A reply to the sentiment that copyright infringement not resulting in lost sales is benign

June 16, 2011

By Assoc. Prof. David Brennan

A view is held (in both expert and non-expert circles) that unless an infringement of copyright causes proven lost sales, that infringement should not be actionable. Under the logic of this view, to award damages for infringements that do not cause proven lost sales would be vindicating intellectual property rights without triggering incentive effects.

In relation to the damages award in the now famous Larrikin v EMI litigation (comprising a notional usage price of 5% of APRA׀AMCOS royalties paid to the infringers) two of our economists Beth Webster and Paul Jensen have supplied this critique of the law – emphasis in the original:

The sales of ‘Kookaburra’ were not affected in any way shape or form by the success of ‘Down Under’.  Quite simply, Larrikin should not be due any damages at all.

It is worthwhile to think more about (in law and economics) the creation of property rights – including those rights’ remedial scope – for copyright subject matter. A fine vehicle to do this is infringing file-sharing.

Research undertaken at the University of Ballarat in April 2010 reveals something of the global extent of infringing file-sharing. The University’s Internet Commerce Security Laboratory (ICSL) – which is funded by the State Government of Victoria, IBM, Westpac, the Australian Federal Police and the University – was commissioned by Village Roadshow to measure the volume and nature of BitTorrent file-sharing global traffic. It estimated that 97.9% of files made available encoding non-pornographic content were clearly not authorised by the copyright owner. Under the BitTorrent system the term ‘seeders’ refers to people who have completed their download and then make the file available for others to download. That is to say, a seeder is a person who is making that content available online to the public. The ICSL produced a list of what was estimated to be the top 100 seeded files as at April 2010. The top 10 in that list were:

1. The Incredible Hulk[2008]DvDrip-aXXo97065494792.4447: 1,112,628

2. Indiana Jones And The Kingdom Of The Crystal Skull[2008]-aXXo: 1,029,695

3. College[2008]DvDrip-aXXo339166021846.017: 509,576

4. Sherlock Holmes (2009) DVDSCR XviD-MAX: 479,655

5. Avatar (2009) PROPER TS XviD-MAX889790305026.795: 332,665

6. Meet Dave[2008]DvDrip-aXXo: 311,894

7. Lady GaGa – The Fame Monster 2CDRip 2009 [Cov+2CD][Bubanee]: 308,117

8. The Andromeda Strain[2008]DvDrip-aXXo: 284,221

9. Shutter Island (2010) R5 DVDRip XviD-MAX851029283088.936: 282,628

10. 2012 (2009) R5 DVDRip XviD-MAX883775626338.402: 277,043

With this list it should be pointed out that a title like Avatar reappeared twice again in the top 100 list under different file names – i.e. Avatar 2009 DVDScr H264 AAC-SecretMyth (Kingdom-Release) 94,781 seeders and Avatar TS XviD-IMAGiNE(No Rars) 82,977 seeders.

It is commonly considered that unless an infringing file-sharer, but for infringing, would have paid for the relevant content then there is no harm to the copyright owner arising from the infringement. Consider these three published readers’ comments to Asher Moses’s essay-style article ‘Piracy – are we being conned?’ (Fairfax Media, 22 March 2011)

  • Why would they assume that an unpaid download is a lost sale? Kale – Sydney
  • The figures are obviously predicated on the presumption that each illegal download would convert into a legitimate purchase, which is a palpably fatuous assumption to make. The ghost of common sense – My bedroom
  • So are they counting every movie i have downlaoded then as lost revenue? cos i have a surpirse for you, you never were gong to get the money in the first place! [sic] Danny – Melbourne

The commonality of this sentiment is so pervasive that a survey-based analysis of direct loss to the film industry conducted in Australia by IPSOS Media CT and Oxford Economics for the Australian Federation Against Copyright Theft (AFACT) made explicit allowance for it. Deducted from ranks of loss-causing Australian infringers were those who would never have paid to watch the film. That is someone like Danny above. Danny might have unlawfully downloaded Avatar using BitTorrent, but never would have paid to obtain a copy. The AFACT-commissioned survey estimated that 23% of Australian infringers were in Danny’s boat, and so a 23% deduction was made in arriving at the final figure of $575m direct loss to the film industry for the 12 months Nov 2009-Sept 2010.

