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Mainly intellectual property (IP) issues Down Under

A case on computer software licences and back ups in Australia

A rare and interesting decision on the scope of (mainframe) computer software licences and s 47C (computer program back-ups) and s 47F (security testing) of the Copyright Act:

RWWA (which runs the West Australian TAB).  SAG granted it a non-transferable, non-exclusive licence to run the ADABAS database management software on its mainframe computer.  This was the software used for its its betting business.  

In addition to installing the software on its mainframe computer, RWWA arranged with KAZ to use KAZ’ mainframe for a ‘warm’ disaster recovery site: RWWA stored a mirror-image disk copy on KAZ’s mainframe computer.  Although a copy was stored on KAZ’s mainframe, it was not loaded into ‘memory’ except when being used in an actual disaster recovery situation or routine testing to ensure the back-up would work. Prior to this, RWWA had used back-up tapes stored off-site.

In a 268 paragraph decision, McKerracher J has held that RWWA did not breach of its licence by doing this and, in any event, was protected from copyright infringement by ss 47C and s 47F of the Copyright Act.  

The main issues were whether or not RWWA’s off-site storage and testing of the back-up and/or the involvement of KAZ entitled SAG to claim additional licence or maintenance fees (up to several hundred thousand dollars per annum).  In broad summary, SAG contended that

(1) storage and, in particular, the testing of the back-up was in breach of cl. 12.3 and required further maintenance fees or

(2) the involvement of KAZ was in breach of cl. 1.5 which prohibited ‘outsourcing’.

Cl. 1.5 provided:

1.5 The Licensee shall not assign, sub-licence, sell, lease, encumber, charge or otherwise in any manner attempt to transfer this Licence or any of its rights or obligations hereunder. The Licensee may not allow any third party to operate the System(s) on its behalf as part of any outsourcing, facilities management, application service provision or similar type of arrangement.

Clause 12.3 provided

12.3 Software AG hereby expressly authorises the Licensee to copy the System(s) (in object code only) and the Documentation for archival or emergency restart purposes PROVIDED THAT no more than (3) copies made by the Licensee of the then current system version shall exist at any time and all old versions shall be destroyed.

In rejecting SAG’s claims that cl. 12.3 did not protect RWWA, McKerracher J found:

186 Clause 12.3 is intended to be permissive. Objectively viewed, its purpose is to permit the licensee to reproduce the software to the extent that may be required for emergency restart purposes. To merely copy the distribution tapes or cartridges would be of limited practical use for that purpose. This is common ground amongst all experts. To construe cl 12.3 as being confined simply to copying tapes or cartridges of the unconfigured and uninstalled System would be a construction that is at least unreasonable and inconvenient but would also be unjust.

187 It is common ground that the System as supplied does include some source code. When the source code is converted to object code and is then linked to create load modules on installation of the System, the System as installed and configured then becomes a copy ‘in object code only’ and there is a copying of the System for emergency restart purposes.

and

203 As there is no technical meaning, the question is one of construction of the Licence Agreement. In my view the only sensible construction is that when the Licence Agreement refers to ‘use’ it means using the System within RWWA’s ordinary business or some other business, not for occasional testing for one DR Site. This must be so, in my view, if the DR Copy at the DR Site is authorised by cl 12.3 as I conclude that it is.

205 If the use by RWWA of the DR Site is authorised by cl 12.3, then the question as to whether or not the System is otherwise in use (for cl 1.1(d)), in my view, falls away. I consider that the use is so authorised.

Further, the copy was made for the purposes of emergency restart:

209 In a business which has an extremely high turnover of transactions and a substantial financial turnover, each day of delay is significant. In my view there is no scope for the argument that emergency restart simply means that the business has sustained a disaster or emergency which will require a restart at some leisurely pace in a week or so. In my opinion the whole concept of emergency restart means that as an essential part of a highly sophisticated business environment, the restart is required as quickly as reasonably possible.

Taking into account similar considerations, his Honor found that ss 47C and 47F would also operate to protect RWWA.

Nor was there any ‘outsourcing’ in breach of cl. 1.5:

249 Mr Fink who has had very extensive experience in the mainframe industry rejects the suggestion that the arrangement or contract between KAZ and RWWA is one which constitutes outsourcing in any sense. Rather, as a matter of practice and in accordance with the nature of the arrangement between KAZ and RWWA by its contractual documents, what KAZ provides to RWWA is an environment for the equipment on which the DR Copy will be loaded should an emergency occur. RWWA retains responsibility for the DR process. There is no evidentiary basis for suggesting that KAZ is in any way involved in operating the System. Without that evidence which, had it been available, may have been the closest there was to any ‘outsourcing’, none of the other suggested actions could constitute ‘outsourcing’ as it is used in the Licence Agreement.

Racing & Wagering Western Australia v Software AG (Australia) Pty Ltd [2008] FCA 1332 (29 August 2008)

IceTV transcript is up

and it certainly looks like House of Commons was right to warn database owners to be very afraid.

Gummow J opened with a bouncer to Counsel for Nine Network, the respondent, pointing out that the House of Lords in Ladbroke v William Hill overruled Lord Diplock who was then sitting as Diplock LJ in the Court of Appeal.  Followed up with:

GUMMOW J: What I am putting to you is that do not think that in this Court William Hill is the end of a rainbow.

