In this edition (#7)…

May 20, 2010

Dr Leslie Cannold and Professor Luigi Palombi reply to Assoc. Professor David Brennan’s response to their Fairfax article on Genes and Patents.  Click here for the original Cannold/Palombi article.  Click here for Brennan’s response. 

Also, in a follow up to our earlier analysis of the Digital Economy Act  2010 (UK)(here), Jake Goldenfein looks at the DEA’s approach to “Orphan Works” – “in-copyright” works whose authors cannot be located.

The Digital Economy Act 2010 (UK) and Orphan Works

May 20, 2010

By Jake Goldenfein

Two days after the UK general election was called in April this year, the UK Digital Economy Act 2010 (DEA) became law.  Click here for our earlier review.  As parliament was to dissolve within a week, the DEA, passed in a process called ‘wash-up’ whereby parliamentary scrutiny is truncated for the purpose of pushing bills into assent before dissolution. The result was an extraordinarily far-reaching and controversial Bill being passed less than two months after its first reading speech. One victim of the abbreviated legislative process was Clause 43, whose provisions aimed at establishing an ‘orphan works’ scheme in the UK.

The definition of an ‘orphan work’ is in itself controversial, however it generally signifies an in-copyright work whose copyright owner cannot be located. These orphans are problematic as only copyright holders can authorise activities such as reproduction and communication to the public.

A work’s orphanhood prevents a range of activities, including digitisation for many cultural projects or even preservation. Copyright legislation has thus led to a ‘black-hole’ of cultural content in which it is estimated up to 40% of all cultural products exist.

Institutions wishing to utilise works with unknown copyright holders must engage in an often prohibitively expensive search for that rights holder to seek a license. The UK orphan works legislation would have introduced a compulsory statutory licensing regime, allowing a user to obtain a license for an orphan work after demonstrating a ‘reasonable search’ for the copyright holder, and paying an appropriate fee in escrow in case the rights holder later emerged.

There is quite a strong consensus and economic argument in favour of permitting orphan works to be collectively licensed. Such a scheme would assuage the growing and undesirable consequence of copyright law locking-up content whose entry into the public domain would have substantial public benefit. So why did this legislative attempt, as well as previous attempts in other jurisdictions, fail?

Make your legislative intentions clear

In his 2006 article, commentator Ian McDonald discussed the principles that should guide a legislative solution to the orphan works problem. He stated: ‘One touchstone is to clearly define the purpose for which any solution is devised.’ That criterion was insidiously absent from the UK legislative process. This is because orphan works schemes have applications beyond cultural products. There are innumerous contemporary works, orphaned due to digital distribution and copying on the Internet. Any digital text or image without patronage data or attribution is potentially orphaned (depending on the required rigour of the search for the rights holder). This creates problems for professional creatives (especially photographers) whose works are routinely reproduced without attribution or metadata identifying the copyright holder. These groups are legitimately concerned that an orphan works regime creates a mechanism for ‘big publishing’ to utilise compulsory licences for access to cheap images with the effects of reducing the market for new images, and eroding traditional rights to control many uses of copyrighted works.

Recent UK government reports (The Gowers Review of Intellectual Property 2006, Taking Gowers Forward 2007) recognised the problem of orphan works both culturally and commercially and suggested different regimes for dealing with the different uses. However, the proposed DEA provisions did not differentiate between commercial and non-commercial exploitation and the majority of government spin only focused on the liberation of cultural material. The British Library and BBC’s capacious archives were touted as the reason for implementing the scheme. Given the opposition to previous commercial schemes sought in the US, it appeared the UK was successfully garnering support for its scheme by pushing the ‘big culture’ line while quietly including the commercial applications in the same package.

This technique did not get by the UK lawmakers. Lord Howarth of Newport stated in the House of Lords Debate: ‘I am frankly puzzled as to why the Bill was not constructed and designed to show a clear distinction between the treatments of orphan works with little or no commercial value but important scholarly, educational or cultural value, and commercially produced material that is in copyright. It would have facilitated our analysis of it and made it far easier for us to give fair wind to the part that everybody in practice has agreed should be supported. But the two elements of the Bill have been so inextricably tangled up with each other that we have found ourselves in considerable difficulty.’

