In “The Parallel Bars”, Assoc. Prof. David Brennan compares the Omega v Costco litigation (approaching the US Supreme Court) with the Australian position on parallel importation.
In “The Slender Reeds of Originality and Authorship”, Kim Weatherall examines the recent Federal Court case declaring no copyright in news headlines.
Dr Russell Thomson reviews the recent Melbourne Institute Economic Forum on finding the best model to exploit Australia’s inventive talent.
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By Assoc. Prof. David Brennan
In view of the Polo/Lauren v Ziliani litigation that concluded in Australia with a 2008 Full Federal Court decision it is interesting to observe a similar case going to the US Supreme Court in the Omega v Costco litigation (summary here at IPKat).
In both cases the plaintiff seeks to rely upon copyright in a device (logo) trade mark. In both cases, the logos were copied onto parallel imported goods, being goods lawfully made offshore and imported into the relevant copyright territory without the permission of the owner of the local copyright – Polo/Lauren and Omega respectively. In both cases there is no suggestion that the parallel imports are not ‘genuine’, nor is there a suggestion that they are of any lesser quality than goods distributed by the plaintiff. In both cases the plaintiffs sought to rely upon their copyright ownership in their logos to restrain the importations. In both cases, the disputes occur in territories where the effects of trade mark law exceptions deny to the plaintiffs any right in their registered marks to restrain the parallel imports.
The copyright positions on parallel importation in Australia and the US have similarities and differences. Both countries confer a right in copyright owners to restrain the parallel importation of goods embodying the owners’ protected copyright subject matter (the parallel importation right). Each country has, however, created quite different parallel importation exceptions.
Australian copyright law has over the past 20 years been notable for its waves of reform which have created specific exceptions to the parallel importation right in relation to particular types of physical items, such as the 1991 reform creating a qualified exception for books, or for copies of particular subject matter, such as the sound recordings exception enacted in 1998. Also in 1998 another exception was created to the parallel importation right arising from ownership of copyright in an ‘accessory’ to an item. An accessory is defined to be things such as packaging, written instructions and – important for the Polo/Lauren case – ‘labels’.
US copyright law has no such specific array of exceptions to the parallel importation right. Instead, it has since the 1976 Act a codified first sale (exhaustion) doctrine. It provides a general exception to a broad distribution right conferred upon owners of US copyright. Hence while an owner of US copyright has a right to restrain the commercial distribution of copies of its works, which includes the parallel importation right, third parties under the first sale doctrine are entitled to distribute copies ‘lawfully made under’ the US Copyright Act. In Quality King v L’anza Research this doctrine was interpreted by a 1998 US Supreme Court to create an exception to the parallel importation right for the importation of goods that were manufactured in the US with the authority of the US copyright owner, exported to a foreign territory, and then imported back to the US by an intrepid parallel importer. That is, goods that have been on a ‘round trip’.
With that as the back-drop, the salient aspects of the two cases can be juxtaposed.
In Polo/Lauren, the key question before the Australian Full Federal Court was whether an artistic work in the form of polo player logo stitched onto the front of parallel imported shirts comprised “a label”, and therefore outside of the plaintiff’s parallel importation right by virtue of the specific ‘accessory to an item’ exception. The Australian court had little trouble in concluding based on a purposive interpretation of the legislative text that the logo (in the court’s words ‘a representation of a polo player swinging a mallet whilst astride a cantering polo pony’) was indeed a ‘label’ and fell within the exception.
In Omega the key question before the US Supreme Court is whether a watch made by Omega in Switzerland, and to which an artistic work in the form of a globe logo was stamped to its underside, should be regarded as being ‘lawfully made under’ the US Copyright Act, and therefore outside the plaintiff’s right to restrain third party importation by virtue of the general first sale doctrine. A US Court of Appeals has concluded that the ‘round trip’ extended operation of the doctrine could not apply as the goods were manufactured in Switzerland. That conclusion is seemingly consistent with the views of the three leading US copyright texts (Goldstein, Nimmer, and Patry), and is a conclusion supported by the US Department of Justice. The US Supreme Court is however now reviewing its correctness, and in so doing will decide whether (and if so, in what circumstances) the first sale doctrine can apply to imported goods manufactured outside the US.
