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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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August
2004
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[1] About this Publication
[2] Australia- United States Free Trade
Agreement: Update
[3] Senate Select Committee Report on the Australia- U.S.
Free Trade Agreement Report and Recommendations Released
[4] Joing Standing
Committee on Treaties Report on the Australia - U.S. Free Trade Agreement
Report and Recommendations Released
[5] Inducing Infringement of Copyrights
Act 2004 (the Induce Act) introduced in the U.S.
[6] Metro-Goldwyn-Mayer v.
Grokster - A Win for Software Providers
[7] 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] Australia- United
States Free Trade Agreement: Update
On 13 August 2004, the Senate,
by a vote of 51 to 10, passed enabling legislation which will incorporate the
Australia - U.S. Free Trade Agreement (AUSFTA) into Australian domestic
legislation. Australia and the U.S. intend that the AUSFTA will come into force
on 1 January 2005.
This follows the release of the final reports of the
Joint Standing Committee on Treaties (JSCOT), which was tabled in Parliament on
23 June 2004, and can be viewed at:
http://www.aph.gov.au/house/committee/jsct/usafta/report.htm,
and of the Senate Select Committee, which was tabled in Parliament on 5
August 2004, and can be viewed at:
http://www.aph.gov.au/Senate/committee/freetrade_ctte/report/final/index.htm.
Both reports considered whether the AUSFTA overall was in Australia's
national interest, and concluded in the affirmative. Both however also
specifically looked at the IP provisions of the agreement, drew various
conclusions to the effect that the agreement as it currently stands would have
a detrimental effect on Australian copyright law, and recommended various
balancing measures that should be put in place. Below is a summary of these
reports. Please note that this is a selective and brief version and that the
full reports can be accessed at the above links.
[3] Senate
Select Committee Report on the Australia- U.S. Free Trade
The
Committee recognised that the changes which the AUSFTA will bring to Australian
copyright law will tilt the balance of rights between copyright owners and
copyright users, towards copyright owners to an unacceptable degree. However,
the Committee concluded that there are measures that can be taken to address
this imbalance and that overall the AUSFTA is in Australia's interests.
The Committee noted the necessity for appropriate exceptions in favour
of rights users to be created which reflect the interests of the Australian
public. It noted its concerns that such exceptions have not been included in
the FTA package. Since the legislation has now been passed, any movement
towards re-balancing of rights will need to occur subsequent to implementation.
(The ADA and ALCC have subsequently responded to this by lobbying Government in
relation to extending the fair dealing provisions of the Copyright Act to make
it broad and open-ended. The joint submission can be viewed at
http://www.digital.org.au/submission/submission.htm)
Extension
of Copyright Term: The Committee notes that the AUSFTA is viewed as a major
'win' for the US, and refers to the Industry Functional Advisory Committee's
paper on intellectual property rights for trade policy matters (a US Committee
required to provide an advisory opinion to Congress on proposed agreements, and
specifically whether such agreements promote, and if so, to what extent, the
interests of the US), which suggests that the US will push for an even further
extension to 95 years in future negotiations with Australia.
The
Committee identified most of the evidence against extension to relate to the
adverse economic impact on libraries, universities, cultural institutions, and
the wider public. The main arguments against extension included:
- the extended term of payment of royalties;
- increased costs through the statutory
licenses issues to educational institutions by collecting societies;
- the increase in transactional and tracing
costs for an extra twenty years;
- and the reduction of the incentive to create
more works.
The Committee noteed the misrepresentation in
saying that copyright extension is beneficial for creators, and points out that
'arguably, the IP Chapter actually does little more than concentrate power in
the hands of major IP-owning businesses'.
Standard of originality
and 'fair dealing' v 'fair use': It was noted that 'harmonisation' of
copyright has been very selective thus far.
In the US, the 'fair use'
exception provides a non-exhaustive flexible list of purposes which allows US
courts to find 'fair use' for uses including parody, time-shifting (ie copying
for the purpose of later use), space-shifting (ie moving material onto
different mediums for personal/non-commercial use).
The Committee
pointed out that this allows the US courts to find new or unforseen but
economically insignificant uses 'fair'. In relation to the issue of what to do
with 'fair dealing'; the Committee recommended that an open-ended 'fair use'
doctrine, similar to that in the US, be adopted to resolve the discrepancy
which exists in relation to copyright law between legislation and everyday
practice.
