shouldn't be defined at all. Any attempt to define it by reference to the technical act contravenes the principle of technological neutrality, and is going to lead to the kinds of problems we had in Stevens v Sony - which arose from the attempt to be too specific.

Flexibility 2: thinking about the way the circumvention provisions are written

There’s another thing. I was tossing around some ideas with my wonderful colleague David Brennan the other day. David, vainly trying to prove that he is a smarter lawyer than me, pointed out that the DMCA is drafted in a really interesting way.

The civil remedy provisions in the DMCA are written differently from ordinary copyright. If a person infringes copyright, the US law says, ‘The legal or beneficial owner of an exclusive right under a copyright is entitled …to institute an action for any infringement’ (17 USC 501). Then, under 17 USC 504, the infringer ‘is liable’ for either actual, or statutory damages at the copyright owner’s election. In other words, damages are a right of the copyright owner.

Compare the DMCA. Under the DMCA, an action can be brought by ‘Any person injured by a violation’ (17 US 1203). Then, there are a series of remedies that the court may order (including damages, injunctions, etc). These are all, in other words, discretionary.

Put these two together. It would seem, firstly, that the right to bring an action under the DMCA is contingent on injury being suffered. Further, the remedies of the court are discretionary.

Now think about how that might interact with the ‘pointless exceptions’ problem. Couldn’t the government:

• Create broad remedial discretion;
• Make injury a precondition, before any remedy is granted under the OzDMCA; and
• Even specifically provide that where someone provides a tool, or service, to someone who has the benefit of an exception, there is no injury and hence no remedy?

As far as I can see, there is nothing in the text of the AUSFTA that would prevent this approach. On the contrary - this is exactly what the US has done (apart from the last of the dot points). So it must be consistent with the treaty text.

This second 'flexibility' would - because it is consistent with what the US has done - be easier to implement without US objection, you would think.

And in conclusion...

If you’ve stuck this post out till now, congratulations. If you’re here because you want me to cut to the chase – well, here’s the chase. We don’t have to have a draconian law that prevents competition and is anti-consumer. If we end up with such a law, it will, in my view, be a legislative failure on the government’s part.

 
Cadburys - the (costs) sequel

Back when Cadbury so comprehensively lost its passing off litigation against Darrell Lea, in April of this year (see my previous commentary here) speculation amongst legal circles was rife that Cadbury might also be in for an indemnity costs order. After all, this was a set of proceedings which followed dismissal of the first set of proceedings, evidence that was filed late, surveys that weren't conducted in accordance with the Federal Court's own practice note, and a massed set of experts affidavits - most of which were comprehensively rejected as inadmissible (see my prior post here).

Well, Cadburys can breathe something of a sigh of relief. Heerey J has handed down judgment on the costs issue, and they have not been ordered to pay indemnity costs for the entire proceedings. The news isn't all good for them though - they do have to pay indemnity costs for the costs incurred by hte respondent in preparing to meet the substantial body of late filed evidence. There's a few choice phrases directed at Cadbury - the judge does note that 'there is a line beyond which non-compliance becomes unacceptable. That line has been well and truly crossed by Cadbury in teh present case. Court directions ... have been treated with disdain...'. Ouch.

 
The (New Australian) 'Flexible Dealings' Exception to Copyright

About a month and a half ago - on 14 May - the Attorney-General issued a press release, announcing proposed new exceptions to copyright: the outcome of a long review that commenced approximately 12 months before (by the way, check out the text in the URL on that last link - it's deliciously ironic).

I know that the press release was some time ago, and I know, too, that the draft legislation is not out yet. But I've been thinking about the press release a bit, lately, and in particular, the way it would seem to indicate that this exception will look. I thought I'd share some of those thoughts. (for other thoughts, see the Australian Copyright Council's response, posted here).

Here is what the press release says about the proposed exception:

The present exceptions and statutory licences that allow copyright material to be used for specific purposes benefiting the wider public interest will be strengthened. The Government has agreed to include a new flexible dealing exception that will allow for:

• non-commercial uses by libraries, museums and archives (eg. this may allow a museum to includes extracts of historical documents in materials for visitors);
• non-commercial uses by educational institutions for the purpose of teaching (eg. this may allow a school to put an out-of-date VHS documentary onto DVD);
• non-commercial uses for the benefit of people with disabilities (eg. this may allow a person with a print disability to convert a book they own into accessible text); and
• parody and satire.