Three points can be made:
It is worthwhile to reflect on the second and third points in the context of a recent book importation Australian review. Over 2008-2009 the Australian Productivity Commission conducted a public inquiry into the existing qualified book exception to the parallel importation right introduced in 1991. Under that exception, the parallel importation right can be exercised unless a book is unpublished in Australia 30 days after its foreign publication or is otherwise not supplied 90 days after a customer order for the title has been placed. Larger Australian book retailers sought expansion of the exception and the abolition of the parallel importation right for books. This would have enabled the retailers to have unfettered access to cheaper books wholesaled abroad. Australian authors sought retention of the qualified exception upon the parallel importation right, arguing that the ability to exercise some territorial control upon books was important to protect against (for example) offshore remaindered stocks of Australian authored-titles flooding the local market, and prejudicing the viability of Australian professional authors. The Productivity Commission ultimately recommended expansion of the exception and abolition of the parallel importation right for books. By a (reportedly) narrow margin the Australian government cabinet ministers rejected that recommendation. (Click here for reportage). The law has therefore remained unchanged.
The highly democratic and sophisticated policy contest that was involved in this Australian debate over the parallel importation of books is a far cry from the blunt means of reform that is represented by judicial interpretation of the US first sale doctrine, an interpretation which could impact on all copyright-dependent industries without discrimination. The Obama administration in opposing the grant of certiorari reminded the US Supreme Court that Congress ‘deliberately granted copyright holders the right to control importation of lawfully made copies’ and ‘remains free to amend the Copyright Act in order to adjust the balance’. As can be seen from the book debate in Australia, questions of public interest can be finely balanced in this area. Arguably more nuanced outcomes can be arrived at outside of the often binary nature of judicial decision-making.
David Brennan is an Associate Professor at the Melbourne Law
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by Kim Weatherall
So you have some kind of maybe-copyright-protected-work. It’s, say, a magazine or a newspaper or something. Someone copies bits. You want to sue, because you want to stop them. You go to a lawyer. And they tell you:
Counter-intuitive? Maybe? No bones about it, actually. We’re in a bit of a mess. We meaning ‘the copyright-erati’ of Australia. There’s a lot that I think is right about the decision in Fairfax Media Publications Pty Ltd v Reed International Books Australia Pty Ltd [2010] FCA 984. But it is worthwhile taking a little step back and asking yourself: does this process of proof, and this process of reasoning, make any sense at all? If not, how did we end up here? Hold those thoughts.
The case
I don’t need to summarise the case here. Google the case name and you’ll find several very good and succinct summaries produced by various law firms. In short, we have a company (Reed) that is making money by (as part of a larger news type service) providing to subscribers the Australian Financial Review headlines and short abstracts of the articles (well, 40-60% of them anyway). Fairfax not happy. Fairfax sue. They claim copyright in:
1. Each individual headline;
2. Each Article including its headline;
3. The compilation of Articles in each edition (sans advertising and photograph materials – that is, just the article texts with headlines); and
4. The compilation being the whole of each Edition.
So they have to show copyright in each of these, and, if there is subsistence, infringement.
Copyright in headlines: is a headline a copyright work?
Here is where I think it is fair to say that the court clearly got the answer right. Headlines are not copyright works, and so the court concluded (actually, the court was a little more cagey than that. At paragraph 50 her Honour Justice Bennett notes that ‘this does not exclude the possibility of establishing a basis for copyright protection of an individual headline’. The courts always make that statement in these cases and as a result, people will keep arguing that their particular title, headline, or whatever is so very original it should be protected. It’s a shame really).
Her Honour’s finding here is clearly consistent with a very long line of authority in which common law courts have consistently refused to recognise copyright in single words, titles, and short phrases: think Dick v Yates (1881); Francis Day & Hunter v Twentieth Century Fox (1940), or, more recently, State of Victoria v Pacific Technologies (Australia). Like the judgments in those various cases, Justice Bennett’s judgement shows perhaps a little discomfort in finding a reason to exclude the headlines (well, either that or just wants to be very comprehensive) – and so throws every possible argument at it. So we know that the headlines in the case were not copyright works because:
Number 4 seems to be the reason on which her Honour puts the most emphasis, followed by the sheer inconvenience of finding otherwise. That’s helpful, I think, and correct. “Too insubstantial” is the kind of reason that is hard to overcome with ever-more-extensive evidence about the amount of work/work/inventiveness that goes into generating a phrase/title/headline. And relying on the merger of idea and expression, as per State of Victoria, is also a little tricky beyond the facts of that particular case. You can (outside those special facts) usually find other words to express something.
