Wednesday 30 November 2011

Honey to the Bee

In the famous song "Money Honey", written and composed by Jesse Stone, Elvis Presley laments different kinds of money troubles, from demanding landlords to stingy girlfriends and heartless gold diggers, culminating in the demand "I want money, honey!" Elvis Presley Enterprises, LLC, which holds the economic rights in Elvis's estate, shares that sentiment and has been trying to get at the honeypots of Elvis Presley's German record company, Arista Music.

On 23 November, Landgericht München I (Regional Court of Munich I - yes, for whatever reason Munich has two of those, but copyright enthusiasts need not bother with the second one) handed down its judgment in the case. The claim was struck out, but apparently for different reasons than the ones I suspected in my previous post on the matter (see here). According to the suitably entertaining press release (as always, the written judgment will be some time coming), entitled "I want Money, Honey!" and available here, the claimant mainly relied on two arguments:

Additional Remuneration due to Extended Term of Protection

First, the German term of protection for sound recordings (protected under a neighbouring right, not copyright) was extended in 1990 from 25 to 50 years after first publication. Accordingly, the term during which money could be made (and presumably used to buy, among other things, honey...) suddenly doubled. The claimant argued that nobody had seen this development coming in 1973 and that in hindsight the remuneration Elvis received was therefore much too low. The claimant also pointed out that the new provisions explicitly introduced a right to additional remuneration because of the extension of the term of protection.

This claim refers to § 137f (4) UrhG, a transitional provision I admittedly overlooked in my previous post. The provision reads:
"If prior to 1 July 1995 an exploitation right concerning the subject matter of a neighbouring right that continues to be protected under this Act has been granted or assigned to another, in the event of doubt such grant or assignment shall be deemed to cover the period by which the term of protection has been extended. 2The application of sentence 1 shall be subject to payment of equitable remuneration.
It seems like rather a good idea to invoke § 137f (4) UrhG, but the court disagreed. It held that the 1973 buy-out contract between Elvis and the record company was valid. The wording of the contract explicitly covered any claims for additional payments arising out of any extensions of the duration of protection. The claim for additional remuneration that was introduced at the same time as the term extension did not lead to a different result. According to the court, the claim for additional remuneration is not mandatory and unwaivable. Contractual agreements that derogate from the provision are possible, and the contract between Elvis and his record company was such a contract.

Fairness Compensation

Secondly, the claimant argued that since 2002 there has been a legal obligation to pay additional "fairness compensation" if the consideration the artist received is strikingly disproportionate to the profits made from exploiting the work or performance, and that the requirements were met in the case at hand. That claim was based on §§ 32a, 79 (2) UrhG (also see previous posts here and here).

According to the view of the court, however, the provision governing the effects of term extension (§ 137f (4) UrhG) is lex specialis to the general duty of those who exploit the work to remunerate the artist adequately (§§ 32a, 79 (2) UrhG). In other words, §§ 32a, 79 (2) UrhG are not applicable.


The court's solution as apparent from the press release is certainly elegant, but I think there is a chance the OLG (court of appeal) or the BGH (Federal Supreme Court) might see things differently. I am not entirely sure that the right to equitable remuneration pursuant to § 137f (4) UrhG really could be waived in advance. In my opinion, there are good arguments for both sides, though, so I wouldn't bet any money (or honey) on claimant's chances.

However, I have difficulty seeing § 137f (4) UrhG as lex specialis to §§ 32a, 79 (2) UrhG. In any event, the claim should in my view still fail for he reasons given in my previous post. I would also be interested in some judicial insight as to whether the claimant actually had legal standing in the § 137f (4) UrhG claim - i.e. whether like the § 32a UrhG right the right to equitable remuneration pursuant to § 137f (4) UrhG is incapable of being waived or transferred in advance - because in that case Elvis's daughter would be the right holder, and not Elvis Presley Enterprises, LLC.

The good news is that we may actually receive answers to any or all of these questions because counsel for claimant have already announced that they will appeal the judgment and take the case all the way to the BGH if necessary.

Honey Money here
Honey and the Money here
Honey to the Bee here
Pooh's Hunny Hunt here

SOS, it's SAS! But that's just a matter of opinion ...

The joys of Google Image:
a search conducted under
the name of the Advocate
General turned this up as
the first search result
Yesterday Advocate General Bot issued his opinion in Case C-406/10 SAS Institute Inc. v World Programming Ltd, a reference to the Court of Justice of the European Union for a preliminary ruling from the Chancery Division of the High Court, England & Wales (for background click here).

In essence, SAS Institute Inc. developed analytical software the SAS System. This System was an integrated set of programs that let users carry out data processing and analysis tasks, especially statistical analysis. The core component of the SAS System was Base SAS, which let users write and run application programs to manipulate data, these applications being written in SAS Language. The functionality of Base SAS could be extended by the use of additional components, of which three -- SAS/ACCESS, SAS/GRAPH and SAS/STAT (referred to together with Base SAS as ‘the SAS components’) -- were relevant to this dispute.

Once upon a time the SAS Institute’s customers had no alternative but to take its licence to use the SAS components in order to be able to run their existing application programs in SAS language or to create new ones. Any customer wishing to change software supplier would have to rewrite its existing application programs in a different language, at considerable cost. For that reason, World Programming Limited (‘WPL’) had the idea of creating an alternative computer program, the World Programming System (‘the WPL System’), to let users run application programs written in SAS language.  WPL admitted that its intention was to emulate much of the functionality of the SAS components as closely as possible, so that the same inputs would produce the same outputs, since WPL wanted its customers’ application programs to run in the same way on the WPL system as it had on the SAS components.

