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Mainly intellectual property (IP) issues Down Under

Jammie Thomas wins – sort of?

Ms Thomas, a single mother of two, is was the first person successfully prosecuted to a substantive trial by the RIAA in the USA for copyright infringement by P2P file “sharing” – using KaZaa, she downloaded and “shared” 24 copies of protected sound recordings.

The jury awarded RIAA statutory damages of US$220,000 by the jury (or $9,250 per song file downloaded).

Well, (pending the appeal), it’s all coming unstuck – a bit.  The trial judge, of his own motion (they do things differently over there?), recalled the matter, heard further argument and has granted a retrial on the basis that his instruction to the jury was erroneous. 

Jury Instruction No. 15 was as follows:

“The act of making copyrighted sound recordings available for electronic distribution on a peer?to?peer network, without license from the copyright owners, violates the copyright owners’ exclusive right of distribution, regardless of whether actual distribution has been shown.”  

The error appears to be in those words “regardless of whether actual distribution has been shown”.  

US copyright law, like much in the US I guess, is rather different.  The US Copyright Act does not include a “making available” right (see art. 8 WCT and arts 10 and 14 WPPT).  In the funny way they do things there, copyright owners do not get an exclusive right to communicate a work electronically; rather they get – in addition to publication and reproduction rights – (1) a right to publicly perform it and (2) to distribute copies: see 17 USC §106, in particular (3):

(3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending.”   

The “public performance” right is how they provide control over broadcasting.  It turns out, however, that distributing copies requires that there be an actual distribution, not just a making available for distribution.

Four comments:

First, the trial judge has granted a new trial.  

Even on the narrow approach taken by the trial judge (putting to one side the potential for an appeal), Ms Thomas seems to be extremely exposed.  For example, the RIAA argued that the error didn’t matter because Ms Thomas infringed the copyright by downloading the recordings: an exercise of the reproduction right.  The trial judge noted that may well be right, but it was impossible to tell whether the jury awarded the US$220,000 damages on the basis of infringing the reproduction right or the erroneous instruction no. 15, or some combination of factors.

Similarly, the only proof of “distribution” was the copy downloaded by the RIAA’s private investigator.  Ms Thomas argued that this could never be a distribution because the copyright owner (and its authorised agents) can’t infringe its own copyright.  The trial judge rejected this:

The Court holds that distribution to MediaSentry can form the basis of an infringement claim.  Eighth Circuit precedent clearly approves of the use of investigators by copyright owners.  While Thomas did not assist in the copying in the same manner as the retail defendant in Olan Mills – by actually completing the copying for the investigator – or as the retail defendants in RCA/Ariola – by assisting in selecting the correct tape on which to record and helping customers copy – she allegedly did assist in a different, but substantial manner.  Plaintiffs presented evidence that Thomas, herself, provided the copyrighted works for copying and placed them on a network specifically designed for easy, unauthorized copying.  These actions would constitute more substantial participation in the infringement than the actions of the defendants in the Eighth Circuit cases who merely assisted in copying works provided by the investigators.   

That is, by using KaZaa, Ms Thomas placed (whether knowingly or not) unauthorised copies of the recordings in her “shared” file so that other KaZaa users could access it and copy it.  That would be sufficient for liability for distribution if a copy were shown actually to be distributed.  A retrial was necessary, however, because it wasn’t possible to tell how much that infringing act contributed to the damages award and how much as a result of the erroneous Jury Instruction No. 15.

Secondly, the trial judge’s interpretation of the distribution right seems somewhat narrower than what some people had been arguing: that distribution required distribution of physical copies, not transmission of electrons.

Thirdly, Ms Thomas’ imaginary Australian cousin, would not have much hope: see e.g. ss 31(1)(a)(iv) and 85(1)(c) of the Copyright Act 1968, bearing in mind the “communicate” is defined in s 10910 to mean

make available online or electronically transmit (whether over a path, or a combination of paths, provided by a material substance or otherwise) a work or other subject-matter, including a performance or live performance within the meaning of this Act.

and there would also be the small matter of the reproduction of the infringing copy on her computer.

She would not of course be exposed to statutory damages.  As Howard Knopf, over at Excess Copyright notes, the trial judge is extremely upset about the imposition of statutory damages in this context.