So, all in all, this is a good bit of judgment.
Is the compilation of articles (without ads and without photographs) a literary work?
Justice Bennett says yes, rejecting Reed’s argument that it is a ‘hypothetical work’ since it never actually exists or is sold to the public like that. It’s kind of hard to argue with this assertion. We don’t have a lot of well-established principles for working out whether there is ‘a work’ or not or finding the parameters of a work in copyright (if you’re interested, one of the better discussions of this I’ve seen was Mike Handler’s article on Broadcast copyright in the Sydney Law Review). But again, like the failure to simply ‘rule out’ headlines as ever being works, this kind of reasoning has the unfortunate result of encouraging a Russian-Dolls type dissection of a product into ever-smaller-and-less-coherent ‘bits’. This has to lengthen pleadings and complicate copyright arguments. It’s a shame. But by the same token I don’t see a clear way to avoid this (note to self – think about that sometime).
Is an article together with its headline a copyright work?
Here’s where it all gets a bit more dicey. The question here is whether it’s right to see an ‘article together with its headline’ as a copyright work. In a post-IceTV world, you have to be able to identify authorship to find copyright. So the article with headline has to either be a work of authorship, or a work of joint authorship. Problem: mostly, it seems, journalists don’t write headlines (headline-writing being a special skill, as quite extensive evidence sought to prove). So ‘headline plus article’ isn’t a work of authorship.
Anyway: is it joint authorship? Well, that’s kinda awkward too, because for one thing, the journalist’s name is on the by-line (which is a bit weird if they’re only a joint author, perhaps).
But at a more fundamental level, you have a problem that editors edit, and the practice has been to see editing as a distinct function not conferring joint authorship. This may or may not be fair: there’s been plenty of recognition that there are cases where the existence of a good editor has made great writing, in particular, possible – taken undigested genius and turned into something that the rest of us can hold sufficiently in our head to enjoy. But despite whatever evidence might be thrown at the question, I suspect it would be quite hard for a court to turn around and hold an unattributed editor as a joint author. Thus Justice Bennett states affirmatively (paragraph 94) that “straightforward editing of articles for the purpose of inclusion on a page, which may or may not involve substantial changes to the article, is not enough to attract joint authorship for copyright purposes.” Later (paragraph 97) she says that ‘sub-editors edit in the traditional sense, in a manner insufficient to make them joint authors’.
This is interesting when you think about it. First, her Honour clearly has in her mind a picture (a ‘traditional’ one, a ‘straightforward’ one) where editing is not joint authorship. I wonder though. Does this depend on job title? A separation of tasks in time? Would it be different if, say, the sub-editor had come up with the story idea in the first place (so had some more intellectual input into forming the article, if not its text?) In short, I don’t know if I know what ‘straightforward’ editing is, really. I have to say, too, that this reasoning, while logical, and consistent with what we’ve seen emerge post-IceTV as copyright’s unrelenting focus on human authorship, is going to cause plenty of headaches for people involved in collaborative creation. Think about it. IceTV (at least the Gummow et al judgment) seemed to put a great deal of focus on the author needing to be the person putting ‘pen to paper’ (or fingers to keyboard, so to speak). This looked like a shift away from the Cala Homes reasoning which allows for significant intellectual contributors to be authors. Now Justice Bennett tells us that fingers to keyboard isn’t always going to be enough – even if you’re taking out or putting back in large amounts of text while preserving the gist of the story (which I would have thought was reasonably intellectual). And of course Phone Directories has already told us that fingers to keyboard isn’t enough if you’re too rule-bound. I don’t know about you, but I’m having more and more trouble working out who is an author, unless it’s in the truly traditional kinds of literary and artistic creation.