The disparity between the standard of originality required by
US as opposed to Australian law was also noted. In the US, the work must
involve a degree of creativity, whereas in Australia, copyright protection is
granted on the basis of the expenditure of skill and labour. This means that a
broader range of material is protected in Australia compared to in the US.
Anti-circumvention provisions of the AUSFTA: Whilst the
Philips Fox Report recommended amendment of the Copyright Act to expand the
definition of 'permitted purpose' for use and sale of TPMs, the AUSFTA does not
allow a blanket exemption for non-infringing uses, thus those Philips Fox
recommendations cannot be enacted subsequent to the AUSFTA. However, under the
AUSFTA, Australia can make certain classes of copyrighted work exempt from the
normal TPM circumvention prohibitions where the circumvention is for a
non-infringing use (for example, films on DVD, music, and video games).
The Committee noteed its concern that 'the AUSFTA effectively displaces
previous extensive public review processes, such as the Digital Agenda Review,
which involved widespread consultation and participation. These processes
rejected some of the very changes to Australian IP law that the AUSFTA now
requires Australia to adopt'. The Committee went further and drew from this
that at least some the of the changes required to Australian law under the
AUSFTA are not desirable from an Australian policy perspective, and that it is
inappropriate that domestic law reform processes have been made redundant by
the AUSFTA.
The Committee concluded by raising its concerns that it
should be made clear that certain classes of copyrighted work is exempt from
the normal TPM circumvention prohibitions where the circumvention is for a non
infringing use.
Internet Service Provider Liability: The
Committee noted the importance of caching for institutions such as universities
and libraries. It noted the ADA's point that ISPs should not be excluded from
limitation of liability when engaging in the configuration of settings or
maintenance activities that are designed to enhance the efficiency of networks.
The Committee also noted its concerns that further to the AUSFTA implementation
Bill, Australia will be required to draft regulations to facilitate the
implementing legislation, and that DFAT was not forthcoming about what such
regulations will contain, or whether proper consultation and debate will take
place in relation to them.
[4] Joing Standing Committee on Treaties
Report on the Australia - U.S. Free Trade Agreement Report and Recommendations
Released
The Committee acknowledged that as a net importer of
copyright material; 'there is a suggestion that there will be a negative
economic impact on users and consumers of copyrighted material'.
The
Committee looked at the potential for expanding 'fair dealing' in Australia in
quite some detail and ultimately recommended that Australia adopt the U.S.
approach of 'fair use', including the aspect of the fair use doctrine that
provides for time and space shifting.
The Committee concluded by
recognising that the extension of the copyright term from 50 to 70 years was a
concession by Australia in order to secure the deal. It recommended that in
order to assist educational, libraries, research and other institutions to
discharge their functions of providing community access to knowledge, the
Government should:
- Enshrine in legislation the rights of
universities, libraries educational an research institutions to readily and
cost effectively access material for academic and related purposes
- Replace the fair dealing doctrine with a
doctrine that resembles the U.S.' open-ended defence of fair-use, to counter
the effects of the extension of copyright protection,
- Ensure that the Commonwealth
Attorney-General's Department (AG's) and the Department of Communications
Information Technology and the Arts (DCITA), review the standard of originality
applied to copyrighted material with a view of adopting a higher standard such
as that in the U.S.
The Committee supported the implementation
of Australia's obligations in relation to TPMs and recognised that this would
require Australia to increase available remedies in the civil and criminal
codes. However, it made a recommendation that the Attorney-General's Department
and the Department of Communications Information Technology and the Arts ensure
that exceptions will be available to provide for the legitimate use and
application of all legally purchased or acquired audio, video and software
items and components, equipment and hardware, regardless of the place of
acquisition.
The Committee noted that enforcement of IP rights are as
important as their existence. It expressed concern in relation to a hard line
approach to enforcement particularly in response to monopoly market failure. It
referred to the situation in the US where adolescents can acquire criminal
convictions for essentially minor copyright infringements.
