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. -------------------------------------------------------------- November 2002 -------------------------------------------------------------- [1] About this publication [2] Federal Court hands down telephone book decision [3] CAL, Universities strike new copying deal [4] Copyright extension hangs in the air: Eldred v Ashcroft [5] Modchips examined [6] Libraries: a battleground for free speech [7] DMCA review begins [8] Jurisdiciton of U.S. Law tested: the case of Kazaa [9] 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/. 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] Federal Court hands down telephone book decision The full court of the Federal Court dismissed the appeal by Desktop Marketing Systems against a finding that its CD-ROM products infringed copyright in Telstra's telephone books. (A discussion of the lower court's findings can be found here: http://www.digital.org.au/issue/ipwmay01.htm). Desktop Marketing Systems marketed three CD-ROM products that contained 'Yellow and White pages listing data' arranged to be searchable in a variety of ways. Telstra alleged copyright infringement, claiming that it held copyright in the White and Yellow pages, despite the fact that these books contain non-creative factual information which is not protected by copyright in some jurisdictions (chiefly the US). All three judges upheld Telstra's claim of copyright. They rejected the decision of the US Supreme Court case Feist Publications Inc v Rural Telephone Service Co Inc which found no subsistence of copyright in ordinary phonebooks. In that case, Justice O'Connor observed that 'in preparing the white pages directories, Rural simply took the data received from its subscribers and listed the data alphabetically by surname. Her Honour made that observation in support of her description of the "end product" as "a garden-variety white pages directory, devoid of even the slightest trace of creativity."' It was significant in the Feist case that the data was 'received' by the telephone company in the course of its business rather then actively 'collected'. Black CJ rejected this argument in an Australian context: 'in any case, to conclude that Telstra "receives" rather than "collects" the data is to pay insufficient attention to the fact that, even in the case of the White Pages, Telstra receives the data only because it has undertaken the effort and expense of setting up and maintaining systems to get the data from both new and existing subscribers. In a real sense, Telstra does collect the data for the purpose of its compilations and certainly the process can aptly be described as "collecting/receiving". ' Furthemore, the Court rejected the collecting/receiving dichotomy when it said: 'as the discussion of these cases in the judgments of the other members of the Court shows, however, they do not turn upon the circumstance that the effort and expense applied was in the collection, rather than receipt, of data. In general, they turn upon a reluctance of the Courts to allow unfair advantage to be taken of the outlays of another in originating a work.' So the Court found that Desktop was unfairly free-riding on Telstra's efforts. This seems strange in light of the fact that Telstra 'collects/receives' this data by virtue of the fact that it still essentially has a monopoly on many types of telecommunications services in Australia. Since deregulation, many telecommunications carriers and service providers have appeared on the scene but none has been able to rival Telstra in its market position. The 'effort and expense of setting up and maintaining systems to get the data from both new and existing subscribers' is underpinned by an historical monopoly. Lindgren J specifically considered this question and dismissed it: "I am not dissuaded from concluding that this labour was sufficient to attract copyright protection by any one of the following considerations, or all of them regarded as a whole: that Telstra supplied the Directories pursuant to a statutory obligation; that Telstra supplied the Directories free of charge to its subscribers; that Telstra supplied the Directories as an incident of a broader business conducted by it; that Telstra enjoyed a monopoly; that, as a practical matter, it was not open to Desktop or anyone else to acquire the information recorded in the Directories, except from Telstra; that the alphabetical arrangement of the data was achieved by the use of computer programs. While most of these features were not present in the industrious collection cases decided to date, and may be said to make the expression "industrious collection" a too elliptical description of Telstra's labour, which included receiving, standardising, verifying and recording, in my view the principle of those cases is applicable. To deny copyright protection would permit Desktop to appropriate the benefit of Telstra's substantial labour and expense in performing those activities. Desktop has lodged its appeal for leave to appeal to the High Court to make a final determination on copyright in this matter and a decision is anticipated early to mid 2003. >[3] CAL, Universities strike new copying deal Under Part VB of the Copyright Act, universities, along with other educational institutions, are permitted to use portions of published material without permission provided that the use is ultimately paid for. This payment is handled through the Copyright Agency Limited (CAL), one of a handful of copyright collecting societies. CAL and the universities (represented by the Australian Vice-Chancellors