In a sense, her Honour avoids getting into the guts of these questions by saying there isn’t the evidence of the actual collaboration process on the actual articles in question in the case: about, say, the extent of re-writing of those articles, or the level of involvement by a given editor (did the same person re-write and contribute the headline?). But that just brings me back to what I started with in this comment: where are we at, in copyright, when you have to try to get that kind of evidence? How realistic is it to expect that journalists who work on different articles every day will remember the particular process of collaboration leading to a particular article?
I would not want to be litigating these issues now. Can’t wait to see what the Full Federal Court makes of it all.
Infringement
But wait! There’s more! Having found no copyright in headlines, or in Articles including headlines, Reed’s abstracting service raises some really interesting questions about whether they have taken a ‘substantial part’ of the overall Article or Edition compilation. Her Honour found the answer to that was no, and a key part of the thinking here seems to be that compiling is compiling, and headline-writing is headline-writing, and if you’re claiming copyright for your compiling, you can’t claim for your headlines. This ensures that you can’t get ‘greater protection for an element of the compilation’ via compilation copyright than you get for the thing (the headline) on its own.
I can see the argument. But I wonder if it’s right to separate out the writing and the compiling here, and what the implications are for future legal arguments.
Can you really separate the two? If the headlines are written and re-written in the course of putting the whole thing together, and are written so as to work in sympathy with all the other headlines and content, is it right to say the writing of the headlines is a separate act? Could be regarded as artificial, I think. I’ll have to think about that some more.
Also, if you adopt this line, how, as a lawyer, would you plead the next case? Well, you’re going to have to do what Fairfax has done here, aren’t you? Identify a series of ever-more-specific works capturing the particular creativity that you say the other side has taken, because looking at the whole (compilation) won’t help you.
I’m going to have to think about this substantial part analysis more. But there is something about it that is making me uncomfortable. It’s logical. But, in a preliminary way, I think what is bothering me is that it is a kind of twisted, torturous copyright logic, not a real human being logic (and yes, I know, this is a case. But when logic strays too far from lay sense, you should be asking yourself why). On this analysis, the headlines just … disappear. They’re not works. They’re not part of articles. They’re not part of the compilation. They’re … invisible to copyright altogether. I wonder about that.
The final section of the judgment addresses fair dealing – finding this is fair dealing for the reporting of news. This post is already too long, so I’ll just say: how far have we come, that competition and substitution was so important in The Panel and so unimportant in this case.
Conclusion
This is a wonderfully interesting, mind-bending kind of judgment to read. I’m sure I’ll have more to say at some point. I should emphasise, perhaps, that I think the outcome is probably correct. Headlines shouldn’t be protected. News should be able to be reported. But aside from those ‘headline points’ (sorry), there remains… much to ponder.
Kimberlee Weatherall is a Senior Lecturer at the University of Queensland
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By Dr Russell Thomson
On 29 July 2010, the Melbourne Institute held a forum to discuss the following questions – “What is the best business model for a small, isolated economy with considerable R&D talent? Do we attempt to commercialize on-shore or license to overseas experts? If the latter, what is the best strategy for ensuring that we receive an equitable return? If the former, how can we do this better?” For copies of the presentation, please click here.
Three eminent speakers offered a wealth of insights on this important policy issue. Mr Terry Healy bought insights from his unique vantage as special counsel with one of the world’s leading public sector research organisations–CSIRO. Mr Terry Stinson represented a private sector viewpoint as the CEO of Orbital Engine Corporation the firm with the largest automotive R&D facility in the country. Finally, Associate Professor Beth Webster from IPRIA gave us the perspective of a policy oriented academic.
Mr Healy expressed a general preference to see IP applied to create new and strengthened business activity within Australia, suggesting that to deliver benefits like better health, better jobs, better energy supplies, and better communications almost always required application of technology in Australia. Mr Healy also suggested that more should be done to support Australia’s excellent R&D capacity. One important reform he nominated was the need to clarify research exemptions (i.e., freedom to operate) for Australian scientists, noting that such a reform would also be an important step in making Australia an attractive location for foreign R&D.