Is it correct, as our economists Beth and Paul say, that infringement not causing proven lost sales should yield zero damages? Or is it correct, as the Fairfax readers imply, that an infringing download not substituting for an actual purchase should be removed in the calculation of owner harm? And is it therefore correct to make that 23% deduction?  Or, to put it another way, is infringement not resulting in a proven material loss benign?

In economic analysis of copyright law as it applies to (say) the film industry, copyright is justifiable to the extent that it provides an effective promise to film producers and creators that if investment and risk is undertaken to make a film, some of the value that film generates is capable of market appropriation through the conferral of property rights. Avatar is a good case-in-point.  Would it have been created without the promise of copyright? It is difficult to imagine this type of content being produced through non-market means such as philanthropy or public funding. Market demand stimulates such content’s creation. In copyright, property rights in creative expression are deployed as an instrumental device to permit that market demand to induce productive endeavour. This is the incentive effect of intellectual property. It does not mean that those property rights per se generate economic value – the film could be an unmitigated box-office flop. Rather, the rights simply provide a way for a film copyright owner to capture some of the market demand for its film.

Given that copyright in economic theory is a promise of appropriability what, in private law, does that promise mean by taking the form of a property right?  Property as an owner’s right to exclude forges a special norm which governs relations between the owner of the property and users of the property. When relations are governed by a property norm violation by a user means that the owner receives less than the owner deserves, and that the user obtains more than the user deserves. Restitution scholarship regards this as an ‘expense’ to the owner mirroring a ‘gain’ to the user. The expense and the gain are de jure rather than de facto concepts. This restitutionary idea has been applied in intellectual property cases since as long ago as the 1867 patents decision of Penn v Jack where Page Wood VC assessed damages by asking: ‘What would have been the condition of the Plaintiff if the Defendants had acted properly, instead of acting improperly. That condition, if it can be ascertained, will, I apprehend, be the proper measure.’ Here, ‘acted properly’ meant to have paid a reasonable usage price for the use of the intellectual property.

Subsequent UK, US and Australian authority has assessed the lower-end quantum of monetary relief in copyright and patent cases to be the reasonable price for the use of the IP regardless of whether the particular defendant user would have agreed to pay. Indeed this approach is seen in the Larrikin v EMI case itself, where evidence was before the court that a lead member of Men at Work would have resisted paying anything for use of the Kookaburra copyright. But why should at least usage price damages be paid in the Larrikin v EMI litigation, and indeed by people such as Danny in the unlikely event that they are sued for downloading Avatar? For instrumental reasons society has promised the conferral of copyright property. That promise is one of appropriability which entails a particular norm governing relations between owners and users. Failure to at least award usage price damages (or recognise a legal entitlement to such a usage price) represents breach of that promise. It does so by creating the perverse situation of rewarding users who infringe rather than act lawfully. Moreover, why should anyone pay for the enjoyment of Avatar if the law accepts as benign the consumption of ‘you never were gong to get the money in the first place’ Danny?

Stripped away, the point made by the above economists and the Fairfax readers seems to resolve to a more fundamental matter of property delineation. The infringements of the 23% of users identified in the AFACT-commissioned survey should be removed from the copyright promise. That is, removed from the definition of property rights in copyright. Arguably, it presents us with this stunning new conception: copyright is the legal entitlement to exclude the whole world from the exercise of certain defined rights – except those people who would never have paid for the exercise of those rights.

David Brennan is an Associate Professor at the Melbourne Law School

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New Models for Book Publishing

February 17, 2011

By Kwanghui Lim

Traditional book publishers have been increasingly challenged by e-books and other digital technologies. We decided to organize a public seminar with industry participants to learn about new opportunities in this area.