Committee (AVCC)) have had a deal covering the use of hardcopy material (for reading bricks, for example) for some time but this is the first agreement covering electronic use. Following the Copyright Amendment (Digital Agenda) Act 2000, Part VB was amended to allow for the electronic dissemination of educational material. Not only did CAL and the AVCC have to work out a price for this new use but they also had to work out how the electronic communication of educational material was to be monitored and on what basis it was to be charged for. The agreement commences on 1 January 2003 and runs until 2007. Monitoring of copying and communications begins from 20 May of this year. It is not presently known how exactly universities will track electronic usage but John Mullarvey refers to such tracking as 'an added burden for universities'. The AVCC media release can be found here: http://www.avcc.edu.au/news/public_statements/media_releases/2002/ avcc_media_10_02.htm . The CAL media release can be found here: http://www.copyright.com.au/news%20releases/17_05_02.htm >[4] Copyright extension hangs in the air The February edition of the Intellectual Property Wrap Up traced the progress of Eldred v Ashcroft to an appeal to the US Supreme Court. The much anticipated hearing took place on October 9 when oral arguments was held (the transcript of the oral arguments are posted on the U.S. Supreme Court site at http://www.supremecourtus.gov/oral_arguments/argument_transcripts/ 01-618.pdf Eldred lawyer, Lawrence Lessig argued that the bargain the framers of the U.S. Constitution struck was that creators would be granted a limited monopoly on their works as an incentive to encourage further research and innovation. The term "limited" in the copyright clause is intended to be interpreted as such and not treated as renewable to create a copyright that exists perpetually. He also argued that retroactive extension of copyright, such as the Sonny Bono Act violates the Constitution because it clearly can't provide an incentive (as Lessig put it "Gershwin isn't going to write any more music") and to the contrary, the cause of progress actually suffers under retroactive extensions, because works that would otherwise have entered the public domain remains in private hands. Ashcroft lawyer, Mr Theodore Olsen asserted on the other hand, that the framers of the Constitution intended Congress to have the power to define what "limited" is. Olsen claimed also that the Sonny Bono Act, extending copyright a further 20yrs than previously held was a valid congressional decision which provided incentives to creators by giving them more rewards for their work and by creating further opportunities for dissemination. The court asked some difficult questions, amongst them the point that Congress has extended the term through several acts; what significance is attached to the fact that previous extensions were never challenged? And if the Sonny Bono Act were ruled unconstitutional, what ensuing chaos would that mean for previous extensions of time? The court's decision will be delivered early next year with most experts believing that Lessig's arguments will fail, as has been the case in two lower courts. Although the arguments centre around U.S. congressional power and U.S. constitutional law, the case is a notable battle in the bigger war of ensuring balanced access to creative works through the public domain and the provision of rewards for creators of works. [5] Modchips examined… On the 26th July 2002 the decision of Kabushiki Kaisha Sony Computer Entertainment v Stevens (the Sony case) was handed down in the Australian Federal Court, with mixed reactions from copyright owners and users. The background to the case is detailed in the October 2001 issue of the Wrap- Up. In brief, Mr Steven had been selling and installing modifying chips ("modchips")into Sony PlayStation consoles, which allowed the regional access codes in PlayStation games to be bypassed so that games from different areas of the world could be played. Sony claimed that this conduct was a contravention of the Copyright Act, as the practice of regional coding is a "technological protection measure" (TPM) and the chips installed by Mr Stevens constituted circumvention devices. In order to decide whether Sony was entitled to relief against Mr Stevens, the court had to consider whether regional coding is a "technological protection measure" for the purposes of the Act. Justice Sackville rejected the ACCC's submission that a device cannot fall within the definition unless its sole purpose is to prevent or inhibit copyright infringement. His Honour accepted that regional coding is intended to and, does in fact, have the practical effect of deterring or discouraging copyright but did not accept that this is sufficient to satisfy the definition of a TPM. In coming to this conclusion, Justice Sackville expressed the view that legislative history did not support the argument that a technological protection measure is to be protected if the only way in which it inhibits copyright infringement is to discourage infringement rather than actually preventing it. Justice Sackville also rejected Sony's alternative argument that the playing of a PlayStation game without the authorisation of the copyright owner constitutes copyright infringement and followed the decision of Justice Emmett in Australian Video Retailers Association v Warner home Video, holding that the temporary storage of data in a computer's RAM does not constitute infringement of copyright in a computer program as it is not ordinarily possible to reproduce the