Given Terry Healy’s experience on the now famous wireless patent litigation, he argued that generating returns through licensing is far from easy. To recap, CSIRO developed the wireless technology back in 1993. Having been unable to convince industry majors of the merits of the technology, CSIRO supported the establishment of a start-up company called Radiata which they granted a non-exclusive peppercorn licence to the technology. Once an “almost commercial” prototype chip was developed, Radiata was bought by a foreign firm (for $600m). The Australian technology, developed at CSIRO is today embedded in wireless products by all the major manufacturers around the world.
While consumers around the world are benefiting from this Australian made technology, Healy argued the outcome from the perspective of CSIROs mandate to undertake research for the benefit of Australia was not optimal – with minimal royalties and no onshore industry established. After industry around the world refused to accept licences, CSIRO made the decision to begin what was to become a long and expensive litigation that ultimately was resolved via settlements with considerable royalties paid to CSIRO. From a corporate strategy perspective, Mr Healy emphasised that Australian technology owners must be willing to defend patents in the USA. Importantly he considered that failure to defend the wireless patent would have a negative spillover effect on other patents in the CSIRO portfolio
Mr Stinson then shared his insight into commercialization strategy from the perspective of the private sector. Mr Stinson described that licensing technology exposed Orbital to considerable competition from technological substitutes–importantly being the technological benchmark is not sufficient for success. He also highlighted the importance of offering support such as the supply of spare parts and a physical presence in the marketplace.
Some of the issues raised by Mr Stinson resonated with those of Mr Healy. Both the wireless technology and Orbital fuel injection technology demonstrated limitations of relying solely on licensing to generate returns from Australian innovations. This indicates somewhat of a paradox: on the one hand licensing is seen as a means to avoid the difficult and expensive steps of development and establishing manufacturing, on the other hand in order to strike a licensing deal a technology needs to be on the market and supported with for example spare parts. A conclusion might be drawn that internal commercialization and licensing to third parties can be complementary strategies. Certainly it seems that when it comes to identifying an optimal strategy for commercialization Australian technology, it is definitely not a case of one size fits all.
Another lesson from the Orbital success story seemed to be the need to manage not only the IP model, but also understand the ultimate sources of demand. In their case shifts in emissions legislation generated shifts in demand and provided a window of opportunity. Orbital is also now aiming to generate growth through the application of their technology in alternative fuels.
The final speaker, Associate Professor Webster, discussed the issue of commercialization from a public policy perspective. As well as outlining a framework of policy options she offered some concrete policy suggestions. She argued that Australia has moved through three broad policy approaches. In the 1980s, it tried to establish new downstream industries to exploit technology created. A later approach has been to prioritise research in areas where downstream industries and commercialization capacity already exist, such as mining and agriculture. Today, policy acknowledges that Australia cannot specialize in all areas of commercialization in every industry and recognises the importance of engaging effectively with the international value chain.
Professor Webster left us with some concrete policy suggestions. First, she highlighted the need to reform the global intellectual property rights system to reduce costs and reduce inefficient strategic ‘game playing’ and increase global harmonisation. Second, to continue to support informal networking including student and researcher exchanges. Third, she advocated a large tax concession on licence fees from public sector research organizations and universities paid by Australian firms. This, she argues, avoids ‘double payment’ for technology which is already paid for through tax revenue. Finally, she argued that earmarking funding for university technology transfer offices rather than forcing them to be self financing would help clarify their primary objective of getting technology into the marketplace, rather than generating returns to survive.
Dr Russell Thomson is a Research Fellow with the Melbourne Institute of Applied Economic and Social Research
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We profile the inaugural CMCL Medal 2010. This distinguished prize was awarded to Eli Fisher (UNSW). The judging panel included The Hon. Michael Kirby AC CMG, Professor Andrew Kenyon (Deputy Dean, Melbourne Law School and Joint Director of the CMCL), and Ms Gail Hambly (General Counsel, Fairfax Media).
Also in this edition, Kim Weatherall reports on yet another leaked text of the Anti-Counterfeiting Trade Agreement (ACTA) and suggests that the forthcoming round next month may finally lead to a conclusion.
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(L-R) Eli Fisher (winner), The Hon. Michael Kirby AC CMG, Professor Andrew Kenyon, Ms Gail Hambly.
