Copyright at Fordham, and an event reminder

Now that the Fordham extravaganza is (sadly) over and I am back in the UK after an overnight flight from New York to London that was probably shorter than the time spent travelling - alas, without films, not even this - from Heathrow Airport to King's Cross Station because of the Tube strike, it is time to spend a few words on what this invariably engaging conference said about our beloved copyright world.
  Starting with EU copyright, I was asked to provide an overview of the case law of the Court of Justice of the European Union (CJEU) over the past year. If have done my maths correctly, just in the period October 2013-April 2014 the CJEU issued 8 copyright rulings: 

• 3 October 2013 - Case C-170/12 Pinckney [here and here];
• 19 December 2013 - Case C-202/12 Innoweb [here. To be pedantic this case concerned the database right, but perhaps it may still be considered as part of the copyright galaxy]; 
• 23 January 2014 - Case C-355/12 Nintendo [here and here]; 
• 13 February 2014 - Case C-466/12 Svensson [here, here and here];  
• 27 February 2014 - Case C-351/12 OSA [here]; 
• 27 March 2014 - Case C-314/12 Telekabel [here]; 
• 3 April 2014 - Case C-387/12 Hi Hotel [here];
• 10 April 2014 - Case C-435/12 ACI Adam [here and here]; 

Back after a productive afternoon
in the 5th Avenue
or a copyright trip to the CJEU? 

In these cases, the CJEU touched upon several copyright issues, including:

• Scope of copyright exlcusive rights (Svensson; OSA);
• Exceptions and limitations (ACI Adam);
• Enforcement, with regard to jurisdiction and damages (Pinckney; Hi Hotel) and remedies, notably measures (blocking injunctions) that may be imposed on internet service providers (Telekabel);
• Circumvention of technological protection measures (Nintendo);
• Database right and meta search engines (Innoweb);
• National systems for collective management of copyright and related rights (OSA);
• Relationship between EU copyright directives (Nintendo);
• Room left for national initiatives in areas affected by EU copyright directives (Svensson; ACI Adam)

These cases addressed - but also raised - significant issues. However, what I found most striking of all these recent rulings is that there the CJEU quashed quite a few national laws. It did so in Svensson in relation to Swedish understanding of the communication/making available rights; it did so in OSA in relation to a specific non-InfoSoc copyright exception in Czech law; it did so in ACI Adam in relation to Dutch private copying exception.

This - I believe - prompts the following questions: Did Member States understand what EU law - notably the InfoSoc Directive - required them to do when transposing relevant directives into their national laws? Or - rather - is the CJEU currently committed in a (policy) plan to deepen harmonisation of national copyright systems?

Besides recent CJEU case law and policy action - or rather: lack thereof - at the Commission level, I also took part in a panel on orphan works and extended collective licensing, which was particularly timely, considering that:

• The deadline for implementing the Orphan Works Directive is approaching (it is 29 October 2014);
• The UK orphan works regulations are on track for adoption in October 2014 [here's my critical analysis of the UK move];



A gentle and
subtle reminder

• The US is also considering whether to legislate in the area of orphan works [especially following the Google Books ruling last year: has it overcome the very issue?] and extended collective licensing.  

Other copyright panels dealt with the relationship between fair use and freedom of expression [here]; copyright revision around the world [here]; enforcement [here]; and the forthcoming US Supreme Court decision in ABC v Aereo [here].

As 1709 Blog readers may know already, on 6 May [yes, that is next week!] I am holding an event in central London [hosted by Olswang LLP] to discuss all these issues with copyright enthusiasts interested in the implications of current and future copyright developments. The good news is that you may still register! Just click here. 

Going the distance: of Copyright and Kings

Percipient readers of the IPKat weblog will probably have spotted this blogger's affection for the King's College London Distance Learning programme on UK, EU and US copyright, which he expressed in an enthusiastic blogpost yesterday. To matters a little more into perspective, it should be explained that this blogger is enthusiastic about all courses that have the effect of raising the awareness of anyone, be they lawyers, students, businessmen or even curious bystanders, as to what it is that copyright can achieve, what it permits and why, warts and all, it can still encourage investment in the creation and publication of so much of that cultural and informational content that we avidly consume.

So why the King's course? It has been run before, with some success, so people who enrol needn't feel like guinea pigs.  It's flexible in that you can progress from the postgraduate Diploma to a part-time, distance Masters degree. The faculty consists of people who are experienced communicators with a deep knowledge of the subject -- and it gives you a chance to meet some interesting postmen see how multifaceted and nuanced the law and practice of copyright can be.