Although if the imaginary Australian cousin continued after receipt of a letter of demand “additional damages” might loom large: see Review v Innovative Lifestyle at [55] – [65] (a registered designs case).

Finally, trade war?  Well, not yet.  Who knows whether there will be an appeal and how long it will take.  In any event, the making available right is in the WIPO Copyright Treaty and the WIPO Performers and Phongrams Treaty.  These are not obligations that are required to be implemented by TRIPS and so are not subject to the WTO dispute resolution procedures.

But hey, may be Australian copyright owners could lobby the Australian government and get it to take matters up under the Free Trade Agreement procedures.  One can imagine (well fantasise is perhaps more accurate) that the US administration and Congress would be terrified at the offence to their treaty partner’s rights amidst all that Wall Street “flu”.  At least, it might be something to poke them back in the eye with (in due course and providing they are not wearing lipstick).

Case is Capitol Records Inc v Jammie Thomas here.

The Secret – more forum wars

Late in July, Sundberg J found that Australia was clearly an inappropriate forum to litigate the dispute over ownership and infringement of copyright in the film and the book, The Secret.  Now there is an appeal on foot.

To recap: interests associated with Ms Rhonda Byrne commenced proceedings in Australia claiming to be the owner of copyright in the film of The Secret.  Drew Heriot was the director of the film – there is a dispute between the parties over whether he was employed by one of the Byrne interests or the respondent in this proceeding.  In any event, the Heriot interests brought parallel proceedings in the USA.

Sundberg J considered Australia was clearly an inappropriate forum.  Broadly, this was on the basis that it was necessary to have regard to the whole dispute between the parties, not just the component of the litigation relating to Australia.  On that basis, by far the greater amount of damages at stake were those for infringement in the USA (the book has featured on Oprah, amongst others) and only the US court would have power to amend or correct the US Register of Copyrights.  The judge in the US has apparently reached a similar conclusion.

Now, the question in Australia is who should hear the application for leave to appeal: a single judge or the Full Court.  Heerey J has directed that the matter go before a Full Court and, subject to any directions by the Full Court, be heard concurrently with, or immediately before, the appeal.

His Honour considered that the Byrne interests would suffer substantial prejudice if it turned out that Sundberg J’s decision was wrong:

9 However the US proceeding will deal not only with copyright ownership, but with questions of infringement and damages, issues which do not arise in the Australian proceeding. There will be a significant burden, both financial and otherwise, on the applicant in having to contest that proceeding. Moreover, as Mr Batt for the applicant points out, his client’s Australian proceeding was commenced first, seeking a remedy under Australian legislation arising out of events which allegedly took place in Australia. The opportunity for the applicant to contest, and possibly win, the Australian proceeding, without having to defend the more extensive US proceeding, is something of real value, the loss of which arguably amounts to real injustice, supposing Sundberg J’s decision to be wrong. Apart from anything else, victory in the Australian proceeding may create some issue estoppel in favour of the applicant, or give it leverage in commercial negotiations.

Heerey J did avoid the question of whether the decision was in fact wrong.  It was not the subject of detailed submissions by either party.  In any event, experience taught that the two questions could not often be treated in a vacuum.  Moreover, there was a chance the matter could be dealt with in the November sittings if not before.

TS Production LLC v Drew Pictures Pty Ltd [2008] FCA 1329

Stupefy!

in which the spell has landed ….

Harry Potter’s creator, JK Rowling, and her movie producers have successfully obtained an injunction against the publication of The Harry Potter Lexicon.  The judge also awarded US$6,750.

Marty has the text of Warner Bros Entertainment Inc. v RDR Books (SDNY 8 Sept 2008) here.

IPKat has a short summary based on media reports here.

NY Times report (free subscription required) here.

It’s not clear yet if there will be an appeal.

Wonder how it would play out here?  Of course, without looking at the book and seeing just how extensively the takings were, any comments would be worse than idle speculation.  We do have Full Court authority that taking lots of little snippets can constitute a substantial part but that, of course, is under appeal.

Time shifting – remotely

For those who heard my brief summary of Cartoon Network v Cablevision, in which the 2nd Circuit found Cablevision did not infringe copyright in movies and other tv content by adding a “home” taping service for its subscribers, Prof. Raymond Nimmer provides a detailed critique arguing:

This may be among the worst appellate court decisions in copyright law history[!]

here; more favourable review here.

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 ….

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