The inaugural CMCL Medal was held on Monday 30th August 2010. The night was a tremendous success, with 60 guests in attendance to watch the presentations by the finalists.
The CMCL medal was open to final year law students and recent law graduates from Australia and New Zealand. Entrants submitted papers on contemporary issues in media law. After reviewing the submitted papers, three finalists were selected to make a short presentation before a distinguished judging panel.
The judges for the evening were The Hon. Michael Kirby AC CMG; Gail Hambly, General Counsel, Fairfax Media; and Professor Andrew Kenyon, Deputy Dean, Melbourne Law School and Joint Director of the CMCL. The presentations were excellent and the finalists intelligently dealt with the questions and examination of the judges.
The audience was also privileged to hear a typically witty and thoughtful speech from The Hon. Michael Kirby AC CMG who contributed his opinion on the legal issues raised by the finalists.
The finalists were Eli Fisher (winner), Oscar O’Bryan and Cameron Rogers. Details of their papers are provided below.
The evening provided an excellent opportunity to celebrate new voices in media law in the company of academics, leading professionals and friends. The CMCL Medal will be held again in 2011; details will be available on the CMCL website shortly.
Eli Fisher (winner) – Scandalising the Court in Australia
Eli Fisher contemplates an obscure area of contempt law, known as “scandalising the court”, which criminalises public criticism of courts or judges. Eli criticises the judge-made law for creating conflicts of interest, and for being expanded in a bizarre fashion. He points out that the Australian species of scandalising the court has been heading in a vastly different direction from that of our liberal colleagues abroad. Ultimately, Eli makes a compelling case for abolishing scandalising the court in Australia, one that he hopes might have an influence on the future development of the law.
About Eli: Eli Fisher, in between Richmond Tigers football games, studies law at the University of New South Wales, with a focus on issues surrounding media and communications. He completed a BA, majoring in political theory and history, providing the academic background that has ignited his interest in the laws relating to free speech, censorship, defamation and vilification.
Oscar O’Bryan (finalist) - Considering Hyperion v Sawkins and the protection of faithful reproductions and restorations under Australian copyright law
Oscar O’Bryan considers how the recent English case of Hyperion v Sawkins might be decided under Australian copyright law in the aftermath of IceTV v Nine Network. More broadly, his paper considers how Australian copyright law in its current state treats faithful reproductions of existing copyright works, such as, for example, a photographic reproduction of a painting, or a translation of a book from Spanish to English. Are reproductions such as these sufficiently ‘original’ in the requisite sense that copyright will subsist in them? If so, what degree of taking is required to constitute a substantial part infringement of them? The analysis suggests that application of the principles derived from IceTV to faithful reproductions of existing works is potentially problematic, thus highlighting some of the small – but potentially significant – gaps in the current Australian copyright law.
About Oscar: Oscar O’Bryan is a final year BA/LLB student at the University of Melbourne. He is also undertaking a concurrent Diploma in Practical Music at the Melbourne Conservatorium. Oscar is a trumpeter, and also performs regularly as a DJ. He has a particular interest in the interplay between the field intellectual property law and cultural/creative subject matter and industries.
Cameron Rogers (finalist) – Independent Games Development: Open v. Closed Source Models
Since the introduction of the iPhone in 2007, and the Apple ‘App Store’ in 2008, developing games for the international market is more accessible to independent games developers than ever before. Cameron Rogers’ paper considers the kinds of legal issues faced by independent games developers who utilise Apple’s closed source licence and the App Store as their primary means of reaching their target audience. In contrast, his paper compares the Apple model with the kinds of legal issues faced when developing for the Android operating system, an alternative ‘open source’ model being championed by Google Corporation.
About Cameron: Cameron Rogers is a screen industries lawyer with the Melbourne based law firm Marshalls & Dent. He graduated from Flinders University in South Australia in 2006. Cameron is interested in the way we interact with media, and is particularly interested in all digital media projects intended for mobile phone delivery. As part of his practice he advises clients who release games across all platforms including DS, iPhone and Android.
Thanks to Clarissa Terry, Elisabeth Cooke and Vicki Huang for reporting.