If you want further information, you can get it here.  There's no special price for blog readers, alas, but IBC -- who manage the event -- would be really and truly happy if anyone registering via this link would be so kind as to quote reference no. FKW123241709, since they are curious to find out how many of our readers can afford their prices are interested in pursuing postgraduate education without all the hassle of attending university (parties, discos, etc ...)

Sorrow will come: a new book

Here's a new book by Jeremy Grice: it's intriguingly entitled "Sorrow will come in the end", it bears the tagline "Legal case studies in the music, theatre and entertainment industries".  This is what the author -- who is Head of Music, Theatre and Entertainment at the Liverpool Institute for Performing Arts -- has to say about its title and its content:

"Sorrow will come in the end" is the title of a song written in 1997 by Steven Morrissey, following his defeat in the UK Court in Joyce v Morrissey. Its angry lyrics offer a message to his victorious opponent:

You pleaded and squealed and you think you’ve won
But sorrow will come to you in the end.

It finishes somewhat chillingly:

A man who slits throats has time on his hands and I’m gonna get you So don’t close your eyes, don’t ever close your eyes.

Unsurprisingly, Morrissey’s record label, Island Records, withdrew the track from the album before distribution.

Not every court case in the music, theatre and entertainment industry ends in such vitriol. Indeed the combatants even get back together some times. But there are always lessons to be learned. This website examines high profile disputes such as Joyce v Morrissey. Such disputes are often settled before the case reaches court; often the settlements will reflect the legal merits of the different sides, but at times it may be a reflection of financial muscle and/or bravado. This site focuses on UK cases which actually reached court before being resolved. It examines the primary source of court transcripts which explain the decisions, explains the background to the case and analyses the judgment. It highlights the legal principles which were under examination, evaluates the impact of the cases for the music, theatre and entertainment industries, and discusses what can be learned. The key legal principles illustrated in each case are highlighted in the titles.

The book itself, being effectively the book of the website, is in the sort of format that this blogger is increasingly growing to appreciate. It's small, light, with large print and no footnotes.  There's enough law to justify the decision of any lawyer to read it, but enough factual narrative to let you read it without letting the law get in the way.  The time-chart of the key elements of the Beatles/Apple trade mark dispute, spanning 45 years, make you feel pretty old if you can remember when it all started.  Not all the cases that feature here are copyright cases, but copyright lies at the heart of most of them, and is rarely very far from where all the action is.

You can purchase this book via Amazon here.

Tarantino Suit Against Gawker Dismissed

As reported by the 1709 Blog back in February, director Quentin Tarantino is currently suing popular media and gossip blog, Gawker, for the contributory infringement of copyright in a script entitled, The Hateful Eight. The screenplay was leaked after the director circulated it among six acquaintances. Thereafter, the script was uploaded to two file-sharing sites: Anonfiles.com and Scribd.com. Gawker reported the leak and provided hyperlinks to the uploaded files.

Quentin Tarantino

Last week, a district court judge in the Ninth Circuit granted Gawker’s motion to dismiss on the grounds that Tarantino had failed to provide any evidence of direct infringement. Instead of providing the necessary proof that someone copied the work and that Gawker’s actions contributed to that direct infringement, Tarantino simply speculated that some direct infringement must have taken place.    

This leads one to wonder whether Tarantino’s assumption that direct infringement occurred was misplaced. On the balance of probabilities, it seems likely that someone will have downloaded the script from the file-sharing sites. Ought the failure to provide a specific allegation of such actions be grounds for motion to dismiss? Or ought the court presume direct infringement and allow the case to continue to the discovery stage?

Also interesting is the court’s discussion of what qualifies as a direct infringement. In a footnote, the court states that “even if Plaintiff alleged that individuals accessed the links contained in Defendant’s article in order to read Plaintiff’s script, such an allegation would still not support Plaintiff’s contributory infringement claim against Defendant” because “[s]imply viewing a copy of allegedly infringing work on one’s own computer does not constitute direct infringement.” Some have questioned whether this statement is consistent with a previous Ninth Circuit case of MAI Systems v Peak Corp., 991 F.2d 551 (1993). According to this case, the automated copying of protected material into a computer’s RAM is potentially grounds for direct infringement, despite the temporary existence of the copy. Presumably if someone did use the link to access the script, their viewing of the site would create a RAM copy and thus constitute a direct infringement under the MAI holding.