A common theme among our speakers was of the growing fault lines between those who create content and those who distribute it. From the point of view of content creators, digital technology is not a bad thing. It presents new ways to reach customers. To a firm like Lonely Planet, printed books, e-books and apps are alternative and useful delivery mechanisms. The heterogeneity is a good thing since each delivery mechanism has its strengths and weaknesses. For example a map-based application on your mobile phone may be useful for navigating the streets of Melbourne, while a printed travel book might be preferred if you are travelling the Australian outback (books are more durable than electronic devices; they also require no electrical power).

Authors are beginning to explore new pricing schemes. For example several authors are trying to sell a larger volume of e-books at lower prices (around $2.99 – $3.99) instead of a small number of regular books at higher prices (say, $10). Other authors are trying “pay what you want” schemes. Our guest speaker Max Barry will be selling his next book as a real time electronic serial, distributing it directly from his website in small chunks and for an attractive price ($6.95). It is too early to know which of these will work well and for whom because the book industry has many different segments of customers with different needs. Furthermore, there are concerns with e-books around the issue of digital piracy. However, we were reminded by one of the speakers that for many authors, obscurity is worse than piracy.

Besides, piracy has long been a threat even with printed books: you will of course remember the photocopy machine which has existed for quite awhile, as well as those suspiciously inexpensive textbooks printed on poor quality paper brought in from various developing countries. It seems to me at least that in the digital world, selling a large volume of e-books at a low price makes a lot of sense. In this context, the serialized e-book has an added advantage because it builds a repeated interaction between the reader the author. Over time this may help create loyalty towards the author.

I see three areas of opportunity and these arise along the fault lines described above.

The first opportunity is with “apps”. It crossed my mind earlier this month that simply repackaging a book as an app gives the author tremendous freedom. With books, the author is stuck with publishing delays, parallel import laws and other legal impediments, not just the need to physically deliver products. With apps, all that is gone. Re-purpose a book as an app and it morphs into a software program, so different rules apply. If you go one step further and make the app exciting to use, you can counteract the myth that printed books are superior. Those who have tried The Elements on an iPad will find it hard to go back to a printed Periodic Table. Similarly, having compared both this app and the book version, I much prefer learning about photography using the app version which is more interactive and has built-in videos.

A second opportunity lies in offering new skills combinations. In order to serialize his next novel, Max Barry combined his computer programming expertise with a passion for writing: he is essentially selling each subscriber a private RSS feed as a separate product. Most people do not have this combination of skills, especially the generation of authors that went to journalism school and did not acquire a technical background. An opportunity exists for people who can bridge this divide and provide new tools and services to help content authors to craft their products and reach customers easily. For example, Graeme Connelly spoke to us about the new “expresso printer” at Melbourne University Bookstore which produces small print runs that were uneconomical in the past. I believe this is only a starting point, e.g., we don’t yet have the equivalent of WordPress for creating books with existing tools being either too complex or too amateurish.

The third opportunity lies in further disaggregating the value chain. I learned from the session that one of the benefits to authors of going with traditional book publishers is their expertise in editing. Publishers convert the messy raw material that is a manuscript into a curated experience that is proof-read, edited and checked. I suspect that the editing activity will split apart into a distinct industry segment, just as has happened in other industries such as semiconductors, which used to be vertically integrated but which now has some firms focusing exclusively on system development and others on chip design or manufacturing. This is pure speculation on my part, but I don’t see why the editing process, while valuable, needs to be tied much longer to the manufacture and distribution of physical products.

It is hard to predict how things will work out and I don’t think the traditional book will completely disappear. This industry is definitely going to be interesting to watch over the next few years.

Kwanghui Lim is an Associate Professor at the Melbourne Business School

This article was cross posted here at Core Economics http://economics.com.au/?p=6702

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ACTA reaches a critical new stage

April 23, 2010

By Kim Weatherall

What a difference a fortnight can make!