In reply, Lord Young of Norwood Green (attempting to pass the clause) stated: ‘On the point made by my noble friend about commercial versus non-commercial, the key point is to ensure fairness to rights holders. It is not an arbitrary distinction between commercial and non-commercial use; it is about ensuring that there is an adequate regulation of organisations running orphan works or extended licensing schemes.’

Of course the distinction between commercial and non-commercial is not abundantly clear, but the political spin employed by the government’s response emphasises the quantity of debate and refinement necessary for any orphan works regime to be considered acceptable to a majority

Leaving things to regulations

Another substantial contribution to Clause 43’s failure was its reliance on regulation. Virtually all substantive aspects of the regime would be left to the Secretary of State to implement through regulation. This included: the definition of orphan works, who could operate the licensing schemes, and how they would operate.

While all crucial elements, the lack of a real definition of orphan works in the primary legislation was especially troubling. Because a work is deemed orphan by the legislation, the rigour of the search required to identify the copyright holder is a critical indicator of where the equilibrium between users and rights holders lies. Leaving this to regulation sat uncomfortably with much of parliament, especially in light of the government’s push for flexibility

Orphans still out in the cold

The speed of the DEA’s legislative passage created a quagmire for Clause 43 that could not be overcome. The opponents of the clause argued that too many categories of orphan works were being dealt with indiscriminately. They sought clarification of how the legislative instrument would deal with different industries and different uses of orphan works. On the other hand, supporters of the clause argued that the number of different industries and uses for orphan works required the primary legislation to be vague, such that there would be sufficient flexibility in the regulations.

This was an impasse that the UK House of Commons could not surmount before the election and there was a general consensus that the DEA was an opportunity wasted. However, the Conservatives repeatedly indicated in the debates that this issue would remain high on their legislative agenda, suggesting it won’t be long before another proposed scheme emerges. Perhaps the failure of Clause 43 will compel the Australian Government to be direct, clear and comprehensive with any similar regime it considers in the future.

Jake Goldenfein (LLB(Hons)) is a graduate of the Melbourne Law School

The Digital Economy Act (UK) – preview for Down Under?

April 23, 2010

By Melissa de Zwart and Vicki Huang

The Digital Economy Act 2010 (the Act) was given Royal Assent on April 8th, 2010.  The Act regulates digital media and contains many of the suggestions from the Digital Britain Report of June 2009.  The Act is controversial for many reasons.  First, the lack of debate surrounding the Bill left many commentators reeling.  The first reading of the bill was presented to the House of Commons on March 16th 2010, was not debated at length in the Commons and pushed through in the dissolution of Parliament.  Second, whilst the Act touches on many areas of a digital economy such as the regulation of Channel Four, the most contentious parts of the bill are those centred on shutting down online piracy.  The spirit of these provisions is to use Internet Service Providers (ISPs) to police individual users and their use of peer-to-peer file sharing websites.

Under the Act, copyright holders can send a “copyright infringement report” to an ISP with evidence of a copyright infringement.  The ISP has the burden of notifying its subscriber of the alleged infringement (cl.4).  In addition, ISPs must provide copyright holders, upon request, with a “copyright infringement list” outlining each infringement by an individual anonymised user (cl.5).

The Secretary of State may tell OFCOM (the UK communication regulator) to order ISPs to shut down sites, suspend accounts or enforce other limits upon an ISP customer (cl.10).  ISPs that fail to apply technical measures against infringing subscribers can be fined up to £250,000 (cl.14).  The maximum criminal penalty for making copyright-infringing works is raised to £50,000 (cl.42).

Under cl.17, the Secretary of State may make provisions concerning the granting by a court of an injunction forcing ISPs to block access to “a location on the internet which the court is satisfied has been, is being or is likely to be used for or in connection with an activity that infringes copyright”.  In other words, government sanctioned website blocking.

Why the Uproar?

When the Bill was originally touted, there seemed to be widespread panic.  Claims of shutting down You-Tube and restrictions on freedom of speech were widely reported.  Some of the more vocally opposed proposals such as the “three strikes and you’re out” policy for recalcitrant users seem to have been withdrawn but the Act still has many in the UK concerned.  The fears seem based on the prospect of shutting down of sites that host a combination of legitimate and illegal material and the shutting down of sites that may use copyrighted work but in a reportage capacity eg  At the extreme, some argue that, the inclusion of the phrase “likely to be used” in cl.17, may mean a site like Google may be blocked based on its assumed intentions rather than its actions.

