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The ADA Monthly Intellectual Property
Wrap-Up
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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.
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April
2003
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[1] About this Publication
[2] Digital Agenda Review Update
[3]
Animation, Films and SFX and Computing Games Inquiry
[4] Open source
matures
[5] Pushing into the mainstream: copy protected CD's
[6] P2P:
The Saga of Grokster & Morpheus
[7] I can copy this,
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 Miranda Lee
know by email: (mlee@nla.gov.au).
Nothing in this publication constitutes legal advice.
[2] Digital Agenda
Review Update
As announced last month, Phillips Fox has been named
as the consultant who will report to the Government on the Digital Agenda
Amendments. Philips Fox have set up a page on their
website which will give updates on the
progress of the review, contain copies of issues papers as well as information
on the public consultation phase. The ADA will be consulting with Phillips Fox
as they prepare the issues papers, planned for release in mid-July.
[3] Inquiry into Films, Animation and Gaming
Industries
The House of Representatives Standing Committee
on Communications, Information Technology and the Arts is undertaking an
inquiry into the future of the Australian film, animation, special effects and
electronic games industries. The inquiry will have a creative and technological
focus.
The terms of reference have been released and is available from
the Committee's
website.
The Australian Digital Alliance will be making a
submission to the inquiry.
[4] Open Source
Matures
Open source software once relegated to dot.coms, is
slowly maturing and coming under consideration by the big firms; the open
source Linux is now used by companies such as Merrill Lynch, Verizon and
Boeing. The adoption of open source wares may in part be driven by the rising
cost of software licenses, the difficulty of negotiating reasonable tailored
licenses combined with the often opaque nature of pricing models. While
complexity is often the price of flexibility, companies often find themselves
exasperated by the restrictive conditions and the rigid models offered by the
software monopolies.
The growing popularity of open source has not been
watched passively by the big software companies whose markets are slowly being
undermined by the open source movement's emphasis on open distribution of
software. In the current case filed by SCO group (the inheritor of the
intellectual property for the Unix operating system) against IBM, SCO alleges
that IBM misappropriated SCO's technology by building inappropriate knowledge
of SCO's Unix into IBM's current Linux work. The allegations has indirectly
(but deliberately) raised questions the integrity and "cleanliness" of Linux
software and more broadly, the open source movement.
Although open
source has to date been a cultural and technological success story, the task of
convincing companies that its methods are legally sound remains an obstacle.
While SCO's accusations at this point is unlikely to have any real impact of
Linux and open source, the suit damages the heart of the real game in the
software licensing wars, winning consumer confidence and trust.
The
Open Source Initiative website can be found
here.
[5] Pushing into
the mainstream: Copy protected CD's
Copy-control CDs are
poised to hit the mainstream in the Australian music market. Although they were
formally introduced in November last year, fears of vehement consumer
opposition have delayed their entrance into the mass market.
Copy
controlled CD's are CD's that have imbedded technological "locks" that prevent
the CD from being copied onto other recordable media. Consumer resistance to
the use of this technology on CD's has been strong due to the propensity for
such technology to prevent other legitimate uses of the CD. Although the
current Copyright Act does not allow for digital copying even for personal use,
the various anti-copying technology on CD's have prevented users from playing
the legitimately bought CD's on their car stereos or CD drives in computers as
well as some officially "compatible" disc players (eg Xbox).
Several
formal complaints have been lodged with the ACCC. The complaints have been
based not only on the inadequacy of the copy control technology to enable
legitimate uses but also on the failure of record companies to properly
disclose that the CDs contain embedded copy control technology. The inadequacy
of recording companies' responses or lack thereof has also been the subject of
a number of complaints lodged with the ACCC.
The ACCC has stated that
under the Trade Practices Act if, as a result of inadequate disclosure on the
product packaging or at the point of sale, a consumer believes that a CD can be
played in a certain manner, but subsequently finds that it cannot, they can
return it to the place of purchase to obtain a refund. Although this offers
some recompense to users who are aggrieved, the current use of copy control
technology on CDs remains unsatisfactory, creating a take-it-or-leave market.
While we await improvements to the current cumbersome technology, control has
been lifted from users, taking away a range of uses which music buyers have
enjoyed since the birth of the modern music market.
The spread of the
copy controlled CD's has had a slow beginning in Australia and the US but is
set, at least according to recording companies, to become mainstream practice.
EMI Music has already released over 100 million copy control CDs. Most of these
have been released in Europe and Japan where the consumers are deemed to be
less vocal than the American (and Australian) markets.
While illegal
copying of music has been eased by digital technology, the imposition of these
technological bars is not likely to make any significant impact on the problem
of music "piracy". Once upon a time, it may have been enough to create a
technological obstacle that would deter opportunists but the advent of
peer-to-peer (P2P) technologies amongst other developments makes these
approaches obsolete. Moreover, the introduction of this kind of technology
impinges consumer choice and generates consumer frustration for purchases made
in good faith for legitimate use (perhaps ironically, driving consumers to seek
the product by other means -such as, P2P).
[6] P2P: The Saga of
Grokster & Morpheus
In a significant development in the
continuing struggle over file-sharing, a federal judge in California ruled last
week, that Grokster and StreamCast (the owner of 'Morpheus' networks ) were not
liable for copyright infringement by users. The surprise decision comes after a
long train of events, such as the fate of Napster and the ensuing prosecution
of P2P users, which has suggested that the days of P2P networks were
passing.
In a summary judgement delivered on 25th April, both Grokster
and Streamcast were acquitted of the charges against them for contributory and
vicarious copyright infringement. US Federal Judge Wilson determined that
neither companies could be found liable for contributory infringement as the
companies only had constructive, not actual knowledge of the infringement and
did not have that knowledge at a time when the companies could act on it to
prevent infringement by users.
Further Wilson found the motion for
contributory negligence lacking on the grounds that neither Grokster nor
Streamcast had contributed materially to the infringement by providing "site or
facitlities"as in the Napster case. While Napster operated a centralized
file-sharing network, Grokster technology in effect sets up a cluster of
"nodes" (end user systems) which cluster around some of "supernodes". The
technical process of locating and connecting to a supernode essentially occurs
independently of Grokster. Similarly, Morpheus (owned by Streamcast), is based
on the open-source Gnutella peer to peer platform which features even more
decentralisation than Grokster. Requests sent on Morpheus are passed on from
user to user until a match is found (or the search expires).
Given the
structure of both networks, the motion of vicarious infringement failed on the
grounds that the defendants do not have a right nor ability to supervise the
infringing conduct. In the conclusion of the case the judge stressed that the
court was "not blind to the possibility that the defendants had intentionally
structured their businesses to avoid liability" but that in this instance, the
defendants could not be found to have acted improperly. In delivering the
decision, the judge hinted that any other result would have to first be sought
from Congress.
It is expected that the ruling will be immediately
appealed.
The decision has received a mixed and cautious response from
commentators. While it sends out the positive message that technology companies
can provide new technology tools without fear of copyright liability, it does
not deal with the legality of P2P copying.
Note: While, the suit was
originally filed against Grokster, StreamCast Networks and Kazaa (run by
Sharman Network). Kazaa is no longer part of this case and is not included in
the decision. Consequently, the question Sharman Network's liability remains
unanswered.
The full decision of the case, Metro-Goldwyn-Mayer
Studios v Grokster, can be found via the
EFF
site .
[7] 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.
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