SAS Institute sought an order that WPL’s actions infringed copyright in its computer programs. In two separate decisions, UK courts have ruled that it was not an infringement of the copyright in the source code of a computer program for a competitor of the right owner to study how the program functions and then to write its own program to emulate that functionality. SAS Institute, challenging that approach, has brought an action before the referring court and complaining that WPL has (i) copied the manuals for the SAS System published by SAS Institute when creating the WPL System, (ii) in so doing, indirectly copied the computer programs comprising the SAS components,(iii) used a version of the SAS system known as the ‘Learning Edition’, in breach of the terms of the licence relating to that version and the commitments made under that licence, and its copyright in that version, and (iv) infringed the copyright in the SAS Manuals by creating its own WPL manual.

Mr Justice Arnold stayed the proceedings and asked the Court of Justice for a considerable quantity of preliminary guidance:
"‘1. Where a computer program (“the First Program”) is protected by copyright as a literary work, is Article 1(2) [of Directive 91/250] to be interpreted as meaning that it is not an infringement of the copyright in the First Program for a competitor of the rightholder without access to the source code of the First Program, either directly or via a process such as decompilation of the object code, to create another program (“the Second Program”) which replicates the functions of the First Program? 
2. Is the answer to question 1 affected by any of the following factors:
(a) the nature and/or extent of the functionality of the First Program;
(b) the nature and/or extent of the skill, judgment and labour which has been expended by the author of the First Program in devising the functionality of the First Program;
(c) the level of detail to which the functionality of the First Program has been reproduced in the Second Program;
(d) if the source code for the Second Program reproduces aspects of the source code of the First Program to an extent which goes beyond that which was strictly necessary in order to produce the same functionality as the First Program? 
3. Where the First Program interprets and executes application programs written by users of the First Program in a programming language devised by the author of the First Program which comprises keywords devised or selected by the author of the First Program and a syntax devised by the author of the First Program, is Article 1(2) [of Directive 91/250] to be interpreted as meaning that it is not an infringement of the copyright in the First Program for the Second Program to be written so as to interpret and execute such application programs using the same keywords and the same syntax? 
4. Where the First Program reads from and writes to data files in a particular format devised by the author of the First Program, is Article 1(2) [of Directive 91/250] to be interpreted as meaning that it is not an infringement of the copyright in the First Program for the Second Program to be written so as to read from and write to data files in the same format? 
5. Does it make any difference to the answer to questions 1, 3 and 4 if the author of the Second Program created the Second Program by:
(a) observing, studying and testing the functioning of the First Program; or
(b) reading a manual created and published by the author of the First Program which describes the functions of the First Program (‘the Manual’); or
(c) both (a) and (b)? 
6. Where a person has the right to use a copy of the First Program under a licence, is Article 5(3) [of Directive 91/250] to be interpreted as meaning that the licensee is entitled, without the authorisation of the rightholder, to perform acts of loading, running and storing the program in order to observe, test or study the functioning of the First Program so as to determine the ideas and principles which underlie any element of the program, if the licence permits the licensee to perform acts of loading, running and storing the First Program when using it for the particular purpose permitted by the licence, but the acts done in order to observe, study or test the First Program extend outside the scope of the purpose permitted by the licence? 
7. Is Article 5(3) [of Directive 91/250] to be interpreted as meaning that acts of observing, testing or studying of the functioning of the First Program are to be regarded as being done in order to determine the ideas or principles which underlie any element of the First Program where they are done:
(a) to ascertain the way in which the First Program functions, in particular details which are not described in the Manual, for the purpose of writing the Second Program in the manner referred to in question 1 …;
(b) to ascertain how the First Program interprets and executes statements written in the programming language which it interprets and executes (see question 3 …);
(c) to ascertain the formats of data files which are written to or read by the First Program (see question 4 … );
(d) to compare the performance of the Second Program with the First Program for the purpose of investigating reasons why their performances differ and to improve the performance of the Second Program;
(e) to conduct parallel tests of the First Program and the Second Program in order to compare their outputs in the course of developing the Second Program, in particular by running the same test scripts through both the First Program and the Second Program;
(f) to ascertain the output of the log file generated by the First Program in order to produce a log file which is identical or similar in appearance;
(g) to cause the First Program to output data (in fact, data correlating zip codes to States of the United States of America) for the purpose of ascertaining whether or not it corresponds with official databases of such data, and if it does not so correspond, to program the Second Program so that it will respond in the same way as the First Program to the same input data. 
8. Where the Manual is protected by copyright as a literary work, is Article 2(a) [of Directive 2001/29] to be interpreted as meaning that it is an infringement of the copyright in the Manual for the author of the Second Program to reproduce or substantially reproduce in the Second Program any of the following matters described in the Manual:
(a) the selection of statistical operations which have been implemented in the First Program;
(b) the mathematical formulae used in the Manual to describe those operations;
(c) the particular commands or combinations of commands by which those operations may be invoked;
(d) the options which the author of the First Program has provided in respect of various commands;
(e) the keywords and syntax recognised by the First Program;
(f) the defaults which the author of the First Program has chosen to implement in the event that a particular command or option is not specified by the user;
(g) the number of iterations which the First Program will perform in certain circumstances? 
9. Is Article 2(a) [of Directive 2001/29] to be interpreted as meaning that it is an infringement of the copyright in the Manual for the author of the Second Program to reproduce or substantially reproduce in a manual describing the Second Program the keywords and syntax recognised by the First Program?’".
The Advocate General has advised the Court of Justice to rule as follows:
"1. Article 1(2) of Council Directive 91/250 ... on the legal protection of computer programs is to be interpreted as meaning that the functionalities of a computer program and the programming language are not eligible, as such, for copyright protection [No problem so far, since this seems to reflect the conventional understanding, ever since the days of the original software directive if not before, that functionality qua functionality was not copyright-protecte subject matter]. It will be for the national court to examine whether, in reproducing these functionalities in its computer program, the author of the program has reproduced a substantial part of the elements of the first program which are the expression of the author’s own intellectual creation. [Here the problems start, in so far as the AG appears to see a binary system in which a work, including a computer program, is either functional or the expression of individual creation: a trial judge is more likely to be presented with a continuum between two overlapping concepts]
2. Articles 1(2) and 6 of Directive 91/250 are to be interpreted as meaning that it is not regarded as an act subject to authorisation for a licensee to reproduce a code or to translate the form of the code of a data file format so as to be able to write, in his own computer program, a source code which reads and writes that file format, provided that that act is absolutely indispensable for the purposes of obtaining the information necessary to achieve interoperability between the elements of different programs. [Given the intention of the software as well as its actual provisions, this should not prove controversial] That act must not have the effect of enabling the licensee to recopy the code of the computer program in his own program, a question which will be for the national court to determine. 
3. Article 5(3) of Directive 91/250, read in conjunction with Articles 4(a) and (b) and 5(1) thereof, is to be interpreted as meaning that the expression ‘any of the acts of loading, displaying, running, transmitting or storing the computer program [which the person having the right] is entitled to do’ relates to the acts for which that person has obtained authorisation from the rightholder and to the acts of loading and running necessary in order to use the computer program in accordance with its intended purpose. Acts of observing, studying or testing the functioning of a computer program which are performed in accordance with that provision must not have the effect of enabling the person having a right to use a copy of the program to access information which is protected by copyright, such as the source code or the object code. [Problem here for copyright traditionalists: the words "information which is protected by copyright" seem wrong unless you consider that copyright protects information, rather than the manner in which it is expressed -- which in turn takes us back to the old arguments about the protectability of expression which is the only manner in which an idea or information is capable of being expressed, which takes us back to all that lovely idea/expression dichotomy litigation in the United States back in the previous century ...]
(4) Article 2(a) of Directive 2001/29 ... on the harmonisation of certain aspects of copyright and related rights in the information society is to be interpreted as meaning that the reproduction, in a computer program or a user manual, of certain elements described in the manual for another computer program may constitute an infringement of the copyright in the latter manual if – a question which will be for the national court to determine – the elements reproduced in this way are the expression of their author’s own intellectual creation".