Two weeks ago on this Review, I noted that we had no (official) access to the text of the Anti-Counterfeiting Trade Agreement, or ACTA.  As of Thursday this week, though, we do (available here), following a decision by the negotiators last week to meet the demands of civil society and politicians for transparency.

There has been a reasonable amount of commentary already from the likes of Michael Geist, Margot Kaminski at Yale, and Sean Flynn at American University.  In fact, Michael Geist has a useful blogpost with links to commentary across the web.

This official text is perhaps most interesting in showing where the negotiators have got to since January.  My summary?  There are some improvements: there seems to have been some attempt to respond to industry and civil society concerns; and so some (definitely not all) of the nastiest stuff has been taken out and new flexibilities are proposed, if not yet agreed.

The language that had been interpreted as potentially imposing ‘three strikes’ legislation (or graduated response) – that is, requiring ISPs to engage in a process of graduated responses to file-sharing by customers in response to copyright owner complaints culminating in suspension or termination of internet service – that’s kind of gone.  It was in a footnote to the text that now starts on page 19 of the official draft text, and it used to refer (back in January) to ISPs having a policy for the termination of repeat infringers. Now the text just says (on page 21) that at least “one delegation proposes to include language in this footnote to provide greater certainty that their existing national law complies with this requirement”.  In other words, I think that the US, and probably Australia, and maybe another country want confirmation that their domestic requirement for a termination policy complies with the language of ACTA. But they won’t tell us what that text is right now – maybe its not been drafted yet.

There are some general provisions at the front now (at least proposed) referring to important concepts like the protection of privacy and confidential information, proportionality, and that the agreement does not require countries to redistribute scarce enforcement resources to prioritise IP over everything else (my paraphrase).

The statutory damages provision now includes a proposal to allow additional damages instead.  As I’ve explained at length elsewhere additional damages are better than statutory damages, largely because they allow courts to decide who is an appropriate person to be punished (rather than the rightsholders): they put in place more discretion.  That said, they can be pretty darn arbitrary. But better.

There’s a proposal to allow countries to choose whether to apply border measures to patent and design infringements rather than mandating their coverage.  As I’ve noted before, inclusion of patents is problematic because of the potential impact on legitimate businesses including generic pharmaceutical manufacturers.

On the other hand, some of the material I described as concerning in the post a fortnight ago, and in a more lengthy paper that’s available online, is still there.

There is still a proposal to allow rightsholders (and, by the way, rightsholders includes representative groups like the RIAA or MPAA) to get injunctions against intermediaries whose services are used by third parties to infringe – even where the intermediary is not itself liable – thus potentially turning the ISP into the enforcement arm of the rightsholders and courts.

There is still a provision that seems to be proposing the creation or ‘confirmation’ of secondary liability – something not found in international treaties anywhere else and something that is entirely about substantive law, not enforcement, and so inappropriate here.

The draft still proposes an elaborate ACTA superstructure which, for reasons Geist has explained, is pretty darn concerning.  Let’s face it: bodies like this need to justify their own existence and will create work for themselves.  Including working groups for new and even more exciting enforcement provisions into the future.

There’s a nasty possibility that Kaminski points out: they’re debating criminalizing “[i]nciting, aiding and abetting” infringement.  These provisions are both up for debate, and should not be included in the final draft if ISPs don’t want to become subject to criminal investigations.

And there’s still plenty of provisions where the possibility of applying the provisions to patent is still on the table, albeit with border measures those measures are optional.

And there’s more.  This post can only touch on the kinds of detail we are seeing in this proposal.  There is much yet to work through. At least we now have something to go on.

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 wikileaks.org.  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.

    Anti-Counterfeiting Trade Agreement Negotiations Enter the Next Round: but will this ACTA have a finale?

