Copyright: The Next Generation

A Paper By Nicholls Legal

The Issue in Context

A brief overview of copyright law on authorization

The first copyright act, the Statute of Anne, was passed over three hundred years ago, in 1710.

Copyright law is regarded as an essential element in promoting investment of time, energy and capital in creative endeavours, in that it “creates incentives for people to invest their time, talent and other resources in creating new material – particularly cultural and educational material – which benefits society.”[1]

Owners and licensees of copyright materials such as films, sound recordings, broadcasts and published editions have the exclusive right to reproduce such materials. In addition, there are rights relating to:

showing films and playing recordings in public;
transmitting films and sound recordings to the public using any form of technology (for example, via email, broadcasting, cable or the internet); and
rebroadcasting television and sound broadcasts.

A person infringes copyright if he/she uses copyright works in one of the ways exclusively reserved for the copyright owner without permission.

The rise of the internet, and in particular peer-to-peer file sharing has had a significant impact on the incidence of copyright infringement, particularly in relation to works such as sound recordings and films.

The Recording Industry of America and the Phonographic Industry (UK) have bought infringement proceedings against individuals in the hope of deterring others. However, the judiciary has declared the process of suing individual users to be a “futile process”.[2]

Importantly, in Australia, a person who authorizes the infringement of copyright is treated as if they themselves directly infringed copyright: Roadshow v iiNet.[3]

In Australia, apart from the recent Roadshow case, the music industry has on a number of occasions succeeded in establishing that an alleged infringer authorized the infringement in the relevant sense. So, for example:

in Universal Music Australia Pty Ltd v Sharman Licence Holdings Ltd,[4] the copyright owner succeeded against the persons and companies responsible for the peer-to-peer file sharing system known as Kazaa; and
in Universal Music Australia Pty Ltd v Cooper,[5] again the copyright owner succeeded against the creator and host of a website containing links to infringing music files.

In summary, the cases to date have held that, in order to be held to have authorized copyright infringement, a person must:

(a) provide “the means of infringement”; or

(b) fail to take reasonable steps having regard to the factors set out in section 101(1A) of the Copyright Act; or

The recent High Court decision in the Roadshow case affirms this approach and found that the current provisions on authorisation in the Copyright Act are not ‘readily suited’ to protecting copyright owners from widespread infringement over the internet.[6] The majority (French CJ, Crennan and Kiefel JJ) and the separate opinion of Gummow and Hayne JJ ultimately found that iiNet had not authorised infringement of copyright by their customers over their network. The court also reaffirmed the decision of Justice Cowdrow at first instance that an ISP could not be liable for authorisation of copyright infringement by providing continued access to their customers, and in doing so overturned the Full Court of the Federal Courts finding that iiNet had provided the means of infringement, iiNet did possess relevant powers to prevent copyright infringement, and that there were reasonable steps available to them to prevent this infringement.[7]

The High Court was unanimous in their finding that the Copyright Act’s provisions on authorisation could not be interpreted to cover iiNet’s conduct in its ‘indifference’ to AFACT copyright infringement notices. In particular, both the majority and the separate judgment of Hayne and Gummow JJ found that iiNet (and by implication other ISPs) lacked the requisite power to prevent copyright infringements via BitTorrent services on their networks. iiNet had only a ‘mere’ contractual power to terminate customers internet connections, and had no technical ability to detect and prevent infringements occurring. Further, as there is no established industry protocol amongst ISPs that could successfully prevent iiNet customers whose services are cancelled from simply contracting with a new ISP and continuing their infringement over those services. The Court also found that it would be unreasonable for iiNet to act on the basis only on the evidence of AFACT infringement notices, as this could potentially expose them to action by customers for violation or improper termination of contract.[8]

The High Court’s decision confirms the position that authorisation does not occur simply if a customer uses a ISPs network to infringe copyright. In light of this decision ISP’s can feel significantly more certain that infringement by customers on their networks will not expose them to claims for authorisation under the Copyright Act, as the court has recognised that they lack the requisite power to prevent copyright infringement.[9] As a matter of public policy, Gummow and Hayne JJ were careful to note that that it should be up to the Parliament to react to changes in technology that present new threats to copyright and that the courts should avoid radical interpretations of existing legislation to keep up with technological change.[10]

Notably, the music industry (in Australia and abroad) has not enjoyed very much success in recent times in this area; the safe harbour provisions in the Copyright Act are broad and the creators of peer-to-peer file sharing services have proved difficult to locate – as the search for the “Pirate Bay” demonstrates.[11]

In the United States, Viacom[12] sought $US1billion from YouTube for breaching safe harbour provisions by failing to remove infringing material. The case was dismissed at summary judgment: the District Court held that YouTube removed infringing material if it was informed of it and cancelled accounts of repeat offenders. This was enough to qualify for safe harbour protection under the US provisions. Further, the Court held that YouTube was under no obligation to search for infringing material.