The court will allow Tarantino to re-file the case with more evidence by the end of the month.  Meanwhile, although he was initially so appalled by the leak that he decided to scrap the project, the director has subsequently stated that he is continuing to work on the script.

Today the CopyKat pokes a ponderous paw at politics

Stan McCoy, the assistant US Trade Representative who oversaw the creation of the copyright provisions in ACTA and the Trans Pacific Partnership has left the Obama administration for a job at the film industry's lobbying group, the MPAA. The Obama administration has headhunted software industry lobbyist Robert Holleyman  (who supported SOPA) to take over his job. More on this revolving door between the US government and content owners' lobby groups and trade associations on Vox here.

Karl Marx

An unusual copyright spat has caught the attention of a number of blogs who noticed that the radical publishing house Lawrence & Wishart - at one time was connected to Great Britain's Communist Party - was demanding the removal from the Marxists Internet Archive of the "Marx-Engels Collected Works" - a series of US $25-$50 hard cover books - because the texts were their translations - and they had copyright in those translations. The archive has posted a message to its readers informing them that Lawrence & Wishart's material would be removed by April 30 although that "English translations of Marx and Engels from other sources will continue to be available." The Socialist Worker asks "Should Marx and Engels be copyrighted?" quoting an opinion from Andrew Leonard who says  'I wonder — just how angry would Karl Marx get if he learned that the publisher of his collected works, in the name of maximizing profits, was using copyright law to hinder the cause of “equipping the working-class movement with the scientific ideology… for the realization… of communism” ?' More here: http://socialistworker.org/blog/critical-reading/2014/04/26/should-marx-and-engels-be-copy

Reed on oh great minister

Popular Bulgarian musicians have delivered proposals for amendments to the Bulgarian Copyright Act at the Bulgarian Ministry of Culture in Sofia to Bulgarian Minister of Culture Petar Stoyanovich and Deputy Minister of Culture Vasil Vasilev by symbolically handing over their proposals written on papyrus. The proposals for amendments concern five articles of the Bulgarian Copyrights Act: Article 21 (cable re-transmission); Article 26 (free carriers); Article 40 (tariffs regulation); Article 58; and Article 98. At the meeting it was agreed to hold another meeting in two weeks. Different Bulgarian musicians have united under the motto “For REVIVAL of the Bulgarian culture” supporting the cause of establishing stable legal preconditions for development of the Bulgarian culture and the wish of Bulgarian artists to declare their will for the establishment of an optimal mechanism for protection of their rights. The ministers expressed readiness to do their best to establish a normal environment where the Bulgarian artists can work and create. 

Trevor Clarke, Assistant Director General of the World Intellectual Property Organization (WIPO) has told a conference in Tehran that although Iran has taken concrete steps to protect the intellectual property rights, it should join the Universal Copyright Convention. Iran joined the World Intellectual Property Organization (WIPO) in 2001 and approved the Lisbon Agreement for the Protection of Appellations of Origin and their International Registration in 2005.

And the United States has removed the Philippines from its blacklist of countries which fail to properly protect U.S. copyrights and patents, the U.S. Trade Representative said on Monday.
Whilst the Philippines had introduced laws to better protect intellectual property rights and also beefed up enforcement, there was more to be done with the USTR stating "Although significant challenges remain, the commitment of Philippine authorities and the results achieved merit this change in status". 

And finally, PCWorld lets us into a leak from the European Commission which reveals that EU lawmakers believe that micro-licensing could solve copyright problems related to user generated content (UGC). The document, which pre-dates the latest public consultation on EU copyright reform, takes the view that although there are problems with UCG, “legal certainty” may be provided through micro-licences: The document says that “There remain technological obstacles to the ability of UCG generators to identify themselves and reap economic reward for their work”.

Fordham 2014: Aereo

Moderated by David Carson (IFPI), the final copyright session of the 22nd Fordham IP Conference was devoted to the forthcoming decision of the US Supreme Court in ABC v Aereo [an entire session on this? Of course, because - compared to the EU - Americans are rarely blessed with copyright rulings from their highest judicature].

What is this case about? In a nutshell and as neatly summarised by the US Supreme Court Blog, it concerns whether a company “publicly performs” a copyright-protected television program when it retransmits a broadcast of that program to thousands of paid subscribers over the internet.