    April 9, 2010

    By Kim Weatherall

    Next week in Wellington, negotiators from a select group of like-minded countries – US, the European Union, Japan, Switzerland, New Zealand, Canada, Mexico, Australia, South Korea, Morocco and Singapore – will meet in what will be the eighth round of negotiations aimed at producing an ‘Anti-Counterfeiting Trade Agreement’ (ACTA). These negotiations are both troubling, and troubled – and I’d like, in this post, to explain why.

    The Goals

    According to all the official documentation, the goals of the proposed ACTA are to establish an international framework for efforts to more effectively combat the proliferation of counterfeiting and piracy in three ways: by enhancing cooperation between the various agencies in the participating countries; by establishing ‘a set of enforcement best practices that are used by authorities’ (whatever that means) and by setting out a legal framework of enforcement measures. The underlying belief seems to be that existing international treaty provisions on IP enforcement are relatively general and weak. And while it might seem a bit strange to negotiate a treaty on combating counterfeiting without including the major source countries for counterfeit products, there are two good reasons for doing so. First, counterfeit-receiving countries can do quite a lot without cooperation: they can seize goods at the border, share intelligence, apply penalties and remedies to internal acts, and so on. Second, an ACTA could establish a ‘benchmark’ with other countries joining at a later point.

    While ACTA is supposed to be about counterfeiting and piracy, and not about private, non-commercial activities of individuals or raising general IP standards, there has long been concern on the part of civil society groups that it would end up being much more extensive than that, and might make already strong IP laws even stronger, at the expense of individuals, consumers, and civil liberties generally.

    There has been no official release of any proposed text for the ACTA: the negotiations, while not secret, are in substance being treated as confidential. But there have been leaks of various proposals, from which it is possible to get a picture of what is being proposed.


    The picture that emerges from the various leaked documents (which can all be accessed at American University’s IP Enforcement website) is of a proposed Agreement that is wide-ranging and arguably over-inclusive, and which, in particular, extends its reach well beyond what most people would think of as ‘counterfeiting and piracy’. There are provisions on damages and how they should be assessed; the powers courts should have to issue injunctions or make orders for the collection of evidence, the process for customs to seize, retain, and perhaps destroy infringing goods and implements; and extensive provisions on IP in a digital context: provisions on online service provider liability and ‘safe harbours’; for prohibiting circumvention of technical measures, and institutional provisions to set up an ‘ACTA Oversight Council’ to supervise ACTA implementation, facilitate amendments, and establish working groups and generally monitor the application of the treaty provisions.

    For Australia, many of the provisions that we see in the leaked texts are not particularly new: quite a few mirror more or less closely what we have already agreed to and implemented as a result of the Free Trade Agreement with the US back in 2004. So the anti-circumvention provisions (requiring countries to ban people from ‘circumventing’ technical measures used to protect copyright works) are nothing particularly new or exciting for us – in fact, they are positively generous and flexible compared to what we are already committed to.

    However, a number of the proposals are troubling, if only because they would, if included in a final agreement, require changes to our law or at least muddy our legal waters:

    1. A proposal to introduce statutory damages: if compulsory, this could create a risk of oppressive damages awards and create a tool to hold infringers in terrorem by threatening large payouts if they do not settle early;
    2. A proposal to extend criminal liability to ‘ordinary’ trade mark infringement (in Australian law terms, in cases where there is deceptive similarity between the registered and the alleged infringing mark) – at the moment, we have criminal provisions for counterfeit trade mark use. This could create new uncertainties for legitimate businesses;
    3. A right to obtain information from infringers about others involved in the infringement that looks like it might encourage fishing expeditions;
    4. A provisional power to seize evidence – not, on the face of it, subject to the careful protections built in to the already rather stringent Anton Piller (search orders) process;
    5. A proposal to extend border seizures to patent infringements – which I imagine would be controversial; and
    6. A new criminal provision: to make ‘camcording in cinemas’ a criminal act

    There’s more too. Most concerning are a few bits of language that can only be described as a hotch potch. One is a proposal to apply the Berne Convention ‘three step test’ – usually used to limit the exceptions to copyright a country can introduce – but maybe used here to limit the exceptions to damages or secondary liability. Oh, and a very ham-fisted attempt to ‘define’ the extent of the law of secondary liability (in Australian terms, authorisation liability) (which no doubt, just like the attempt to ‘codify’ authorisation law in the Digital Agenda Act, would cause another decade of uncertainty for Australian law).