Bits and pieces

For those living outside the European Union, the prospect of pan-European copyright -- and pan-European licensing practice -- is intriguing. After all, there is a single market in which there is a dual system of national rights and pan-European rights in place for registered trade marks, registered designs and plant variety rights, and the pan-European patent right is now a matter of 'when', rather than 'whether', so what's holding up the pan-European copyright with its corollary, the pan-European licence. This makes even more sense where the licensed territory is exploited via the internet, a medium for which national borders were inappropriate ab initio and even more irrelevant as time marches on.  Anyway, a reader from outside the EU has written to me to ask about public performance rights in the EU:
"What is the current position regarding the regulated collection of royalties for public performances that are delivered over the internet in an integrated manner in the EU?"
Offhand, I couldn't think of a good answer, and ten minutes on my favourite search engine didn't leave me any better able to respond.  The question has a competition dimension to it as well as a copyright one. Can any reader suggest some worthwhile links and/or supplementary reading materials that will aid an "alien"?

Another reader, Sandra Alvera (Panasonic Europe), who has been closely following copyright levy issues, writes to draw our attention to Commissioner's Barnier's announcement about appointing Antonio Vitorino a mediator to address the process of stakeholder dialogue which, if we are lucky and he is successful, might just lead to the solution of some of the problems associated with copyright levies. Thanks, Sandra, for this link. The full text of the Commissioner's speech can be read here. He concludes with the following words:
"The fact that authors and other rightholders must receive fair compensation for the use of their work is not at issue. The issue is that all schemes used for the collection of this compensation should be organised in the most efficient way possible".
Fairness and efficiency make uncomfortable bedfellows, though, since efficiency has a deep and meaningful relationship with another powerful personality in the world of copyright -- arbitrary convenience.  Let's see how this troika works out ...

The ever-industrious Howard Knopf (Excess Copyright) has compiled a list of factums in the fair dealing cases which are currently before the Supreme Court of Canada: (i) SOCAN v. Bell et al (the “iTunes previews” case) SCC #33,800 and (ii) Province of Alberta et al v. Access Copyright (the K-12 “education” case) SCC #33,888. You can access them here.

From Andy Johnstone comes this link to a dispute between Singapore Press Holdings (publisher of The Straits Times) and Yahoo! in what he suspects might become "Singapore's Meltwater moment". Noting that the legislation has some similarities to the UK's Copyright, Designs and Patents Act 1988 but also some notable differences, Andy prudently declines to call the odds on the outcome of this little spat over Yahoo!'s copying of editorial content into its aggregator: that's a job for one of our Singaporean readers (any volunteers?)

Monday 28 November 2011

German concert promoters look to neighbouring rights

The German Association of Concert Promoters (bdv) has said that it has applied to the German Patent & Trade Mark Office to set up a new collection society to collect revenues it believes its members are due as a ‘neighbouring right’ under Section 81 of the German Copyright Act arising from recordings made at live events. Bdv President, lawyer Jens Michow says that the new Society,Verwertungsgsgesellschaft fur Wahrnehmung von Veranstalterrecheten, plans to negotiate with broadcasters, record labels and other users of live recordings to set tariffs to compensate event promoters.

In January 2011 IQ magazine published an article by Dr Johannes Ulbricht, a German lawyer in Hamburg at Michow and Partner, about the German ‘neighbouring rights of the concert promoter’ – identifying these an overlooked potential revenue source from Germany where it seems possible that those who stage events which are filmed or recorded (anywhere in the World) could collect a payment if the recording of that concert is then exploited in Germany. You can find a pdf of that article here on page 10.

Image (C) The Television Company (London) Ltd 2011

Thursday 24 November 2011

Will copyright owners see red over Scarlet?