The first speaker was Jacqueline C. Charlesworth (US Copyright Office), who reviewed the parties’ positions in this case, as well as the views of the US government, that - as 1709 Blog will know already - sided against Aereo.

Would even views from non-US-based 
people be beneficial to US matters 
discussions?

Then, Joseph C Gratz (Durie Tangri LLP, San Francisco) highlighted how, since the dawn of television, consumers have had a fundamental right to watch over-the-air broadcast television via an individual antenna, and they have had the right to record copies for their personal use since the Sony decision in 1984. These are rights that should be protected and preserved, and copyright law should not curtail them simply because you don't like Aereo or one is using modern, cloud-based equipment.

After Gratz, it was the turn of Robert K Kry (MoloLamken LLP, Washington DC). He argued that the Aereo case has evoked extreme positions on both sides, and that - instead - there is a strong case for a middle ground, ie that the Second Circuit's transmission-based interpretation in Cablevision was correct but that Aereo should lose even under that standard.

The panelists were Irene Calboli (Marquette University Law School, Milwaukee), Jane C Ginsburg (Columbia Law School, New York), and Terry Hart (Copyright Alliance, Washington DC). The latter highlighted that discussion around this case has mostly focused on potential impact on technology (notably cloud computing) and consumers, but that not much has been said about impact on creators.

We'll see what the US Supreme Court decides in this case. For the time being, I cannot help but notice that this panel was 100% made in the USA. Would have views from people working outside the US been beneficial to a discussion on a US case? Vive la diversité ... or not?

Fordham Report 2014: Enforcement

The average Fordham copyright enthusiast
getting in the mood
for the enforcement session

The second copyright session of this afternoon at the 22nd Fordham IP Conference [again: do not forget that 6th May is the day of my Post-Fordham Copyright Catch-Up event] was moderated by David Carson (IFPI) and dealt with enforcement issues.

The first speaker was Jane C Ginsburg (Columbia Law School, New York), who examined ISP liability and website-blocking in the EU, following the recent decision of the Court of Justice of the European Union (CJEU) in Telekabel [here], as well as earlier rulings in Scarlet [here] and Netlog [here]. She recalled that Article 8(3) of the InfoSoc Directive must be balanced against Article 3 of the Enforcement Directive and Article 15 of the E-Commerce Directive, and also highlighted the relevance of Charter fundamental rights [see paras 45-47 of the Telekabel decision for some CJEU discussion on this very point] to enforcement discourse. Despite the ambiguities of the Telekabel decision, she concluded that filtering measures would not be compatible with EU law.

Then, Karen R Thorland (MPAA) discussed how different copyright regimes have designed and implemented notice and takedown systems, which she considered as just one means to help reduce infringement. There are statutory regimes, regimes set through case law, and others that are the result of voluntary agreements. Going into details, Thorland reviewed the information that notices must include; obligations of intermediaries upon receipt of notices; the consequences of sending improper notices; and effectiveness of the various systems in actually removing infringing material from the internet. She also mentioned the case of Italy as the first country in Europe to provide for an administrative website blocking procedure [earlier this week, AGCOM issued its first blocking order: see here]. 

#Quentincometoeurope as an enforcement
(or lack thereof) case study?

After that, it was the turn of Alexander Tsoutsanis (Institute for Information Law (IViR), University of Amsterdam, and DLA Piper) to discuss the recent Svensson decision (and prior to this, the opinions of the European Copyright Society and ALAI), and his paper Why copyright and linking can tango.

The presentations were followed by discussion with the audience and panelists Kristina Janušauskaitė (IFPI), Jan Bernd Nordemann (Boehmert & Boehmert, Berlin) and Silke von Lewinski (Max Planck Institute for Intellectual Property and Competition Law, Munich). 

Unexpectedly and without much explanation, at a certain point the IPKat #Quentincometoeurope campaign was displayed on the screen: #Fordhamgetspolitical? 

Fordham Report 2014: Copyright revision around the world

Common expression of the average
copyright aficionado
at Fordham this morning

Some copyright, at last! Following a copyright-free morning in which copyright enthusiasts felt a bit lost - not to say like a fish out of water -, the second and final afternoon at the 22nd Fordham IP Conference [again: do not forget that 6th May is the day of my Post-Fordham Copyright Catch-Up event] started with a yummy session moderated by Michael S Shapiro (United States Patent and Trademark Office - USPTO) devoted to discussing copyright reform projects around the globe.