computer program from the data stored in the RAM of the PlayStation Console. While Sony is appealing the decision, the judgment sheds some light as to the way that TPMs are defined and raises some other interesting issues with respect to infringement and technology. Copyright owners has seen the decision as an erosion of the protection of their rights but the real of effect of the decision will no doubt be debated for a while to come. The full text of the decision is available at http://www.austlii.edu.au/au/cases/cth/federal_ct/2002/906.html [6] Libraries: a battleground for free speech….. The U.S. Supreme Court has agreed to consider the constitutionality of the Children's Internet Protection Act ("CIPA") (U.S.), which requires that libraries receiving federal funding for Internet access must install software filters to prevent children from being exposed to pornography and excessive violence. In May, the American Library Association (ALA) received a unanimous lower court ruling that CIPA is unconstitutional because the mandated use of filtering technology on all computers will result in blocked access to substantial amounts of constitutionally protected speech. The Court's decision hinged on the inefficacy of available filtering software finding that currently, filters were "blunt instruments" that would suppress not only pornography and violence but constitutionally protected speech presented on legitimate sites. The panel also found that "filtering products' shortcomings will not be solved through a technical solution in the foreseeable future". For these reasons, the judges concluded that the library plaintiffs must prevail in their contention that CIPA requires them to violate the First Amendment rights of their patrons. The lower court permanently enjoined the Federal Communications Commission (FCC) and the Institute of Museum and Library Services (IMLS) from withholding funds from public libraries that have chosen not to install blocking technology on all Internet-ready terminals. As a result, public libraries are not required to install filters on their computers in order to receive funds from either agency. In the Supreme court next year, it will be argued that the lower court was wrong when it viewed the case as a first amendment case, and should instead have treated it as one involving the government's broad discretion to decide whether access to materials otherwise blocked are sufficiently worthwhile for the government to be required to support it with public funds. Reactions to the ruling have been mixed. Librarians heralded the decision as proof that technology cannot replace the critical evaluative role that information professionals play. Since CIPA's enactment, its opponents have maintained that Internet access issues should be determined at the local level, according to community standards and individual library considerations. However, CIPA proponents found it regrettable that the courts have hampered the ability of parents to protect children from online pornography and allowed libraries to continue to do so on public funds. For the full text decision of the decision in the lower court, go to http://www.paed.uscourts.gov/documents/opinions/02D0415P.HTM [7] DMCA review begins… The U.S. Copyright Office has opened the window for submissions of comments for The 1998 Digital Millennium Copyright Act (US). Based on the comments and their evidence the Copyright Office will make recommendations to the librarian of Congress, who can accept or reject the proposals with decisions expected in October 2003. The 3-year review is mandated by the DMCA and high volume of comments is expected. The DMCA review has come a few months before the review of the Australian Digital Agenda Act which is tagged to begin in March 2003. The findings of the DMCA review will be an interesting example which may indicate the direction and some of the options that the DAA review may take . [8] Jurisdiction of U.S Law tested: the case of Kazaa Fuel will be added to the issue of cross-border legal reach when a Californian federal judge delivers his judgment on whether Sharman Networks, the parent company of Kazaa (arguably the most popular online file-swapping services), can be sued by a coalition of US record companies and movie studios. Hearings were held on 25th November and although the ruling has not been handed down yet, Judge Wilson indicated that he would be inclined to find jurisdiction against Sharman; ``I find the argument about providing the service to so many California residents compelling,'' he said. . The issue has become increasingly important as companies dealing with file-swapping and other Internet businesses dealing with copyrighted material have increasingly moved operations off-shore in an attempt to decrease its legal risk under the DMCA and related legislation. Jurisdictional arguments such as sufficient business contact and in this case, jurisdictional clauses in the company's contracts with partners will be considered by the judge in the decision which will send an important message to other companies dealing in online trade of intellectual property. The fate of Kazaa will hang on the judge's decision on whether Sharman Networks, headquartered in Australia and incorporated in Vanuatu can be found liable in the United States jurisdication; if so, Kazaa will be added to a larger lawsuit ongoing against two rival file swapping companies utilising the same underlying de-centralised networks, Streamworks Networks and Grokster which will reach a critical hearing on Dec 2nd . >[9] 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