Case C‑70/10Scarlet Extended SA v Société belge des auteurs, compositeurs et éditeurs SCRL (SABAM); Belgian Entertainment Association Video ASBL (BEA Video), Belgian Entertainment Association Music ASBL (BEA Music) and Internet Service Provider Association ASBL (ISPA) intervening is today's contribution of the Court of Justice of the European Union to its seemingly burgeoning body of copyright jurisprudence.  Its a reference for a preliminary ruling from the cour d’appel de Bruxelles (Belgium) and it looks like this:

SABAM represents authors, composers and editors of musical works in authorising the use of their copyright-protected works by third parties. Scarlet,an internet service provider, gives its customers internet access "without offering other services such as downloading or file sharing", as the court quaintly puts it. During 2004 SABAM concluded that internet users using Scarlet’s services were downloading works in SABAM’s catalogue from the internet, without authorisation and without paying royalties, by means of peer-to-peer networks -- a "transparent method of file sharing which is independent, decentralised and features advanced search and download functions". In June 2004 SABAM brought interlocutory proceedings against Scarlet before the President of the Tribunal de première instance, Brussels, claiming that that company was best placed, as an ISP, to take measures to bring to an end copyright infringements committed by its customers. SABAM asked for
  • a declaration that the copyright in musical works contained in its repertoire had been infringed, in particular the right of reproduction and the right of communication to the public;
  • an order requiring Scarlet to bring such infringements to an end by blocking, or making it impossible for its customers to send or receive in any way, files containing a musical work using peer-to-peer software without the permission of the rightholders, on pain of a periodic penalty;
  • an order that Scarlet provide it with details of the measures that it would be applying in order to comply with the judgment to be given, on pain of a periodic penalty.
The President of the Tribunal found that copyright had been infringed but, before ruling on the application for cessation, appointed an expert to investigate whether the technical solutions proposed by SABAM were technically feasible, whether they would make it possible to filter out only unlawful file sharing, and whether there were other ways of monitoring the use of peer-to-peer software, and to determine the cost of the measures envisaged. The expert's report concluded that, despite numerous technical obstacles, the feasibility of filtering and blocking the unlawful sharing of electronic files could not be entirely ruled out. By June 2007 the President of the Tribunal accordingly ordered Scarlet to terminate the copyright infringements by making it impossible for its customers to send or receive in any way files containing a musical work in SABAM’s repertoire by means of peer-to-peer software, on pain of a periodic penalty.

Scarlet appealed on the following grounds:
  • it was impossible for it to comply with that injunction since the effectiveness and permanence of filtering and blocking systems had not been proved and that the installation of the equipment for so doing was faced with numerous practical obstacles, such as problems with the network capacity and the impact on the network;
  • any attempt to block the files concerned was doomed to fail in the very short term because there were at that time several peer-to-peer software products which made it impossible for third parties to check their content;
  • that injunction was contrary to Article 21 of the Law of 11 March 2003 on certain legal aspects of information society services, which transposes Article 15 of Directive 2000/31(the E-Commerce Directive) into national law, because it would impose on Scarlet, de facto, a general obligation to monitor communications on its network, inasmuch as any system for blocking or filtering peer-to-peer traffic would necessarily require general surveillance of all the communications passing through its network;
  • the installation of a filtering system would be in breach of the provisions of European Union law on the protection of personal data and the secrecy of communications, since such filtering involves the processing of IP addresses, which are personal data.
Faced with all these arguments, there was nothing for it but for the appeal court to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:
‘(1) Do Directives 2001/29 and 2004/48, in conjunction with Directives 95/46, 2000/31 and 2002/58, construed in particular in the light of Articles 8 and 10 of the European Convention on the Protection of Human Rights and Fundamental Freedoms, permit Member States to authorise a national court, before which substantive proceedings have been brought and on the basis merely of a statutory provision stating that: ‘They [the national courts] may also issue an injunction against intermediaries whose services are used by a third party to infringe a copyright or related right’, to order an [ISP] to install, for all its customers, in abstracto and as a preventive measure, exclusively at the cost of that ISP and for an unlimited period, a system for filtering all electronic communications, both incoming and outgoing, passing via its services, in particular those involving the use of peer-to-peer software, in order to identify on its network the movement of electronic files containing a musical, cinematographic or audio-visual work in respect of which the applicant claims to hold rights, and subsequently to block the transfer of such files, either at the point at which they are requested or at which they are sent? 
(2) If the answer to the [first] question … is in the affirmative, do those directives require a national court, called upon to give a ruling on an application for an injunction against an intermediary whose services are used by a third party to infringe a copyright, to apply the principle of proportionality when deciding on the effectiveness and dissuasive effect of the measure sought?’
This morning the Court ruled thus:

– 2000/31 ... on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (‘Directive on electronic commerce’);

– 2001/29 ... on the harmonisation of certain aspects of copyright and related rights in the information society;

– 2004/48 ... on the enforcement of intellectual property rights ;

– 95/46 ... on the protection of individuals with regard to the processing of personal data and on the free movement of such data; and

– 2002/58 ... concerning the processing of personal data and the protection of privacy in the electronic communications sector (Directive on privacy and electronic communications),

read together and construed in the light of the requirements stemming from the protection of the applicable fundamental rights, must be interpreted as precluding an injunction made against an internet service provider which requires it to install a system for filtering

– all electronic communications passing via its services, in particular those involving the use of peer-to-peer software;

– which applies indiscriminately to all its customers;

– as a preventive measure;

– exclusively at its expense; and

– for an unlimited period,

which is capable of identifying on that provider’s network the movement of electronic files containing a musical, cinematographic or audio-visual work in respect of which the applicant claims to hold intellectual-property rights, with a view to blocking the transfer of files the sharing of which infringes copyright".
The ruling is surprisingly short, given that so many Directives and issues have been waved in front of the judges, and the essence of the court's decision-making process is not hard to spot. It's all about balance:
"43 The protection of the right to intellectual property is indeed enshrined in Article 17(2) of the Charter of Fundamental Rights of the European Union (‘the Charter’). There is, however, nothing whatsoever in the wording of that provision or in the Court’s case-law to suggest that that right is inviolable and must for that reason be absolutely protected.

44 As ... Case C‑275/06 Promusicae [2008] ECR I‑271 make clear, the protection of the fundamental right to property, which includes the rights linked to intellectual property, must be balanced against the protection of other fundamental rights.

