The ADA Monthly Intellectual Property Wrap-Up ---------------------------------------------------------------- A monthly summary of recent legislation, cases, reports and other events relating to intellectual property and the public interest, published by the Australian Digital Alliance. -------------------------------------------------------------- June/July 2005 -------------------------------------------------------------- [1] About this Publication [2] Australian Update on Authorisation, Linking & the US-Australia Free Trade Agreement: Universal Music Australia Pty Ltd v Cooper. [3] News from the US: The Grokster Decision [4] Policy Update [5] I can copy, right? [1] About this publication This summary of recent IP (but chiefly copyright) happenings of relevance to Australia is published every month by email and on the Australian Digital Alliance website at http://www.digital.org.au/issue/issue.htm. If you have any suggestions as to what should go in the next issue, please let Sarah Waladan know by email: (swaladan@nla.gov.au). Nothing in this publication constitutes legal advice. [2] Australian Update on Authorisation, Linking & the US-Australia Free Trade Agreement: Universal Music Australia Pty Ltd v Cooper. On 14 July 2005, the Federal Court of Australia (per Tamberlin J) handed down this decision, which provides important clarification in relation to various aspects of copyright law. Amongst other things, the decision discusses what amounts to authorisation of copyright infringement, hyperlinking, and the safe harbour scheme provided for by the US Free Trade Agreement Implementation Act 2004 (Cth). The case was brought by various record companies in relation to breach of copyright in various sound recordings. The sound recordings were accessible via a website, mp3s4free.net, which provided links to music files on other sites. The action was brought against several respondents. Firstly, against Stephen Cooper, the originator, owner and operator of the MP3s4Free website. Secondly against the ISP, E-Talk/Com-Cen, thirdly against a director of the ISP company, and finally against an employee of Com-Cen who had provided assistance to Mr Cooper in relation to the establishment and operation of the website. Authorisation of Copyright Infringement It was alleged that Mr Cooper breached the Copyright Act by: himself making copies of the sound recordings and communicating them to the public; authorising internet users to make copies of the music sound recordings; and authorising both internet users and E-talk/Com-Cen to communicate these music sound recordings to the public. Similar allegations were brought against the ISP, E-talk/Com-Cen. In relation to Mr Cooper, the Court held that he had authorised both copyright infringement by internet users who accessed his website, and also by the owners or operators of the remote websites from which the infringing recordings were downloaded. The Court was of the view that Mr Cooper could have prevented the infringements, because it was not possible to create a hyperlink between a music file and his website without his permission. Mr Cooper had sufficient control of his own website to take steps to prevent the infringement, and could have removed the hyperlinks from his website or structured the website in such a way that the operators of remote sites could not add hyperlinks to his site without his supervision. In addition, the Court held that the disclaimers on Mr Coopers website, did not prevent liability. The disclaimers essentially stated that MP3s could be both legal and illegal and that the downloading of MP3s would be legal only when the song's copyright owner had granted permission for the internet user to download and play the music sound recording. The Court did not consider this to amount to 'taking reasonable steps' to prevent infringement. In relation to the E-talk/Com-Cen, the Court similarly found that the ISP had authorised copyright infringement on the basis that it had the power to prevent infringements, by taking down the website, but instead did nothing. The Court was particularly unconvinced by evidence from the representatives of E-talk/Com-Cen, which essentially lead Tamberlin J to the conclusion that they were both involved in and aware of problems with the website, but decided not to further investigate or take any effective action in relation to the hosting of the website. Implications for the Common Practice of Linking The implications of this case seem to relate more to authorisation of copyright infringement and what amounts to authorisation, rather than to linking per se. If it can be shown that an individual or organisation was instrumental in effecting breaches of copyright, then they will not be able to absolve themselves by claiming that they did not have any knowledge of the breaches. In this case, by providing or allowing the links, the respondents effectively were instrumental in enabling the copyright infringements to occur. Furthermore, the Court was of the view that the Respondents were aware of this but did nothing to prevent the infringements that were occurring with their knowledge. This case provides an important warning for those operating and hosting websites. If it is within the power of an individual or organsiation to take steps to prevent infringements, and if the organisation or individual is aware that infringements may be occurring, then the onus is on them to take reasonable steps to prevent those infringements. ISP Safe Harbour Scheme The Court dealt with this issue very briefly. It was found that the US Free Trade Agreement Implementation Act 2004 (Cth) did not apply to this case as it could not operate retrospectively (i.e. to matters before 1 January 2005). In any event, the Court confirmed the following in relation to the new legislation: For the scheme to apply, an ISP must show that it has adopted and reasonably implemented a policy