The concerns from the ISPs seem to relate to their duty to send infringement notices to users and their potential obligation to shut down access.  The problem with the Act from an ISP’s perspective is that whilst copyright holders can link piracy with an IP address, and these may be linked to a household’s internet account, there is no guarantee that the infringer will be identified.  An IP address can be used by many people at once, for example by legitimate users, neighbours, visitors or hijackers.  For cafes and public places with wi-fi, the identification of a user is almost impossible.  This has led to a fear that many innocent account holders will be sent infringement notices.

Proponents say the current procedure of getting a court order before an ISP will identify the infringing user is inefficient and costly.  By making it clear that an ISP is obliged to identify the user and by imposing a penalty of disconnecting the user, the cost of enforcing copyright laws will lessen as owners are not forced to go the court for orders or seek a remedy through the courts.

Piracy in Australia

The legislative approach in the UK is an interesting contrast to the current position in Australia which relies upon ISPs adopting a voluntary repeat infringer policy. The ‘safe-harbour’ provisions, which were introduced into the Copyright Act 1968 as a consequence of the AUSFTA, were considered in the recent case of Roadshow Films Pty Ltd v iiNet  Limited (No. 3) [2010] FCA 24, reviewed in the Fortnightly Review in February and March. In that case the Federal Court held an ISP to be not liable for its user’s peer-to-peer distribution of copyright works.  The case is scheduled for appeal but the approach of the Court to the safe harbour provisions is interesting in the context of the Digital Economy Act.

Three key aspects of the iiNet decision are important in this context:

1. The meaning of the ‘power to prevent’ infringement under section 101(1A) with respect to authorisation liability.

    • Whilst iiNet had the power to suspend or terminate users’ accounts under its customer contract, the Court held that this did not equate to an obligation to suspend or terminate accounts for copyright infringement. The Court observed [at 430] that ‘copyright infringement is not a straight “yes” or “no” question’. Therefore, the concept of who would constitute a repeat infringer was not self-evident, raising the same interpretation issues as outlined above with respect to the Digital Economy Act.

    2. The operation of s112E.

    • Although this section of the judgment is obiter, the Court interpreted this section to have little or no practical effect. The only circumstance in which s112E could have effect is where the person merely provides facilities for the making of the infringement and does nothing more. However, of course, if this is all the person is doing, it would be unlikely they would fall within the concept of authorisation. Any knowledge of infringement would mean that the section is no longer applicable.

    3. The safe harbour provisions.

    • Again, this section of the judgment is obiter as the sections only apply once a finding has been made that the ISP is liable for infringement. The Court confirmed that as compliance with the provisions is voluntary, failure to adopt a repeat infringer policy cannot be evidence that goes to a finding that an ISP is liable for copyright infringement. In order to fall within the limitation of liability provided by the safe harbour provisions, ISPs are required to adopt and reasonably implement a policy that provides for termination in appropriate circumstances of the accounts of repeat infringers.
    • Interestingly, the Court held that iiNet had a repeat infringer policy even if it had not been fully written down nor described to its subscribers: [at 593] ‘It is impossible to fail to notice the complete vacuum of legislative guidance in relation to any category A requirements when compared to the highly prescriptive requirements in relation to categories B-D found in s 116AH(1) and the Regulations. Neither the legislation, the Regulations nor extrinsic materials provide any guidance to the Court as to what the ‘appropriate circumstances’ for termination are, what ‘repeat infringement’ means or what the ‘accounts of repeat infringers’ means. The assumption must be that Parliament left latitude with the CSP to determine the policy, and left the meaning of those words to be determined by the courts.’

    The approach of the Court in this case demonstrates the difficulty of interpreting and applying such concepts, and it is likely that similar confusion may apply in the context of interpretation and application of the Digital Economy Act (UK).


    Clearly, ISPs make much easier targets for copyright infringement actions than end users, but as a matter of public policy, the question needs to be asked regarding how much accountability and responsibility we wish to place on ISPs for monitoring and enforcing access to certain content. This broader policy question also arises in the context of content regulation and the Australian Government’s proposed introduction of mandatory internet filtering. Whether this is an issue for the courts or rather one for the legislature has to be questioned. The impact of the UK Digital Economy Act will certainly be closely watched by interested parties in Australia.


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