45 More specifically ... national authorities and courts must strike a fair balance between the protection of copyright and the protection of the fundamental rights of individuals who are affected by such measures.

46 Accordingly ... national authorities and courts must, in particular, strike a fair balance between the protection of the intellectual property right enjoyed by copyright holders and that of the freedom to conduct a business enjoyed by operators such as ISPs pursuant to Article 16 of the Charter.

47 In the present case, the injunction requiring the installation of the contested filtering system involves monitoring all the electronic communications made through the network of the ISP concerned in the interests of those rightholders. Moreover, that monitoring has no limitation in time, is directed at all future infringements and is intended to protect not only existing works, but also future works that have not yet been created at the time when the system is introduced.

48 Accordingly, such an injunction would result in a serious infringement of the freedom of the ISP concerned to conduct its business since it would require that ISP to install a complicated, costly, permanent computer system at its own expense, which would also be contrary to the conditions laid down in Article 3(1) of Directive 2004/48, which requires that measures to ensure the respect of intellectual-property rights should not be unnecessarily complicated or costly.

49 ...  the injunction to install the contested filtering system is to be regarded as not respecting the requirement that a fair balance be struck between, on the one hand, the protection of the intellectual-property right enjoyed by copyright holders, and, on the other hand, that of the freedom to conduct business enjoyed by operators such as ISPs.

50 Moreover, the effects of that injunction would not be limited to the ISP concerned, as the contested filtering system may also infringe the fundamental rights of that ISP’s customers, namely their right to protection of their personal data and their freedom to receive or impart information, which are rights safeguarded by Articles 8 and 11 of the Charter respectively.

51 It is common ground, first, that the injunction requiring installation of the contested filtering system would involve a systematic analysis of all content and the collection and identification of users’ IP addresses from which unlawful content on the network is sent. Those addresses are protected personal data because they allow those users to be precisely identified.

52 Secondly, that injunction could potentially undermine freedom of information since that system might not distinguish adequately between unlawful content and lawful content, with the result that its introduction could lead to the blocking of lawful communications. Indeed, it is not contested that the reply to the question whether a transmission is lawful also depends on the application of statutory exceptions to copyright which vary from one Member State to another. Moreover, in some Member States certain works fall within the public domain or can be posted online free of charge by the authors concerned.

53 Consequently ... in adopting the injunction requiring the ISP to install the contested filtering system, the national court concerned would not be respecting the requirement that a fair balance be struck between the right to intellectual property, on the one hand, and the freedom to conduct business, the right to protection of personal data and the freedom to receive or impart information, on the other".
This blogger suspects that SABAM and other agencies will not shrink from seeking injunctive relief which requires filtering until they have first noted how carefully and narrowly the active part of the judgment has been drawn, how many invitations it appears to make in order to accommodate those who seek to modify their enforcement demands, and how the fate of the enforcement action may be contrasted with the approach taken in the British courts in Newzbin 2.

Tuesday 22 November 2011

Remuneration for private copying: changes in store for French rights holders

The 1709 Blog is delighted to receive this piece of information from Paris-based intellectual property practitioner and enthusiast Asim Singh ( on a topic that seems to attract a lot of attention in continental Europe -- remuneration for private copying. As Asim explains:
"The French government recently (October 26, 2011) tabled a bill (projet de loi) related to the remuneration for private copying. 
Like many other European jurisdictions, France applies a levy to blank media capable of being used for private copying (cassettes, CDs, DVDs, hard drives, etc.), defined by Section L.112-5 of the Intellectual Property Code as “copies which are strictly reserved for the private use of the copier and not intended for a collective use”. 
The so-called Private Copy Commission (made up of representatives of rights-holders, consumers and consumer electronics companies) determines the media subject to the levy and sets the applicable levy rate. The monies are paid by manufacturers and importers of subject media who in turn pass on the ultimate burden to the consumer who acquires the subject media. The monies are collected by Copie France which, after deducting a portion earmarked for subsidizing creative efforts, live shows and training artists, passes the balance on to the beneficiaries (authors, performers, producers and publishers), according to a pre-determined key. 
The system has been in place since 1985 but two recent rulings by the Conseil d’Etat (French Supreme Court for administrative matters) have led the government to act to modify the statutory scheme. 
In a July 11, 2008 decision regarding applicable levy rates, the Conseil d’Etat held that the remuneration owed for private copying had to be tied directly to the scope of private copying from lawfully acquired sources. In other words, the potential for a given media to be used for private copying from unlawfully acquired sources (e.g., peer-to-peer networks) was not relevant in determining the applicable levy rate. 
In a June 17, 2011 ruling, the Conseil d’Etat applied the recent Padawan decision of the Court of Justice of the European Union (October 21, 2010) and held that media acquired for professional purposes could not be presumed to be intended for use for private copying and hence should not be subject to the levy. The bill tabled by the government takes these developments into account and proposes to amend the Intellectual Property Code accordingly. 
In addition, the bill mandates that the media acquired by a consumer and subject to the levy be accompanied by information regarding the amount of the levy applicable to it".

Richard Hooper to lead Digital Copyright Exchange

The Government has today announced that Richard Hooper, formerly of Ofcom and the BBC, will head up a feasibility study to develop a Digital Copyright Exchange, one of the key recommendations in the Hargreaves Review of Intellectual Property. With over 20 years experience in the information and communications industry, Hooper seems a sensible choice for this project on the face of it; he is certainly no stranger to challenging projects, having led an independent review into the Postal Services Sector.

The Digital Copyright Exchange (DCE) is envisaged as a means to boost economic growth in the creative sector by lowering the costs of licensing and improving access to copyright material for businesses and consumers. However, the Review recognised that:

“A range of incentives and disincentives will be needed to encourage rights holders and others to take part [and that] governance should reflect the interests of participants, working to an agreed code of practice.” (Recommendation 3:

As a matter of opinion, a functioning digital rights marketplace should ensure the following:

1. That rights holders are fully supportive and willing to allow their content to form part of the DCE;

2. That the right technical people are involved to ensure that the technological infrastructure is fully functional and supported (too often in the past technical expertise around copyright-related schemes has been overlooked, to great detriment);

3. That licences available to purchase are regulated – one of the main problems faced by those who want to use other people’s material is the debilitating sum which is charged, often leading to the failure of many projects such as documentary films. An affordable and regulated licensing structure is key to facilitate the success of this scheme.