To avoid confusion, the new extended dealing exception will not apply to uses where an existing exception or statutory licence already operates. Any new use falling within this exception must comply with the standards in Australia’s international treaty obligations.

The interesting bit of this statement is the bolded sentence above: that exceptions must 'comply with the standards' set by treaty. This is a reference to the famous 'three step test' enacted in the Berne Convention (Article 9), TRIPS (Article 13) and in the Australia-US Free Trade Agreement too (Art 17.4.10). That test says that a country in its laws must confine limitations or exceptions to exclusive rights to:

(1) certain special cases
(2) which do not conflict with a normal exploitation of the work and
(3) do not unreasonably prejudice the legitimate interests of the right holder.

The interesting question, given the wording of the press release, is just how the three step test is going to be brought in - and what are the implications for Australian copyright law if it is.

Here's the question. Are the 'certain special cases', required under international law, the categories the government has enumerated (like 'parody and satire') or are courts going to be expected to identify, within those categories, 'certain special cases'? In other words, for the courts, under this new law, is it a two step test, or a three step one? Is the real exception a narrower one than is stated in the press release, or not?

It might not have been entirely clear from the press release, but a newsletter, issued by the Attorney-General's Department shortly after was a little more specific. It said that:

It will also be provided that any use falling within this exception must comply with the standards in Australia’s treaty obligations. That is, the use must be a certain special case that does not conflict with a normal exploitation of the work and not unreasonably prejudice the legitimate interests of the copyright owner.

This wording seems much stronger. Taken at face value, it seems that the government is planning to enact all three steps as 'conditions' of the exception. Is this an approach we should be worried about? There are a few possible objections. Let's look at some of them, shall we?

The first possible objection is this: do we really need to drill down to a higher level of specificity than the ones specified in the press release? In other words - aren't categories like 'non-commercial uses by libraries, museums and archives' 'certain' and 'special' enough - particularly when you take into account the latter two requirements (non-interference with the legitimate interests of the rightsholder, not conflicting with normal exploitation)? Does international law really require that exceptions be drafted with no flexibility? (and if that is the case, how do we get away with our current exceptions, like 'fair dealing for the purposes of research or study' or 'fair dealing for the purposes of criticism or review'? How does the US get away with fair use, if we have to be more 'certain' than those categories?).

If this represents a view by the Attorney-General's Department that even more 'certainty' is required - are they right, as a matter of international law? Please explain?

Or, is this the government trying to 'hedge its bets' - not willing to take the risk that in fact the purposes enumerated are 'certain special cases', they have adopted the lawyer's 'CYA' principle (cover your ...) and decided to put in a phrase that they can point to and say - look, your Honour, we comply with the law, honest we do? It's not open ended. The exceptions have to be certain.

If that is the approach being taken, it's a cop-out. And while it might solve problems when we stand in international fora, it will cause untold judicial headaches if it ever does come to a court.

Imagine you are a judge. You are sitting on a copyright case. You are told that you have to identify, within one of these categories, a 'certain special case'. Imagine it's a parody case. Are you supposed to identify certain kinds of parody that are excepted? Surely, if you put all 3 steps into the legislation, no other view is open to a judge. They have to be more specific, because that's the assumption underlying the legislation. They can't make one of the conditions a nullity - can they?

Or imagine it's a library case. The library is making some preservation type copies to migrate material from an obsolete format. You are told by the legislation you have to identify a 'certain special case' within the non-commercial uses by libraries exception. Is 'preservation' a certain special case? Or is it 'preservation in the face of obsolescence'?

See, here's the thing. We've had this long, drawn out, year long review of copyright exceptions. Everyone's been sticking their oar in. That's what happens in copyright these days. It's political. Everyone has a view. And everyone has an interest. Most copyright owner interests have been arguing for 'certainty' in the law. They've offered detailed qualifications on any exceptions that might be offered (for an example, see the Australian Copyright Council submission, and look in particular at the conditions it suggested for a private copying type exception).

That is the kind of thing that is going to be offered to an Australian judge. It will be argued that 'certainty' practically requires the court to create an exception that helps this institution in this situation.

And you know what? This argument will be run again, and again, and again. It will come up every time. And there will be a big debate about when 'certainty' is reached. Again, and again, and again. Instead of focusing on the real issues that should be exercising the judge's mind - whether this use interferes too much with normal exploitation and the copyright owner's interests. (oh, and yes, virginia - there will be more amicus curiae submissions. In every case. Probably from both sides. And they will have very good reason to want to get involved).

