Three recent cases have intensified the attention of business and the public on the value of copyright and how it can be captured, or lost, in our increasingly interconnected electronic world. Hollywood, Telstra and that iconic Australian rock band Men At Work were all playing the copyright “game”. All lost: Hollywood’s movies were not protected from downloading by the public; Telstra’s telephone directories were found to be “authorless”; and a minor refrain in a Men At Work song might end up costing the band a lot of Vegemite.
What really happened to deprive them of the rights they thought they had? In this IP and Media Communiqué, we explain why the cases were decided against them, and what our governments are doing to properly balance individual rights against the mass exploitation made possible by the internet, by new technologies and by new consumer devices.
When you leaf through the White Pages and the Yellow Pages, you are probably in no doubt that they are useful and valuable publications. Ownership of that “value” was recently tested in the Federal Court, in an action in which Telstra asserted its alleged copyright to stop the publication and sale of a competing telephone directory. The court decided that there was no copyright in the Telstra directories, because of the inability to identify all the authors involved in the compiling of the relevant “work”.1
To some extent, the decision follows on from the reasoning of the High Court in the Ice TV case last year. That case concerned copyright in electronic TV program guides asserted by the Nine Television Network and considered both authorship and originality in the context of copyright. This recent Telstra decision will further frustrate businesses seeking to assert their “ownership” of compilations such as customer lists and other lists prepared for use in their business, particularly where the compilation is computer generated from a number of not-easily identified sources. In addition to the need to identify every author of the compilation, the person asserting copyright (ownership) will have to show some “originality” in the production of the work which comprises the compilation. In the Telstra case, the court held that substantial cost and effort was not enough to constitute originality.
Last month, the Federal Court was placed in the invidious position of having to referee a dispute between two Australian icons. Larrikin Publishing, owners of the children’s song “Kookaburra Sits in the Old Gum Tree” (written in 1934), sued rock band Men At Work and their music publisher EMI, claiming that the guitar riff in the 1981 song “Down Under” was a direct copy from “Kookaburra”. The court agreed, finding that the riff infringed a substantial part of “Kookaburra”, even though it is only a few bars long. The court decided that the riff was a distinctive part of “Kookaburra”, and that the “substantiality” required to constitute an infringement was to be measured by quality and not quantity.2
The song is an Australian anthem, and has achieved considerable notoriety by being used as the theme for the success of Australian sportsmen and women, such as at the 1983 America’s Cup when “Australia II” took the trophy away from the US, and at the last football World Cup in Germany when the Socceroos made it to the round of 16. Why, then, wasn’t the case commenced until now, almost 30 years after “Down Under” was a hit both here and internationally? It took a passing observation about similarity from a presenter on the ABC television programme “Spicks N Specks” to arouse the suspicions of the owners of the “Kookaburra” copyright.
Obviously, copyright owners should be always vigilant in protecting their copyright. But it is important to remember that the right of action is not subject to any limitation period, apart from the expiration of the copyright itself.
The case has been appealed by EMI, the owners of “Down Under”.
Also in February, an Australian court handed down the world’s first judicial decision concerning alleged copyright infringement by an internet service provider (“ISP”), and this has attracted great attention both here and overseas. In fact, with the Federal Court’s approval, the case was featured during the hearing on the social networking site, Twitter. In this case the court accepted the defendant ISP’s argument that it had not authorised certain copyright infringements, even though it was told that the infringements were occurring and being perpetrated by identified subscribers and it took no action to stop them.3
33 of the 34 applicants (“the movie houses”) in this case were major international movie studios, including very familiar names like Universal, Paramount, Warner Bros, Disney, Columbia, Twentieth Century Fox and Dreamworks. The 34th applicant was Seven Network (Operations) Limited, part of the free-to-air Seven Television Network here in Australia which is also a part owner of the cable television service, Foxtel. (Foxtel has its own Video on Demand movie channel called Box Office.) The defendant in the case was iiNet, Australia’s third largest ISP with half a million subscribers.
The alleged infringements constituted the downloading and sharing of movies by persons accessing the internet through iiNet’s facilities: in other words, internet users like you and me. The infringements were made possible by the use of a P2P (peer to peer) file sharing system known as the Bit Torrent protocol. Put simply this protocol, or “networking system”, allows a group of users to share files and parts of files and to transfer them directly between group members without the intervention of a central server. The court held that it was the Bit Torrent system that was the actual means by which the infringements occurred, and that iiNet had no control over the Bit Torrent system and was not responsible for its operation. Mere connection to the internet, the service provided by iiNet, was not the means of infringement. The file sharing system was necessary to enable the infringements to occur.
In Australia, a person commits an offence under the Copyright Act if the person authorises an infringement of copyright even if the person is not engaged in any infringement. The movie houses alleged that iiNet had authorised the infringements because iiNet was told that downloads were occurring, and by whom, and took no action to suspend or terminate their internet access. The court decided that iiNet’s failure to take steps to stop the infringing conduct did not mean, in the circumstances, that iiNet was authorising the infringements.