Also, the Spanish Court has recently held that YouTube enjoys the protection of the safe harbour provisions in the European Union.

The problem

The Australian Government’s National Broadband Network (the “NBN”)[13] and Australia’s growing digital economy pose significant challenges to our system of copyright law.

The NBN will create unimagined opportunities for the infringement of copyright. Emerging digital technology and increased broadband capacity mean that the marginal cost of reproducing and disseminating exact copies of protected digital works is rapidly moving towards zero. In the words of Andrew L Shapiro, “the Net…seems to be a gigantic copying machine”.[14]

As the cost of reproduction moves towards zero, the cost of enforcement of copyright escalates. With sites such as YouTube boasting 24 hours of new video footage being uploaded every minute,[15] the problems with identifying and pursuing individual copyright infringements make the value of copyright seem hollow.

In its explanatory note to the Copyright (Infringement File Sharing) Amendment Bill 2010, the New Zealand Government states:

“The cost of seeking an order and the cost of taking infringement proceedings in court is generally much higher than a possible award of damages for that particular infringement, acting as a barrier to the effective enforcement of copyright.”[16]

Further:

“While the damage sustained by a copyright owner from a single file sharing infringement is generally small, the prevalence of infringing file sharing in the current digital economy is having a negative cumulative effect”.[17]

The Australian Federation Against Copyright Theft (“AFACT”) estimates that internet piracy costs the local (Australian) economy approximately $92 million annually.

It now appears clear that our current system of copyright protection may well be inadequately equipped to tackle the issues arising in a digital environment. What is needed is a system of copyright protection which is flexible, dynamic and able to deal with the challenges wrought by changing technology.

Unique policy challenges

The internet is “arguably the greatest communication mechanism ever devised. But like all great innovations it threatens established business models, social practices, and, here the ability to control the flow and use of information. So it presents unique policy challenges to governments around the world”.[18]

The Internet Industry Association’s (“IIA”) “manifesto” states that the “processes for development of good policy for the digital economy and the internet should be similar to processes for development of good policy throughout the economy, namely they should engender:

transparency and openness;
proportionality and efficiency;
recognition of global best practice;
regulation only when necessary;
empowerment of individual choice through education and tools;
clarity and predictability, but with adaptability; and
a reliance on valid and reliable evidence.

However, policies regulating the broadband internet must also: factor in the pace of change, seek conformity with international standards, manage change appropriately, aim to build trust and confidence – and above all recognise the unique attributes of the internet that may frustrate traditional regulatory responses”.[19]

The Australian Commonwealth Government has announced its intention to ask the Australian Law Reform Commission (“ALRC”) to examine whether copyright law should be amended to adapt to technological developments. The Commonwealth Attorney-General, Robert McClelland, stated in this regard, “it is my view that the area would benefit from the expertise of the ALRC. It is very complex; there are obviously competing interests between consumers and service providers and networks; and it is an area where there are legitimate views each way in respect of a whole range of issues. I think the best way to approach it is with genuine expert advice”.[20]

Orphan works (works where the copyright owner cannot be identified)

The issue of orphan works appears to be looming as a significant by-product of the digital world.

The lack of an author is problematic, as only the copyright owner can authorize activities such as reproduction. A major concern in the UK is that a lot of orphan works are “cultural products” (photographs, drawings, etc.) which exist in a “black hole” because they cannot be used.

The UK proposed a solution to this problem, but it was controversial and was deleted from the Digital Economy Bill 2010 (because the bill was passed during “wash-up” and there was no time to debate it). Under the proposed UK scheme, persons who wished to use an orphaned work could obtain a licence to do so (after demonstrating that they had undertaken a “reasonable search” for the copyright owner). The licence fee would then held in escrow in case the copyright owner were later identified.

The concern here for authors is that digital distribution and copying on the internet often results in orphan works. There are concerns that the proposed scheme would allow works to be used at a lesser price (or that the author may never receive the fee at all) and would lessen control over copyright works.

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