Take a stand guys. If you think you have identified certain special cases, reflect that, and don't include that first limb in the Act. If you don't think you have a certain special case, why not have another go at adding a little (and I mean a little) extra specificity. Put in a list of the kind of things libraries might be able to do, like preserve, use for internal administrative purposes, communicate within the library, use new technologies - whatever it is you are thinking about. After all, there are still the other two limbs to protect the interests of rightsholders.

Now, let me be clear. I'm not saying that we have to spell out all the details. I'm not saying I think we have to create exceptions delimited to the nth degree. Some people will no doubt make that argument: that an exception in these terms invites 'judicial legislation'. In other words, what copyright law (like other property law) needs is certainty, and this kind of 'open-ended' exception doesn't provide that kind of certainty.

This objection I don't really buy. We could certainly (and will no doubt, and should no doubt) have something of a debate about the meaning of terms like 'non-commercial' - this can happen when we have an exposure draft.

Allegations of 'judicial legislation' or 'uncertainty', however, seem to be based on the premise that nothing short of nailing down the exception to the last possible detail in legislation leads to certainty. It often seems that this premise is attractive to our lawmakers (and the UK law makers - see Robert Burrell and Alison Firth's book on this).

Problem is, it ain't true. It's the kind of premise that led to the notorious 'no-rewind' proposal (ie, the proposal to limit 'time-shifting' exceptions to a single viewing) that elicited such laughing disbelief the moment the press release came out.

Most law-making, and law-enforcing, involves, like, you know - judgment. Judges do that. You know it's, like, their job. Hell, even bureaucrats, library managers, and archivists and gallery owners make judgments too. It appears to be a human thing. Attempts to nail everything down - particularly when technology is moving, and shifting, and changing - are doomed to failure (and doomed to lead to problems for the supposed 'beneficiaries' of such exceptions: see Hudson and Kenyon on this). Legislation can be drafted using more open textured words than some copyright owners would argue, without the world falling apart at the seams.

So I'm not saying the government can't create a flexible exception. I'm not saying every detail has to be spelled out. I don't think that's required by the 3 step test. I think we can put flexibility in and we can avoid spelling out the details. But I am saying that if they want to do that, then putting in the three step test - all three limbs of it - and expecting courts to drill down further (who knows how much further) is inviting problems.

Here's the second objection (yes, I know this post is long. It's been building up, what can I say?). What it appears the government intends to do is:

• leave existing fair dealing exceptions exactly as they are; and then
• add the new flexible dealing exception(s), qualified by the three step test.

Now let's take a moment to step back and think what the legislation is going to look like when that is done. We'll have:

• An exception (section 40) that allows ‘fair dealing … for the purpose of research or study’ and which sets out a series of factors to be taken into account - things like the purpose and character of the dealing, the effect on the market etc;
• An exception (section 41) which allows that 'fair dealing ... for the purpose of criticism or review', provided an acknowledgment is made, and a similar exception (section 42) for uses 'for the purpose of ... the reporting of news'. Notably, these exceptions don't come with a long list of factors, although courts tend to consider things like effect on the market, and the purpose/character of the dealing, as part of the analysis of whether the dealing is 'fair'; and
  
• An exception for parody and satire, that is subject to the application of the three step test, meaning courts have to assess whether there is a certain special case, whether the use conflicts with normal exploitation of the work, and whether it unreasonably prejudices the interests of the copyright owner.
  

Now imagine writing the legal advice to the makers of The Panel TV show. It runs a bit like a script for that show, doesn't it?

Lawyer: Well guys, your use might be:

• reporting news (but we'll have to look at all those old English and Australian cases on what that means) or it might be
• criticism or review (but we'll have to look at all those old English and Australian cases on what that means), or it might be
• parody or satire (but then we have to look at the decisions of the WTO and some European courts who have interpreted what the three step test means, to work out whether this complies with the three step test'

The Panel guys: Um, ok. so why are we looking at different courts again?
Lawyer: well, the legislation says we have to take different things into account depending on whether this is parody or whether it is criticism and review. We've got old caselaw on the criticism and review and the news stuff, but this parody defence - well, it's got this new set of conditions on it, and the only people who've interpreted that are international courts,
The Panel guys: So how much is that going to cost?
Lawyer; well, we'll have to get in a consultant who knows something about international trade law, because they'll have to read those WTO decisions because the court is going to want some help on what these factors mean ...'

Enough already. Made the point, yes?