The decision is the most recent precedent on what constitutes “authorisation” under Australian law and on the “safe harbour” provisions introduced into the Copyright Act in 2006. To obtain the benefit of the safe harbour provisions an ISP must adopt and reasonably implement a policy that provides for termination, in appropriate circumstances, of the accounts of repeat infringers. The court decided that notification, suspension and termination of customer accounts was a not a reasonable step for iiNet to take in the circumstances of this case. And it is the circumstances of this case that make it additionally interesting.
How did all those movie moguls, in their far away offices, know what a few Australian iiNet users were downloading from the internet? They, or someone who shared their concerns, had formed an Australian company called AFACT, the Australian Federation Against Copyright Theft Limited. According to its website, AFACT “was established in 2004 to protect the film and television industry, retailers and movie fans from the adverse impact of copyright theft in Australia”.
AFACT then hired an internet sleuth, in the form of the cyber private detective DtecNet. DtecNet was incorporated overseas in 2004 and has offices in four locations around the world, including in Los Angeles, but none in Australia. From 2008 DtecNet created a list of iiNet users who were downloading and sharing movies through the Bit Torrent system. It did this by becoming both an iiNet user and a Bit Torrent client itself, and then using an IP filter to ensure that it only received shared information from other iiNet users.
AFACT then used the list of “offenders” compiled by DtecNet to ask iiNet to stop the infringements. The court accepted the evidence of iiNet’s CEO that iiNet had an established policy of not acting upon unsubstantiated complaints. Furthermore, iiNet held the view that copyright owners themselves should take action to enforce their own copyrights, and should not pass that responsibility and the cost of enforcement on to others like iiNet.
The court found that the legal relationship (if any) between AFACT and the movie houses was “at best, unclear” even after a lengthy hearing. Applying the “safe harbour” provisions in the Copyright Act, the court took the view that issuing warnings and terminating subscriber accounts on the basis of information it received from AFACT was not a reasonable step for iiNet to take. One has to wonder why the movie studios who were the actual copyright owners didn’t simply send their own demands when iiNet ignored the AFACT overtures, and whether the court would have taken a very different view of iiNet’s obligations under the safe harbour provisions if they had. Or perhaps this was tactical, designed to “test the waters”.
The case has been appealed by the movie houses.
There are already calls for the Australian Government to legislate to overcome the result in the iiNet case. If it did, then it may follow recent legislation currently passing through the UK Parliament and affectionately dubbed by the British media as “the three strikes rule”. The new UK Digital Economy Bill provides for anyone accused of serious copyright infringement three times to have his or her internet connection “suspended” for an unspecified period of time. A notification procedure and an appeal process before a tribunal is proposed, but some commentators are concerned about the natural justice of both. The other concern is that the Bill makes no exceptions for institutions such as libraries, schools or universities, or for businesses such as hotels or internet cafes that provide internet access to the public at large.
In France, similar “three strikes” legislation, introduced in 2009, which allowed suspension of an internet user’s access for up to one year, was declared unconstitutional. The French Court decided the penalty was disproportionate and contrary to the fundamental right of freedom of expression and communication. The legislation was also struck down because it reversed the presumption of innocence by requiring the user to prove that they had not engaged in the alleged piracy. Subsequent legislation in France now allows a government entity to issue two warnings to users based on complaints received from copyright holders. Following that, a judge can suspend internet access for a period from three to 12 months, and also fine the offender.
New Zealand amended its Copyright Act in 2008 to specifically provide protection from prosecution or civil action for an ISP in the same position as iiNet. Interestingly, a notice of infringement under those provisions must be signed by the owner of the copyright or a duly authorised agent. Early this year, the NZ Government introduced the Copyright (Infringing File Sharing) Amendment Bill which creates further “safe haven” provisions for ISPs when dealing with file sharing like the Bit Torrent protocol. The proposed procedure provides for a set of warning notices to the individual user from its ISP, following which the obligation to take legal action is placed squarely on the copyright owner. If the procedures in the legislation are satisfied then, on an application from the copyright owner, the NZ District Court may make orders requiring the ISP to suspend the account of the person found to be engaged in infringing file sharing. The ISP can charge the copyright owner for performing the functions required by it in the warning procedure.
In July 2009 the Australian Minister for Broadband, Communications and the Digital Economy released the Australian Government’s Future Directions of the Digital Economy paper. The paper outlines the key areas of focus for government, industry and the community to maximise the benefit of the digital economy. It was developed through an extensive consultation process, including a website blog which lead to the publication of a draft paper in 2008 which attracted over 100 submissions. In theFuture Directions paper, the Australian Government undertakes to consider whether the scope of the provisions should be expanded to cover other types of online service providers that are important to the digital economy. It will be interesting to see whether any expansion of this protection will be balanced by a clear procedure or process for enforcing breaches of copyright by repeat offenders.
For more information, please contact Christopher Hewitt on +61 7 3367 6900 or email@example.com.
1) Telstra Corporation Limited v Phone Directories Company Pty Ltd  FCA 44
2) Larrikin Music Publishing Pty Ltd v EMI Songs Australia Pty Limited  FCA 29
3) Roadshow Films Pty Ltd v iiNet Limited (No. 3)  FCA 24
This memo presents an overview and commentary of the subject matter. It is not provided in the context of a solicitor-client relationship and no duty of care is assumed or accepted. It does not constitute legal advice.
© Moulis Legal 2010