    Some of the ‘house of horrors’ fears about the ACTA are not borne out by the leaked texts. It seems like the governments don’t want to have customs start searching our iPods at the border, nor are they determined to seize them on the streets (good thing too). And the anti-circumvention provisions, as I mentioned, are positively gentle compared to what we’ve seen in other treaties. But there’s enough niggling little details, and little shifts, and troubling provisions, in there to make you wonder whether the whole thing is just a bad idea.


    Something else, however, emerges from the various leaked texts which is interesting to observe: namely, the differences that exist as between the various negotiating parties. If the various comments on the text leaked in January are in any way accurate, Japan appears to be in fundamental disagreement in the digital area: they seem to want to be stricter on ISPs (requiring them to act on infringement unless it is technically impossible) but easier on people who want to circumvent technological protection measures (they don’t ban, and don’t want to ban, circumvention of access controls). Europe and the US seem to be fairly diametrically opposed on the role of damages: in the US, statutory damages are clearly punitive in nature; the EU does not see ‘punishment’ as a role of damages in IP. And no one, it seems, can agree on anti-camcording laws or what they should look like. In many, many cases, provisions that one country or group want to make mandatory, others want to be an optional extra (usually, because it doesn’t fit their law: like Australia with statutory damages). That goes for most of the provisions that I’ve outlined up there. For pretty much all of them, there’s someone who wants to strike it out or make it optional.

    So we end up in this rather strange position. If all those provisions go in, we have something to be worried about and we’ve got a load of provisions that are going to create a chilling effect on individuals and legitimate businesses. Nasty stuff. But if all the qualifications go in, and ‘shall’ gets replaced en masse with ‘may’ – then we end up with … not much?

    Why bother?

    And this, in itself, raises a question. If these countries can’t agree; if there is this much contention, two and a half years or so since negotiations started – what, exactly, are we doing here? And if we smooth over all the disagreements, and ‘vague-up’ the language sufficiently that everyone can agree… will we have achieved anything concrete at all? I’m not so sure. I can’t help but feel we’re heading towards a whole lotta optional extras and not a lot of substance.

    Now, the obvious response to this is – well, so what? That’s good, right? No nasty stuff that makes Australia change its laws (again)? So what if the negotiators get together and, in the end, have 40 pages or so of treaty with 3 provisions of compulsory simple stuff and 35 pages of optional extras?

    Well, personally, I think there is a so what here. Because you know what that means? A whole lot of complication, a lot of hard to understand jargon, a lot of ill-will (because this stuff is controversial and it’s generating a lot of bad press for IP law generally) – and IP owners who don’t make a single dollar more, meaning we don’t get a single extra book, or movie, or innovative new product out of this treaty. And in the end, isn’t that what this is all meant to be about? Encouraging creativity and innovation?

    And then there’s the secondary effect. That you set up a standard – ok, it’s optional, but it’s there – and when the trainers come to the developing countries – or, indeed, developed countries the next time someone gets their bee in a bonnet about something – to write their shiny new IP laws, this treaty is held up as the shining example of a perfect IP enforcement system. And the people are told – look, you want all the optional extras, right? They’re features, right? And more features are good???

    I think, if I were a negotiator, I would be taking a long hard look at what is in the treaty, and I would be asking: is this really worth it? Is it worth the criticism and the ill-will and the conspiracy theories, and is it going to make creators any richer. Cause if not? I’d be spending the Wellington hotel bills on better arts grants and fund a few science projects.

    ACTA. I’m not sure if it’s going to have a finale. And if it does, I’m not sure whether it’s going to be the 1812, or a fade-out. Watch this space.


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