The Government has also indicated that it wants the DCE to be self-sustaining and free at the point of access for users.

The feasibility study will look at the licensing challenges facing different sectors and should take all these issues on board, basing its findings on evidence from a number of stakeholders. Views must be acquired from not only the creative industries themselves but also from consumers and individual creators to ensure a suitable balance of opinion. The study will run in two stages: firstly, defining the problems of copyright licensing across the sectors, and secondly to bring forward appropriate industry-led solutions with a view to how these could be implemented. Findings from the study will be reported to the Government before the summer 2012 Parliamentary Recess and will provide the groundwork for a functioning exchange.

Image 'Exchange_Place' from Flickr by _SiD_, used under CC-BY-NC-ND licence

Monday 21 November 2011

Universal goes shark hunting

Wikipedia describes the US based Grooveshark as the “international online music search engine, music streaming service and and music recommendation web software application, allowing users to search for, stream, and upload music that can be played immediately or added to a playlist”. But is it legal? Well, the World’s biggest record company thinks not. Universal Music Group has reportedly filed a lawsuit against music service Grooveshark over alleged copyright violations saying that records show that senior management at Escape Media Group, the company which operates Grooveshark, had led an effort to upload more than 100,000 songs to the music service and claims to have supporting emails and documents, including evidence showing that staff members Sam Tarantino, Paul Geller and Ben Westermann-Clark uploaded 1791, 3452 and 4600 unlicensed songs respectively. Many of those tacks would be presumed to be Universal tracks given the major's market share in the recorded music sector.

Universal is reported to be seeking the maximum in damages of $150,000 per infringing act. Whilst Grooveshark has negotiated direct licenses with EMI and numerous independent labels and aggregators, it has no deal with Universal - but as the service allows user to upload music so UMG tracks will appear – although Grooveshark says that, like YouTube, it will remove unlicensed tracks when notified.

Grooveshark relies on the ‘safe harbour’ provisions in the US’s DMCA which protects an online service from the infringing activities of its users in some specific situations. Grooveshark does not use filters to (theoretically) screen out unlicensed material, although filters are seemingly not as yet required by law in the USA to fall under safe harbour abut insists it has a valid "takedown" system. YouTube does use filters. But in the USA if a service has any direct knowledge of infringing content on its network, it must remove or disable access to that content before being contacted by the copyright owners. If Grooveshark’s management led an effort to upload copyrighted material, as the lawsuit alleges, that would certainly be considered direct knowledge! Universal says that whilst it is committed to "supporting legitimate and innovative" digital business models, it claims "Grooveshark did not build its business legitimately; its business is built on wilful infringement."

The UMG lawsuit also reportedly notes a recent article from Digital Music News about the problems King Crimson guitarist Robert Fripp had in trying to get his music removed from Grooveshark, including an anonymous post in the comments section of that article purporting to come from someone working for Grooveshark, who claims staff there were routinely instructed to upload music to the streaming service's platform. The comment adds that Escape Media senior management were aware of Fripp's takedown requests, but ignored them because they believe Fripp hadn't the resources to sue.

Last year Universal filed a lawsuit in the New York County Court claiming Grooveshark violates copyright by providing free access to its pre-1972 recordings. This is now provably an irrelevance as the court in the recent EMI v case said that differentiating between pre and post-1972 works was not necessary, and that DMCA safe harbour applied irrespective of the year of copyright protection.

Grooveshark also faced a copyright infringement lawsuit brought by EMI in 2009. That lawsuit ended with a licensing deal that added EMI's roster to Grooveshark's catalogue.

Friday 18 November 2011

US Auction Houses face Droit de Suite Class Action

For readers who prefer looking to listening, belated news from the Big Apple. The New York Times reported on November 1st that Sotheby's, Christies' New York and online auctioneer ebay are the subject of 3 class actions by artists. The claimants are seeking the identities and locations of sellers with a view to making claims for droit de suite payments. American lawyers who subscribe, or at least the Californian ones, will know of the California Resale Royalties Act.
A mischievous copyright red herring: Patty Milich, the Resale Royalty Act coordinator at the California Arts Council, tells the NYT that "People often don’t realize, for example, that if a California hotel with paintings on the walls changes ownership, or if a donated sculpture sells for more than its original price at a fundraising auction, a royalty may be due." So if the hotel which is the vehicle for the art is sold, what about a company that is a vehicle for copyrights being sold? Which, for readers that listen rather than look, may prompt idle pondering about whether recording artists and songwriters entitled by contracts to shares of any other income touching or concerning the copyrightsmight be entitled to share pro-rata in the proceeds of the EMI sale

Thursday 17 November 2011

Bonnier AG: "it's lawful if you do it lawfully .."