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by Kim Weatherall
Another round, another leaked text – this time with a lot less brackets. Yes, it really does look like, subject to a couple of mostly scope-related disagreements still to be resolved, the Anti-Counterfeiting Trade Agreement is nearly complete. Rumour has it that the next round – later this month – will be the final one, leading to the conclusion of a treaty directed entirely at raising standards of IP enforcement between the US, EU, Japan, New Zealand, Canada, Switzerland, Australia, Morocco and Mexico.
I’ve been over this ground so many times before, I’m at serious risk of sounding like a broken record. But, for the record, I thought I’d add a few more comments on this close-to-final draft, because there’s a couple of interesting developments in there.
The big news: a lot less digital stuff
The big news of the draft is the way the digital provisions have been deflated. If before we had a Zeppelin of a chapter on digital enforcement, now we have, if not quite a kid’s balloon, maybe a small bunch.
Let me explain. The original draft on digital enforcement was proposed by the US, like an American Diner meal, it had the works: a general obligation to have effective enforcement in the digital environment; secondary liability for intermediaries; detailed safe harbour provisions, detailed and restrictive anti-circumvention provisions, and provisions on rights management information. It was a slightly watered-down version of the US FTA provisions or the DMCA.
Anti-circumvention (or digital locks)
In the last leaked text, it seemed that the anti-circumvention provisions had been trimmed quite a lot. Early drafts had explicit protection for both access and copy controls; a prohibition on both the act of circumvention (in the case of copy controls) and manufacture, sale or distribution of circumvention devices; and both civil and criminal liability for violations of either prohibition. By July, the reference to criminal penalties had disappeared. Now, it looks like there’s a chance that the provision will be clawed back to something that looks a lot like the WIPO Copyright Treaty: a broad requirement to have effective protection against TPMs. The whole provision dealing with the specifics (prohibiting circumvention, prohibiting sales of devices or services to circumvent) is all in brackets. That is quite a step-down from the original proposals – and, of course, an appropriate one in a treaty that is meant to be about combating global counterfeiting…
ISPs, Secondary Liability, and Safe Harbours
Even more striking though is the removal of stuff about ISPs and filesharing: in particular, two provisions that were stirring up a lot of controversy. The first would have ‘required signatories to affirm’ that they recognized secondary liability. The second provision would have provided ‘safe harbours’ for online service providers like ISPs subject to the OSP complying with certain conditions. Here, too, the original draft was modeled on US law.
In its initial form it stirred immense controversy as it looked like it either would require, or was a stalking horse for, the implementation of ‘three strikes’ rules. ‘Three strikes’, or ‘graduated response’, is the set of rules – now found in countries like France, Korea, and to some extent the UK – that require ISPs to engage in an escalating series of actions – warnings, technical measures, termination of service – against infringers identified by copyright owners (usually file-sharers). The January ACTA draft had text that would have required ISPs to have a ‘policy addressing the unauthorized storage or transmission of materials protected by copyright’. A footnote gave, as an example of such a policy, a ‘policy providing for the termination in appropriate circumstances of subscriptions or accounts’. These provisions were reduced somewhat in the July 2010 text.
Now it’s all gone. The secondary liability provision, and the ISP safe harbours. There is a footnote reference to protecting OSPs, suggesting it might be a good idea. But the obligations are gone.
The consensus in the commentary I’ve seen so far, online and off, is that losing these two provisions is a setback for the US and a good thing for anyone who is concerned about the ACTA treaty and the push for ever-more-stringent enforcement. Some people are expressing concern about the remaining provisions – in particular, one that commits Parties to ‘endeavor[ing] to promote cooperate efforts within the business community to effectively address [copyright] infringement while preserving legitimate competition and consistent with each Party’s law, preserving principles relating to freedom of expression, fair process, and privacy’.
I would agree that removing secondary liability from the treaty is a good thing: the early text was diabolical and would, in Australia certainly, and elsewhere, could have required changes to law and hence have made things a whole lot more confusing for everyone. And to me, the very general commitment to ‘endeavour to promote cooperation’ isn’t too much of a worry. It wouldn’t require much concrete action on the part of a signatory.
I’m more concerned, however, about the implications of removing the safe harbours, and what the failure to agree on safe harbours tells us about international IP law-making.