The first speaker was Jacqueline C Charlesworth (US Copyright Office), who explained the US Copyright Office's take on music licensing, aka as "the most complex and fragmented of all areas of copyright law". The main question she addressed is how to reconcile the statutory framework - which she considered outdated, inefficient and overly complex, far from being a one-stop shop system - with emerging business models, technology growth, consumer behavior, and the exclusive rights of authors in the context of current US copyright review debate, which Bob Goodlatte announced a year ago. In particular she focused on the public performance right [which US law does recognise but to a limited extent], statutory licenses, blanket licenses, micro-licensing, consent decrees, rate-setting, data standards, and the investment in, and development of, new products and delivery platforms. 

Following Charlesworth, it was the turn of Shira Perlmutter (USPTO). She discussed the recent 99-page USPTO Green Paper on Copyright Policy, Creativity, and Innovation in the Digital Economy. The key conclusions of this study are that: (1) copyright is key to US economy; (2) there is no need for a complete re-write of the 1976 Copyright Act; and (3) a good copyright system and a vibrant internet are not at odds with each other. She then focused on specific issues, including remixes [which she called a sub-set of user-generated content] and mashups, first sale doctrine in the digital environment [remember ReDigi?], and statutory damages in personal file-sharing.

A pair of glasses that can only belong
to Australian Copyright Council's Fiona Phillips

Then David Carson (IFPI) provided an overview of copyright reform projects outside the US, notably Europe - at both the EU [here] and Member States' (UK, Ireland [here, here, here] and France) levels -, Australia [here] and Hong Kong [the latter is currently considering introducing an exception for parody, satire, caricature and pastiche], and outlined the common themes - in particular whether US-style fair use [but which fair use doctrine? He submitted that current interpretation of fair use, eg Cariou v Prince, is different from what fair use used to be, say, 20 years ago] should be imported into these laws - as well as different approaches that have arisen in the course of these processes. 

Finally, it was the turn of designated audience members Mihály Ficsor (Hungarian Copyright Council), Howard P Knopf (Macera & Jarzyna LLP, Ottawa), invariably fashionably dressed Fiona Phillips (Australian Copyright Council, Sydney) and Steven Tepp (Sentinel Worldwide, Washington DC) to make their comments before the general discussion.  

From the audience, Mr Justice Richard Arnold asked whether US copyright reform is going to take into account criticisms of non-compliance with international instruments and lack of moral right protection. The response of Perlmutter was: "everything is [awesome and] on the table". Another comment came from a Disney employee who said that, if you wish to see what bad evidence for copyright reform means, just consider the case of the UK ...

Fordham Report 2014: Fair Use and Freedom of Speech

As 1709 Blog readers who also follow the IPKat will surely know, the 22nd Fordham IP Conference is currently taking place in the heart of beautiful Manhattan [and 6th May is the day of my Post-Fordham Copyright Catch-Up, for which you may register here]. Yesterday I was in two panels discussing EU copyright developments and orphan works, respectively. While I will report on those panels very soon, here we go with a report from yesterday's last copyright session. This dealt with a very fashionable topic, this being the relationship between copyright and freedom of speech/expression.

Despite the title, this session was not completely US-focused, and indeed I very much enjoyed the talk by Hon Mr Justice Colin Birss (Chancery Division, High Court, London) on Article 10 of the European Convention on Human Rights (freedom of expression) and its potential role in expanding copyright exceptions in Europe.

The copyright engine

Moderated by Melissa Moriarty (VaynerMedia, New York), the session began with a presentation by Sean M O’Connor (University of Washington School of Law, Seattle), who highlighted how First Amendment's free speech values are part of the copyright engine, notably through fair use and the idea/expression dichotomy. After playing I Wanna be Sedated [was this some wishful thinking considering that it was the last session of the day?] by Ramones, he argued that well-established copyright/free speech balance should not be changed just because online content dissemination has made users' engagement [read: user generated content] with protected works so easy.