Case C-461/10 Bonnier Audio AB, Earbooks AB, Norstedts Förlagsgrupp AB, Piratförlaget Aktiebolag, Storyside AB v Perfect Communication Sweden AB is a reference to the Court of Justice of the European Union for a preliminary ruling which originates from the Swedish Högsta domstolen. Two questions were referred:
"1. Does Directive 2006/24 ... on the retention of data generated or processed in connection with the provision of publicly available electronic communications services or of public communications networks and amending Directive 2002/58/EC (the data storage directive), and in particular Articles 3, 4, 5 and 11 thereof, preclude the application of a national provision which is based on Article 8 of Directive 2004/48 ...on the enforcement of intellectual property rights and which permits an internet service provider in civil proceedings, in order to identify a particular subscriber, to be ordered to give a copyright holder or its representative information on the subscriber to whom the internet service provider provided a specific IP address, which address, it is claimed, was used in the infringement? The question is based on the assumption that the applicant has adduced evidence of the infringement of a particular copyright and that the measure is proportionate. 
2. Is the answer to Question 1 affected by the fact that the Member State has not implemented the data storage directive despite the fact that the period prescribed for implementation has expired?"
Today the Advocate General's Opinion was published in eight languages, none of them English. The advice given in the French version:
" La directive 2006/24 ...  modifiant la directive 2002/58/CE, ne s’applique pas au traitement des données à caractère personnel à d’autres fins que celles visées à l’article 1er, paragraphe 1, de cette directive. Par conséquent, ladite directive ne s’oppose pas à l’application d’une disposition nationale au titre de laquelle, dans le cadre d’une procédure civile, aux fins d’identifier un abonné déterminé, le juge enjoint à un fournisseur d’accès à Internet de divulguer au titulaire de droits d’auteur, ou à son ayant droit, des informations relatives à l’identité de l’abonné à qui ledit opérateur a attribué une adresse IP qui aurait servi à l’atteinte audit droit. Toutefois, ces informations doivent avoir été conservées pour pouvoir être divulguées et utilisées à cette fin conformément à des dispositions législatives nationales détaillées, qui ont été adoptées dans le respect du droit de l’Union en matière de protection des données à caractère personnel."
This being so, there is no need to answer the second question.  Google Translate renders this as follows:
"Directive 2006/24 ... and amending Directive 2002/58/EC does not apply to the processing of personal data for purposes other than those referred to in Article 1, paragraph 1 of this Directive. Therefore, the directive does not preclude the application of a national provision under which, in the context of civil proceedings, in order to identify a specific subscriber, the judge ordered a provider access to the Internet to disclose to the holder of copyright, or his successor in title, information concerning the identity of the subscriber to whom the trader has allocated an IP address that would have been used to achieve that right. However, this information must be retained in order to be disclosed and used for this purpose in accordance with detailed national legislation, which were adopted in compliance with EU law on the protection of personal data".
In other words, ordering an internet service provider to divulge subscriber information is lawful, as long as it's done lawfully.

We await further developments -- and corrections to the translation, if relevant.

Wednesday 16 November 2011

Photo-shoots and inclusion of copyright-protected works: a reader asks

A good example: the Gigi album cover on the
album cover of Pink Floyd's Ummagumma
A reader writes with the following question:
"Does the principle of exhaustion of rights enable someone to prevent a copyright owner from asserting his rights in props which are being for a photo-shoot -- for example where a painting, a sculpture or a book appears in the background on a table in an advertisement? Would there be any kind of defence to a copyright infringement claim?  I mention the exhaustion of rights principle -- but I know that not all rights of a copyright owner are exhausted just because the distribution right may have been exhausted!".
I offered my own answer, and was told that the reader has received advice both that the exhaustion doctrine applies and that it doesn't. On the facts as spelled out here, what do readers think? (Readers from outside the European Union: do please state your jurisdiction).

TvCatchup and online streaming: "communication to the public" is not a repeat

Courtesy of a news flash from Hogarth Chambers, the 1709 Blog has learned that Mr Justice Floyd yesterday handed down a further judgment in ITV Broadcasting & others v TvCatchup, in the Chancery Division, England and Wales.  As this media release explains:
"The ruling asks the European Court to determine whether live internet streaming of free-to-air TV channels is lawful. 
The Defendant, TVC, operates a website through which viewers can watch live streams of some free-to-air-televisions channels. The Claimants, a collection of broadcasters and TV content providers, alleged that TVC had infringed their copyrights in films and broadcasts by reproduction and by communication to the public. TVC denied infringement and, alternatively, relied on a defence relating to transient copies (under s.28A of the Copyright Designs and Patents Act 1988) and a defence that permits the cable retransmission of some broadcasts within their intended reception areas (under s.73). 
Floyd J gave a first judgment on 18 July 2011, in which he proposed a reference to the Court of
Justice of the European Union (“CJEU”). A further hearing was convened to consider the impact on that potential reference of the earlier decisions of the CJEU in Football Association Premier League Ltd and others v QC Leisure and others (Joined Cases C-403/08 and C-429/08 – “FAPL[see 1709 Blog note here and comment here]) and in Airfield NC and Canaal Digital NV v Sabam and Airfield NV v Agicoa Belgium BVBA (Joined Cases C-431/09 and C-432/09 – “Airfield”). 
The Claimants submitted that the decisions in FAPL and Airfield meant that no reference was needed on the issue of communication to the public. Floyd J disagreed: the CJEU’s decision in Airfield did not make it easy to distill a clear principle as to what amounts to a communication to the public in the  context of this case. A question, as set out in paragraph 24 of the judgment, will therefore be referred on this issue. 
Floyd J held that reproduction by the creation of “rolling copies” of films and broadcasts was
rendered acte clair by FAPL, as was TVC’s s.28A defence, although its applicability will depend upon the result of the communication to the public reference. A further reference on the construction of s.73 was refused: this was a question for the national court.".
The actual wording of the referred question can be found in paragraph 24:
"“Does the right to authorise or prohibit a "communication to the public of their works by wire or wireless means" in Article 3.1 of the Directive extend to a case where: 
(i) Authors authorise the inclusion of their works in a terrestrial free to air television broadcast which is intended for reception either throughout the territory of a Member State or within a geographical area within a Member State; 
(ii) A third party (i.e. an organisation other than the original broadcaster), provides a service whereby individual subscribers within the intended area of reception of the broadcast who could lawfully receive the broadcast on a television receiver in their own homes may log on to the third party's server and receive the content of the broadcast by means of an internet stream? 
Does it make any difference to the answer to the above question if: 
(a) The third party's server allows only a "one to one" connection for each subscriber whereby each individual subscriber establishes his or her own internet connection to the server and every data packet sent by the server onto the internet is addressed to only one individual subscriber? 