First – is it really a good thing for the safe harbour provisions to be gone? Some would say yes, because the safe harbours come with obligations for ISPs – basic cooperation such as ‘notice and takedown’. It’s true that by removing the safe harbours those kinds of commitments are gone. This is particularly good for a country like Canada which has eschewed ‘notice and takedown’ in favour of ‘notice and notice’ in copyright.
But there’s a cost, and that is that there’s no guarantee of protection for OSPs in the new ACTA. That can’t be a good thing. As far as I can tell, the safe harbours found in the US DMCA (17 USC 512) have been very useful – YouTube has relied on them; Google has relied on them; so have others. Arguably the existence of Safe Harbours has facilitated Web 2.0. We’ve had a long battle in Australia to extend our safe harbours to provide more protection. This in the context of a treaty that has more extensive provisions on damages and injunctions than any other existing international IP treaty.
Second – what we see here is a complete failure on the part of these countries – all of which, bar Switzerland, seem to agree on the basic idea of protecting OSPs from liability – to reconcile their differences and agree to a limitation on copyright. To me, this should worry the many advocates who want countries to be talking about exceptions, and adding them into treaties. There are numerous people arguing for this at the moment. Most visible are the push for a Treaty for the Visually Impaired, the push in the WIPO Development Agenda to work on a broader agreement on exceptions, or academic treatment such as that of Hugenholtz and Okediji (watch it, big pdf) or Kur and Ruse-Khan. Agreement on exceptions could be important to balance out all the strong treaties we have on rights, and now, potentially enforcement. Failure to agree here is, I think, a really bad sign. They had trouble, people insisted on their own various conditions on the exception – and they gave up. This doesn’t bode well. Negotiators are going to need to loosen up and think about how they can agree exceptions, or copyright law internationally is only going to get more unbalanced (by the way, I’ve explored this in more detail in a longer paper – email me for a copy).
Other stuff, old and new
Other new stuff in the new ACTA draft include a preamble. It’s quite a read. I’m liking the various references to the importance of balancing interests and the need not to create barriers to trade. I’m not liking the bare assertion (by the US, EU and Japan) that counterfeiting ‘provides a source of revenue for organized crime’.
Other old stuff that is still there include a camcording provision (sigh) and the EU still wants to have injunctions against intermediaries that aren’t themselves infringing. I’d be worried if I was in the intermediary business. A lot of provisions have become more qualified and hence less evil from a ‘balanced copyright advocate’s’ perspective. The text is better than previous ones, but there’s still a few nasties in there.
Remaining disagreements
Finally, the remaining disagreements. Here, it’s mostly about scope. First in terms of the IP rights covered. In short, the EU, Switzerland and Japan want a broader scope, extending to things like patents, designs, and (importantly for the EU) geographical indications. Australia, along with the US, NZ, Canada and Singapore want it largely confined to addressing copyright and trade mark infringement. This has been an issue from the start, and is all pure comparative advantage: the EU, Japan and Switzerland probably see their best hope of advantage in areas like patent or GIs; perhaps design rights. The US holds more advantage in copyright and trade mark. And there’s a number of other countries – Australia among them – who most likely believe they are better off the narrower the agreement can be drawn.
The other big scope issue is on the border measures. Here the issue is – do customs have to intercept only goods being imported? Or can a right holder call a halt on exports or even goods that are just in transit? Australia is definitely in the minority here: still holding out to require only measures on import (along with Canada, NZ and Singapore). Sincerely hope they hold out on this one. Seems to me that the Australia/NZ/Canada alternative to stopping exports – telling the receiving country the stuff is coming – is a reasonable alternative as it leaves the issues to the country whose market is most affected. Fingers crossed.
There’s plenty of other bits and pieces, which are important. But the agreement will succeed or fail on the scope question. The question is whether someone will blink, and who.
So where does that leave us? Waiting for them to finalise, which I suspect they’ll do soon. Hoping that Australia will, before ratifying, make sure it has a proper public consultation and debate about whether it is even worth signing this thing. And really, really wondering whether all the time and cost spent on negotiating this thing will ever be toted up so we can decide whether it was actually worthwhile. Wouldn’t that be an interesting calculation?
Kimberlee Weatherall is a Senior Lecturer at the University of Queensland
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