that provides for termination, in appropriate circumstances, of the accounts of repeat infringers; For 'category D activities' (which include linking), the ISP must not receive any financial benefit from the infringing activity if the service provider has the right and ability to control the activity; In this case, the Court found that not only did the ISP not have any policy in place as per the requirements of the USFTA Implementation Act, but it furthermore did not expeditiously remove infringing material when circumstances made it apparent that copyright material was likely to be infringed on its network. The Court also found that E-talk/Com-Cen received a direct financial benefit from the infringing activity because it obtained free advertising on the website. The full decision can be accessed here [3] News from the US: The Grokster Decision The MGM v. Grokster Supreme Court decision was handed down on 27 June 2005. The US Supreme Court unanimously held that distributors of peer-to-peer (P2P) file-sharing systems may be held liable if they actively induce copyright infringement by users. In doing so, the Court reaffirmed its earlier ruling in Sony Corp of America v. Universal City Studios (the Betamax case) which held that technologies could not be outlawed if they were capable of substantial non-infringing uses, however it stated that it believed the BetaMax case was misapplied in the lower Court (US Federal Court) decision. The court stated that the BetaMax 'substantial non-infringing use' defence would not protect defendants who had the clear intention of encouraging, and profiting from, illegal use of their products, even where substantial non-infringing uses could be found. The Court found that Grokster had actively promoted to users, the ability to locate and download copyrighted materials in their advertisements. Furthermore, Grokster had provided advice to its users in relation to downloading and viewing copyrighted materials, and had also actively promoted its software as an alternative to Napster, (which was engaged in litigation with the recording industry at the time). Thus it seems that the decision does not prohibit people from designing and offering products that could be used to infringe copyright. The Supreme Court acknowledged the positive uses of P2P technology, stating that "given these benefits in security, cost, and efficiency, peer-to-peer networks are employed to store and distribute electronic files by universities, government agencies, corporation, and libraries….” , The decision does however require that people designing or offering such products do not actively promote and encourage illegal use, and that the products do have substantial non-infringing applications as well. As can be seen from comparing this decision to the Universal Music Australia v Cooper decision discussed above, Australian law is not the same as US law. The US law doesn't have the same 'authorisation' concept as is contained in the Australian Act. However the Grokster decision will no doubt be of influence to Australian Courts in determining cases against developers and distributors of products that are capable of both infringing and non-infringing uses. Responses to this decision in the US were varied. The Libraries Copyright Alliance for example stated in a press release that "The library community is gratified that the Court upheld the Sony rule and struck a balance between the protection of copyrighted works and the development of innovative technologies.” The Electronic Frontiers Foundation (EFF) however was critical of the decision, stating that the decision creates a new test of liability measuring whether manufacturers create their wares with the "intent" of inducing consumers to infringe. In its press release following the decision the EFF stated that the decision means "that inventors and entrepreneurs will not only bear the costs of bringing new products to market, but also the costs of lawsuits if consumers start using their products for illegal purposes. 'Cyberspeak' commentator Andrew Kantor of the US Today contrastingly opined that "Monday's Grokster decision by the Supreme Court is a win for file sharing. In fact, it's a pretty big win, and it's a loss for the entertainment industry. The Court did not say that file-sharing itself was a problem... "The Court's decision was, oversimplified: Grokster and StreamCast bad, file-sharing OK." No doubt the findings in this decision will be further explored by future cases... [4] Policy Update Fair Dealing Review The official closing date for submissions to the fair dealing review was 1 July 2005. The ADA made a submission requesting a range of amendments to the current exceptions to copyright infringement, including: an exception covering orphaned works a 'format-shifting' exception an exception covering both active and passive caching clear and logical preservation copying exceptions a back-up copying exception an exception covering various transformative uses of works The Attorney-General's Department is currently in the process of reviewing the submissions received. Free Trade Agreements The Department of Foreign Affairs and Trade is currently in the process of negotiating 4 free trade agreements between Australia and: The United Arab Emirates; China; Malaysia; and the Association of Southeast Asian Nations. Each of these agreements will contain terms in relation to intellectual property. It is currently unclear whether Australia will ask for the 'trips plus' copyright term of 70 years to be included in these agreements. Currently, these agreements are in their early stages of negotiation. [5] I can copy, right? Yes, you can copy this publication. Feel free to send it to friends or colleagues, print it off or even archive it on your website provided that all text is included or, in the case of an excerpt, appropriate credit is given     News | Membership | Contact Us