Hon Mr Justice Colin Birss spoke next. He recalled that, when he started practicing IP in 1990s, nobody spoke of human rights in relation to IP. Things have now changed, and human rights discourse has entered IP, in particular copyright. This is a piece of property [see also Article 17(2) of the Charter of Fundamental Rights], which is protected as a fundamental right in itself. So the question is how to best balance property (copyright) with freedom of expression values. It is the legislator's job to craft copyright exceptions to struck such a balance. However, some guidance may come from Article 10 itself, which sets a distinction between ideas (that should be protected within freedom of expression) and their expression (that fall within the scope of copyright). This means that under the Convention there is room for drafting broader copyright exceptions, certainly broader than what current UK copyright law allows. So, for instance, if you look at cases like those of search engines that provide snippets of texts, you may well argue that under current EU copyright this activity may be probably infringing. However, it may be argued that snippets merely provide information (not protectable expressions) and that under Article 10 they should be protected as an exercise of one's freedom of expression.

Pamela Samuelson (University of California, Berkeley, School of Law, Berkeley) spoke on the topic of appropriation and transformative use cases. She started by highlighting that 'transformative uses' may have three meanings under US law: (1) altering expression so as to convey new meaning; (2) productive uses, usually of literal copies; (3) uses for different purposes. She then considered the case of appropriation art and Cariou v Prince [here]. She concluded by mentioning that there is a number of cases (a notable example being Garcia v Google) in which copyright is used to achieve non-copyright goals. Answering a question from the audience, she noted that the outcome of the Google Books case [here] is consistent with US case law on fair use.

Fair use countries (green);
fair dealing countries (blue);
other countries (grey)

Then Bernt Hugenholtz (Faculty of Law, University of Amsterdam) spoke of the need for flexible limitations and exceptions in the EU. The principal question of his talk was whether droit d'auteur (continental Europe) traditions can accommodate fair use. He answered in the affirmative, and highlighted why more flexibility is needed. The reason is three-fold: (1) accelerating pace of technological change; (2) legislature cannot respond, but must anticipate change by embracing more abstract, open norms; (3) EU harmonisation is a lengthy process. After recalling why droit d'auteur traditions have been traditionally wary of fair use, he explained why things have somehow changed: (1) civil law has moved to more open norms; (2) authors right systems have been moving away from natural law arguments to justify copyright protection; (3) fair use is not unpredictable [but it is not so widespread either: see map]; (4) fair use does not conflict with the Berne three-step test. He concluded by recalling that Article 5(5) of the Wittem Group's Copyright Code may be a good start for injecting flexibility into the law.  

Ron Lazebnik (Fordham University School of Law, New York) was the final speaker, and he addressed the question 'Who decides what a fair use is on the Internet?' by looking into Capitol Records v Vimeo and Viacom v YouTube. 

Manolito is not the next Spanish summer hit

The 1709 Blog thanks guest blogger Valentina Torelli for the following analysis of a case that has begun to attract a good deal of attention in recent days. The decision in question comes from the Court of Appeal, Madrid, and deals with file-sharing. This is what Valentina says:

A few days ago, following the results of the Observatory of Privacy and Digital Content Consumer Habits for 2013 report, Eleonora wondered about the situation of piracy in Spain, in particular the data suggesting that 84% of content consumed in Spain is said to be from unlicensed sources and that more than half of internet users appear to embrace commonly illegal downloads.

This report was presented by a coalition of companies from the cultural sector on April 9 last and it immediately provoked a reaction of the Spanish Ministry of Culture, which published on its website a communication rejecting the Observatory's conclusions and detailing encouraging figures in the fight against piracy: 349 out of 406 complaints were resolved, with 162 websites suffering removal of unlawful content and 23 being completely closed down.

On the same day, the Court of Appeal of Madrid published its judgment in the controversial Pablo Soto case (here). In Spain, music is one of the creative industries that has been most affected by piracy, suffering not only from illegal downloads but also from the unfair competition of P2P platforms, which are not generally liable for the unlawful activities of their users.

This case started in 2008 when Promusicae (the collecting society representing the music producers in Spain) together with Universal Music Spain SL, Warner Music Spain SL, Sony BMG Music Entertainment Spain SA and EMI Music Spain SA brought an action before the Court of First Instance of Madrid against Mr Pablo Soto Bravo and the two companies solely directed by him, namely OPTISOFT SL and PIOLET NETWORKS SL plus the company M PUNTO 2 PUNTO TECHNOLOGIES SA.

The plaintiffs sought removal of Blubster, Piolet and Manolito both in their free-of-charge and pay-for versions. These sites consisted of an advanced development of the P2P protocol, whereby the search and the sharing of contents are decentralized, meaning that they can be run on the internet within the users' computers, once those applications are downloaded or bought from the defendants' webpages, without any direct involvement of the latter. The problem is that those programs did not provide any specific filter that would allow to distinguish between authorised and unlawful contents to be reproduced and shared between the internet users. Consequently , the plaintiffs also requested that www.blubster.com, www.piolet.com, www.manolito.com and www.mp2p.net be shut down.