Certainty? I don't think so. Flexibility? Maybe. Could this be done in a way that didn't involve bringing in the trade lawyers? Surely. Would that mean defining the exception to the nth degree? No, I don't think so.

But don't hold your breath. The last few times the government has amended the copyright act, simplicity or making things easy to work with has not been high on the agenda (and for more on that, see my paper on the performers' rights provisions).

There. got that off my chest.

 
Another little IP development to watch...

Is that both the Australian High Court (in Lockwood v Doric, round 2) and the US Supreme Court (in KSR v. Teleflex) are going to be looking at the requirement of non-obviousness in patent. This is one of the criteria that limits (or should limit) the granting of 'bad patents' (whatever they are). The Supreme Court case looks particularly interesting - check out Patently-O's summary of the issues and links to all the briefs.

 
IP Quote of the Day

'Thinking that patent lawyers cause innovation is like thinking that ants cause picnics.'
Ed Felten, Freedom to Tinker.

The rest of the post is interesting, too, by the way - and should be of interest to Australian policy-makers. It's all about 'innovation clusters' - where they form, and why. Although Felten's conclusion - that luck may have more to do with it than we would like to think - won't make the Victorian or Qld governments feel any better, I suspect...

 
And the next exciting instalment...

In Australian IP academia is what happens this week and next in Sydney. We have the IP Teachers' Conference at UTS (organised by the wonderful Jill McKeough, and featuring major players like Peter Drahos and Brad Sherman), and 'Unlocking IP', a major extravaganza at UNSW the following week featuring the very impressive Canadian, Michael Geist. Looks like if a nuclear bomb were to go off in Sydney over the period, Australia would lose > half its IP expertise...

 
Blog report card: must try harder (oh, and IP in China)

So having received a call from a friend who decided to 'mock me for my blog', it occurred to me that I've been most neglectful. And it has to be ironic that just as the Age did a big story on academic blogging, I've been quiet. What can I say? It's that time of year when marking exams (aarrgghh) and conferences (yay) take precedence over other things. [on the blog-academic work trade-off, see this very good op-ed by one of my favourite Australian bloggers, Andrew Leigh).

However, on the assumption that there might be one or two readers who are still interested in what I have to say, here we are. Back in the saddle.

To be honest, though, as far as I can tell, since my last substantial little blogging excursion, there really hasn't been that much going on publicly in IP reform or even IP decisions in Australia. A quick perusal of Rothnie's blog indicates maybe one key thing worth noting: the publication of the Trade Mark Amendment Bill by the government. This one is the outcome of a very long process that IP Australia has been conducting for some time: a kind of 'top to bottom' review of the trade mark law. You couldn't call the overall outcomes, however, anything too radical. A whole lotta cleaning up and a few bits and pieces of substantive changes. Nothing I want to investigate in too much detail.

What has been slightly more exciting in my life, however, has been a short visit to China last week, for a conference on the potential for an FTA between Australia and China (yes, the one mentioned in the AFR, in Shenzen, that was briefly interrupted by a PM appearance). I was there to give a paper on potential content for an IP Chapter (I think the paper will be online eventually; in the meantime, if you'd like a copy, just email me k dot weatherall at unimelb dot edu dot au). The conference itself was quite interesting - particularly because all the sessions had Australian and Chinese speakers so we heard different perspectives on some of those key issues.

Perhaps more interesting, from my perspective, was investigating IP infringements first hand. Yes, that's right - I went a-wandering in the Chinese markets and stores to see what was available. It was quite an eye opener. Notable features:

• counterfeit versions of some brands were readily on display. These included Tiffany's, Lacoste, and Gucci;
• other brands and goods were almost never on display: DVDs were one of these. Plenty of people willing to sell you counterfeit DVDs - but they approached you, rather than displaying their wares;
• In a lot of cases, the goods on display were no-brand or no-name (or a chinese brand). This was especially true of watches. However, if you paused for even a moment, the counterfeits would start coming out - Cartier, Omega etc. It was like watching the dance of the 7 veils. Either that, or you would look at a catalogue and then someone would go off and bring the goods you were interested in back.
  
• The people in the stalls had a pretty good idea of when enforcement would occur. One person, when I asked when the police came by, told me '2:30 or 3pm - but we know someone in the police station and they call us to warn us.'
• There's a whole system for keeping goods off-site: you look at the catalogue, they phone or walky-talky to someone who brings the goods to where you are. It doesn't take long. The purpose is to ensure branded counterfeits are not kept onsite.

Very interesting.