The
Committee however concludes that it is reassured that the provisions for
criminal sanctions are aimed at infringements made for significant and wilful
commercial gain. The Committee acknowledged the considerable debate around
where liability should be placed when an infringement occurs, and recommended
that the introduction of a scheme for immunity of ISPs should allow for
copyright owners to engage with ISPs and subscribers to deal with allegedly
infringing material on the internet.
In doing so, the Committee
recommended that Government should:
- Take note of the issues encountered by the US
in implementing a similar scheme
- Tailor a scheme to the Australian legal and
social environment; and
- Monitor the issue of peer to peer file
sharing.
[5] Inducing Infringement of Copyrights Act
2004 (the Induce Act) introduced in the U.S.
The Inducing
Infringement of Copyrights Act 2004 (the Induce Act) gives copyright
holders in the US a mechanism by which to establish contributory liability
under copyright law for anyone who creates, develops, implements or distributes
technology that is capable of disseminating copyrighted material without
compensation to the rights holders.
The Act says "whoever intentionally
induces any violation" of copyright law would be legally liable for those
violations. It has been suggested that the broad language regarding what
constitutes 'inducement' means that liability could extend to anyone who even
advocates the use of such technology.
Promoters of the Act have said
that it will be used to go after those who are engaged in promoting piracy. The
problem of course with this is that the actually reach of the Act is far
greater. It would indeed overturn the 'Betamax Case' (Sony v. Universal
Studios 1984), which established that if a device has substantial
non-infringing uses, its developers, manufacturers, and distributors are not
guilty of contributory copyright infringement if the device is also used to
make unlawful copies of copyrighted works.
In an opinion article for
the Wall Street Journal published Wednesday, Les Vadasz, who retired last year
as an Intel executive vice president, denounced the Induce Act as having a
wealth of undesirable side effects. "The chilling effect that a law like this
would have on innovation cannot be underestimated," Vadasz said. More than 40
trade associations and advocacy groups voiced similar sentiments in a letter to
senators on July 6 saying that the Induce Act "would chill innovation and drive
investment in technology" overseas. This group included organisations such as
CNET Networks, eBay, Google, Intel, MCI, TiVo, Verizon, Sun Microsystems and
Yahoo. (CNET Networks publishes News.com.)
The US Copyright Office has
defended the Induce Act as making modest changes to copyright law that were
necessary to target file-swapping companies. "If people have specific concerns
(about the wording of the bill), we'd be open to working with the committee to
figure out how to address them," a lawyer for the office said.
NetCoalition however, which represents e-commerce firms and Internet
publishers, vigorously disagreed that Congress ought to reconsider the Betamax
decision, and suggested that the Betamax decision is one of the reasons for the
explosion of the Internet, instant messaging and Web browsing products.
[6] Metro-Goldwyn-Mayer v. Grokster - A Win for Software
Providers
A three-judge panel for the US 9th Circuit Court of
Appeals on 19 August 2004 upheld a lower court ruling that found the providers
of Grokster and Morpheus P2P file sharing software not guilty of copyright
infringement.
The judges concurred with the District Court Judge, that
the decentralized design of Morpheus and Grokster implies that the software
providers have no control over the use of copyrighted material on their
networks. In doing so, they held that to be considered vicariously liable for
copyright infringement, three elements are required:
1. direct
infringement by a primary party
2. a direct financial benefit to the
defendant
3. the right and ability to supervise the infringers
Media industry lawyers argued that the Morpheus developers and Grokster
Ltd. could have used fingerprint-based filtering technologies to ensure that
copyrighted materials stay off the networks, but chose not to do so in order to
attract large user bases to free content. In 2001, the Napster decision held
that having the ability to control use of copyrighted works but electing not to
for one's own gain, leads to a charge of vicarious copyright infringement.
The Court did not agree however. Whilst Napster had a central directory
of files available on the network, and thus some knowledge of what was there,
the Court held that Grokster and Morpheus did not. In handing down the Grokster
decision, Judge Sidney Thomas went even further, expressing the opinion during
the trial that filtering technology is unlikely to work as a means of
controlling copyrighted works.
However, it will be interesting to see
how this case fits in with the Induce Act. Although the Induce Act has the
potential to be interpreted so as to shut down file-sharing networks, this will
be in the hands of the Courts.
[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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