The case, which dealt with copyright infringement and unfair competition claims alike, was dismissed both at first instance and on appeal.

In its judgment of 31 March last, the Court of Appeal provided a helpful description as to current state of art regarding copyright enforcement in Spain, pending the entry into force of the recent changes to the Spanish Copyright Act and in particular the introduction – as per Article 138.2 of the draft reform – of contributory and vicarious liability for digital copyright infringement.

Given the decentralised nature of the P2P applications under examination, the court stated that:

1. As to the direct liability for copyright infringement of the defendants:

The online reproduction and the sharing of copyright-protected content is lawful in so far as no copyright-protected material is involved or where the internet users can rely on the authorisation of the right holders. Moreover, the P2P applications should be considered in the light of the principle of the neutrality of technology. Accordingly the applications' creators and/or distributors cannot be considered liable for the unlawful use made out of them.

In the present case, the defendants cannot be defined as ISPs. Thus the related liabilities, provided by the Information Society Services Law (Ley 34/2002 LSSI) implementing the e-Commerce Directive, cannot be applied. The defendants only created and commercialised P2P applications on the internet, without carrying out any acts of mere conduit, caching, hosting and linking. The court added that it was not possible to ascribe direct liability for acts of copyright infringement to them: the defendants neither reproduced nor made available the music files to the public, nor did they harm the TPMs applied to the music files.

2. As to an indirect liability of the defendants for copyright infringement:

Indirect liability for copyright infringement, in the forms of vicarious and the contributory liability, is a controversial matter in Spain. At the moment the judges have no legal grounds upon which they can ascribe liability for indirect infringements.

The court held that, according to indirect liability doctrine, while a third party has infringed a right (i.e. an IP right) the defendant [the indirect infringer] must not only be aware of such illegal activity of but must also have substantially participated in the infringement, by inducing, causing or materially contributing to the infringement (i.e. contributory liability), or by exerting the right/authority of control over the infringer to get a direct financial benefit from the infringement (i.e. vicarious liability). In the Spanish system, unlike in the US legal framework, no typified conduct of indirect liability currently exists.

The Court of Appeal observed that US case-law that construed indirect liability in the Betamax, Napster and Grokster cases could be applied in this domestic dispute. In particular, the provisions in Spanish copyright law outlining the regulation of the TPMs and the DRMs could not be such as to allow applicability of indirect liability doctrine to copyright infringement cases.

3. As to the defendants' liability for unfair competition:

The offer of a P2P application does not imply the misappropriation or taking unfair advantage of the right holders' content where no plan to sink and to unbalance the right holders was conceived.

According to the court, in the case under exam no unfair competition acts of imitation could be ascribed to the defendants, since they solely developed an advanced P2P software in the full exercise of their entrepreneurial and commercially strategic powers. Not even the general clause of goodwill could serve as a legal ground in this dispute: the applications were created for the sharing of all types of audio files, without any control over the unlawful traffic of copyright materials on part of the internet users, given the decentralised nature of the P2P platforms allowing the users to share music files without intermediaries. The defendants did not play any role in deactivating the DRMs applied by the music producers to the music files, thus avoiding any copyright infringement. During the trial it was largely proved that not only were the contested P2P applications completely in compliance with the music files' DRMs but also that on the defendants' websites a copyright notice to prevent IP rights' infringement was placed in a prominent position.

It is apparent that the Spanish piracy situation is causing much concern to the cultural industries inside and outside this country. It is arguable that this critical condition cannot solely be linked to legal technicalities. Spanish judicatures have often claimed that the legal tools in their power are insufficient to fight against the piracy phenomenon, even after the introduction of a judicial-administrative proceeding by means of the Sinde-Wert Law (Ley Sinde) which was passed in 2011 and established an ad hoc antipiracy section within the Intellectual Property Commission. At the time of its adoption, the idea was that this new procedure would have speeded up copyright enforcement, although its targets are only the ISPs. It is also arguable that the provision of accessible legal offers is still insufficient. It is however hoped that the draft Reform Act of the Intellectual Property Law, approved on 14 February last, together with the introduction of new business models applicable to the cultural industry will definitely contribute to finding a new direction for the protection of cultural content.