Friday 18 June 2010

Stretching copyright with contract

Copyright has its limits. To what extent can they be pushed by contract law?

GlobalCOAL facilitates the trading of coal and coal derivatives by means of a standard industry contract (‘SCoTA’) and an online trading platform. Traders and brokers who make use of this platform sign a Product Licensing Agreement. Under this agreement, globalCOAL grants licensees a licence ‘under its Intellectual Property Rights in the globalCOAL Products to use the globalCOAL Products and the Trade Marks’ and in return the licensees undertake not to the ‘use the globalCOAL Products’ in certain ways, including transactions with parties that are not other globalCOAL licensees. ‘Products’ include data, prices, indices and contracts developed and published by globalCOAL.

This agreement was scrutinized last week in Global Coal Ltd v. London Commodity Brokers. The court asked itself: is it only globalCOAL’s IP that licensees are undertaking not to use in prohibited ways or does the undertaking extend further, to not using any of globalCOAL’s information and documents? Mr Justice Briggs came to the conclusion that the undertaking related to the Products, not the IP. If London Commodity Brokers had used the Products in brokering trades with parties that were not globalCOAL licensees, it would be in breach of contract even if it had not made use of globalCOAL’s IP.

So when a licensee signs the agreement he finds himself in some ways more restricted than he was before signing it both because much of the ‘Product’ information is in the public domain and because the restricted ‘uses’ go beyond the types of uses that IP law regulates. Briggs J tried to make sense of this by saying that it would be difficult to trade in this market without making use of globalCOAL’s IP, so globalCOAL’s IP ownership gave it de facto control of the Products. This is questionable and hotly contested by the parties: it seems entirely possible for a broker to implicitly refer to SCoTA and globalCOAL’s index without using the trade marks or copying the contract.

Either way, the licensees’ obligations technically extend beyond IP rights. Copyright could never forbid you to refer to a dictionary when you write something. A contract can, perhaps. Moreover, restricting use of the Products was working more efficiently for globalCOAL than enforcing IP: the court found it easier, quicker and cheaper to determine whether a licensee had used the Products than the IP (e.g. copying SCoTA) – and jurisdiction was cleaner too.

But the advantages may not be without their risks. As the judgment draws to a close, it makes a passing reference to ‘potentially serious issues of abuse of dominant position’, but leaves them for another day.

1 comment:

Crosbie Fitch said...

Copyright is a suspension of the individual's natural right to copy (liberty). Only the state has the power to do this (irrespective of any constitutional limit).

Being an inalienable right, an individual cannot alienate themselves from their liberty through contract.

Contract is not micro-state and micro-legislature between two persons. It is simply an agreement to exchange what can be exchanged. It is not an exchange of power or servitude, a means of mutual bondage to be enforced by the state (though many might like it to be).

Similarly, NDAs cannot actually enable an individual to alienate themselves from their freedom of speech - though no doubt some judges believe they can.

The problem is that copyright (in being an unethical suspension of a natural right) sets this as a precedent in people's minds and they assume that what can be unethically contrived by law can be unethically contrived by contract.

A copyright license conditionally restores some or all of the liberty suspended by copyright, it cannot actually suspend any liberty of its own (whether the licensee agrees or not).