Then:

GUMMOW J: There is real question of what this notion of originality means in this “electronic age”, is there not?

Gummow J went on to describe Cramp v Smythson from the 1940s as the “elephant in the room” and then

GUMMOW J: I suppose what I am putting to you is, maybe some of the considerations that underpin the approach in Feist conceivably could underpin an approach to the notion of substantiality at the later stage in our law.

although his Honour did indicate that Counsel’s rejection of the relevance of Feist under our Act “may well be right”.  Nonetheless:

GUMMOW J: There will be a grant of a special leave in this matter. The Court will allow one and a half to two days, I think, and we expect to have the assistance of counsel to deal with this matter thoroughly without any reticence in starting at the bottom, so to speak, and we expect counsel to be familiar with the academic writing in this field. They have already been referred, I think, to an article by Dr Deazley in [2004] Intellectual Property Quarterly 121. There is also what may be a useful article by Professor Sterk in Michigan Law Review for 1996, Volume 94, pp 1197 called Rhetoric and Reality in Copyright Law. There is a lot of other material out there as well. I hope the arguments will be informed with all of that, at least in a suitable background.

We’ll have to wait a bit longer to see what the actual questions are.

IceTV in the High Court

The High Court has apparently granted special leave to appeal.  

Lid dip, Kim (who also has a link to David Lindsay‘s slides).

It can’t just be the “what is worth copying is worth protecting” rubric that requires reconsideration so maybe House of Commons is on to something with the injunction (presumably to database owners) to be afraid?  The transcripts seem to be running about 2 weeks behind. 

IPwars on the Full Court decision.  IPKat reviews Estelle Derclaye’s new text on sui generis database protection.

The sky is falling

with apologies to Chief Vitalstatistix:

ARIA’s half year figures for 2008 show that sales of recorded music are still falling – down 4% on the corresponding period last year.

But guess what, the decline in sales of physical copies is almost all set off by the rise in digital sales: 12 million digital tracks up from 8 million for the 6 month period last year.  

According to ARIA:

“… figures which demonstrate the beginning of a remarkable transition to a whole new economy that is still only in its infancy.”

Perhaps in a sign of gloom for music industry executives, a lot of these downloads were single tracks rather than albums, but digital albums still increased by 55%.

ARIA press release here; full stats here.

Parody

Nicholas Suzor tries to work out where parody fits into Australian copyright law …

here.

A parody, or is it a satire ?, here.

Copyright owners versus ISPs

Reports today that the UK Government has ‘brokered’ a deal between copyright owners and ISPs forcing ISPs to take a more pro-active role in cutting off illegal downloaders …

According to the IPKat things may be a little more complicated: at least one of the ISPs claims all it has agreed to do is write to the downloader and tell them that someone alleges they infringe copyright.

IPKat here.

Kim has links to the UK Government’s announcement here and expands on the details.

All this is directed at downloaders. Here, of course, ISPs (I really mean ‘carriage service provider’, start here), engaging in Category A conduct get some protection; but nonetheless can have court orders inflicted on them to cut off accounts – who is going to bear the legal costs of a successful court action to achieve this? And there is more limited protection for other types of conducrt depending on whether the activity is Category B, Category C or Category D activity – I kid you not!

Of course, if you’re not a ‘carriage service provider’, you should be shaking in your boots; especially once you get a letter from someone claiming to be a copyright owner (or acting for one) see Metro on George and Cooper v Universal, although depending on your degree of involvement you may be able to argue the latter case in particular is a bit unusual.

Even if you are a ‘carriage service provider’, it may well be that you can’t afford to sit back and wait for letters of demand (I mean, notifications) to come in:

first, you may still be liable for infringement if you become aware of infringing material or of facts or circumstances that make it apparent that material is likely to be infringing …;

secondly, Viacom and the English Premier League (no, there is no copyright in a sporting spectacle, but there is in the broadcasts) contend under the US templates of these provisions that Google must be aware because there is too much infringing ‘stuff’ out there ….

Dollars v sense

The latest plans to extend copyright term in the EU seem to have fired up a collected who’s who of copyright academics …

A band of intrepid professors have taken to the pages of the Times to point out why it’s a bad idea, via IPKat also having a go at performer’s rights

Another group calling themselves “Sound Copyright” have also reacted strongly (and negatively), via IPKat again

And, soon to visit these shores (here and here), Bill Patry http://ipkitten.blogspot.com/2008/07/sound-copyright-time-to-take-action.htmlweighs in from across the water

and, not to be outdone, some academics have decided to counter-attack against the copyright owners’ rather restrictive interpretation of the ‘3 step test’: IPKat and Patry both joining in.

Jib Jab did it again!

The folks who brought us This Land have now found

Time for some campaignin’ …

here.

Now, why does that tune sound so familiar?* Why does the scenery behind Barack Obama seem familiar?

According to Excess Copyright, it wouldn’t be legal in Canada.

But is it parody or satire?

Fortunately, in a country where a clip of the Prime Minister singing happy birthday to “a” cricketer was neither news nor criticism/review (see here [34] and [39] then here), we now have fair dealing for both parody and satire.

Do you think they took too much? Surely, they added enough original contribution?
* here – I’m not going to suggest you click on the number 56

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