(b) The third party's service is funded by advertising which is presented "pre roll" (i.e. during the period of time after a subscriber logs on but before he or she begins to receive the broadcast content) or "in skin" (i.e. within the frame of the viewing software which displays the received programme on the subscriber's viewing device but outside the programme picture) but the original advertisements contained within the broadcast are presented to the subscriber at the point where they are inserted in the programme by the broadcaster? 

(c) the intervening organisation is: 
(i) providing an alternative service to that of the original broadcaster, thereby acting in competition with the original broadcaster for viewers; or 
(ii) acting in competition with the original broadcaster for advertising revenues?".
Hogarth have kindly made a copy of this judgment available as a 10-page Word document on their website here.
There's some background to this dispute on the IPKat weblog here.

Sunday 13 November 2011

11th Annual International Copyright Law 2011: antidote to pudding-thoughts

The 11th Annual International Copyright Law 2011, organised by IBC Conferences, takes place in three weeks time, from 6 to 7 December 2011, in Central London. This blogger has a soft spot for the event, in which he and Hugo Cox (also a member of the 1709 Blog team till he took a recent break from blogging) have spoken in the past, and in which a number of his friends are speaking this year.

A problem faced by conference organisers in many fields of law is that, when they seek to serialise a successful conference and put it on annually, they are giving a hostage to fortune to the gods of feast or famine. In some years there have been so many new developments, legislative initiatives and major judicial decisions that the two days allotted are scarcely adequate, while in other years it appears that there is little to report other than the rate at which the dust has settled on the previous year's novelties.  In recent years copyright has been kind to conference organisers, including IBC whose programme this is, by providing a constant fare of fascinating, challenging topics and rulings. No dust settles here.

It's not so many years ago that participants in this event were riveted by reports, analyses and speculations as to how The Pirate Bay and BitTorrenting would produce the ultimate showdown, a veritable High Noon with the recording industries. This topic has now gone remarkably quiet. Another copyright horror story, the Google Settlement, has shrunken from a top-billed topic to the fourth bullet-point in the US round-up presentation of the US Copyright Office General Counsel David O. Carson.

Some people make every
effort to outlive their
copyright term ...
Meanwhile, a number of "exes" have popped up. Extension of term for recordings and performers' rights looked dead in the water not so long ago, buried by the Gowers Review and evidence-based economic analysis -- but here it is, with a session to itself. Extension of artists' resale rights has clawed its way to prominence and a third "ex", "exhaustion" of rights and the (to Europeans) puzzling result of the US Supreme Court ruling in Costco. Other new topics include the consequences of the recent UK Meltwater litigation (is it really going to put the brake on browsing?), while current favourites which we can't ever get enough of are (i) how to handle rogue websites and (ii) practical solutions for resolving disputes.

This year's conference looks like being fun, with a great line-up of speakers under the expert chairmanship of Professor Adrian Sterling. Unfortunately I'll be unable to attend in person on account of clashing commitments, but this blog hopes to hear from some of its readers who are attending as to what gems of wisdom, what incisive analyses, what outrageous comments they have heard -- it w;; give is all plenty of food for thought before the end-of-year break makes puddings of our thought-processes ...

Full details of the conference programme and registration details are available here.

Friday 11 November 2011

Sabam imposes download levy

Torrrentfreak reports that the Belgian music royalty collecting agency Sabam has said that it will bill Internet Service Providers for allowing subscribers to play and download copyrighted songs. Sabam claims it is entitled to charge ISPs for compensation for illegal downloading by their users based on existing 1994 copyright legislation, and is demanding 3.4% percent of the monthly fee paid by subscribers. The legislation provides that authors should be paid for any “public broadcast” of a song – although whether a download is a ‘public broadcast’ is a moot point. In a recent blog on 1709 (4th October) we examined the US position, where the Courts have recently held that a download is NOT a public performance of a recorded work.

Belgian ISPs, who are also involved in a longstanding legal battle with Sabam over a network piracy filter (Sabam v Tiscali), believe the demands of the music rights group make little sense with Torrentfreak reporting Belgacom spokesperson saying “It’s their interpretation of the law, but that is not legally justified".

Thursday 10 November 2011

Righthaven - Another MediaCAT?

We blogged fairly extensively on the 'MediaCAT' litigation - the numerous cases brought by ACS:Law on behalf of MediaCAT against individual accused of illegally accessing copyright material - here porn films - by illegal file sharing. The case ended up before Judge Colin Birss QC - and bankruptcy for MediaCAT. I was reminded of the story when I read recent reports about the exploits of Righthaven LLC, another vehicle for content owners to pursue alleged infringers, which is having a torrid time in the USA.

Righthaven is a copyright "holding" company that has filed hundreds of copyright infringement lawsuits in the USA. Since March 2010, the company, fronted by attorney Steven A Gibson, has filed 275 lawsuits claiming website operators, bloggers and message board posters had infringed on copyrights by posting material online from the Las Vegas Review-Journal and the Denver Post; the lawsuits generally allege copyright infringement against sites that have posted all or portions of newspaper articles and photographs Righthaven claimed it owned through assignments from copyright owners. Nevada based Righthaven describes itself as 'The nation's pre-eminent copyright enforcer' ( But District Courts in both Nevada and Colorado have dismissed Righthaven's complaints on the basis that it lacked standing to sue since it did not, in fact, own the copyrights it claimed it did. Now a court in Nevada has dealt Righthaven its biggest financial blow to date. Not only did the court determine that Righthaven lacked standing to sue, Judge Roger I. Hunt it awarded a Righthaven defendant Thomas DiBiase nearly $120,000 in legal fees as a result of the expenses Mr. DiBiase incurred defending himself against Righthaven's claims. This is the third such award for a Righthaven defendant and the largest award to date. Previously in August, another Nevada judge in Las Vegas awarded another successful defendant approximately $34,000 in legal fees after that defendant successfully moved to dismiss Righthaven's claims for lack of standing. US commentators say that it remains unclear how Righthaven will proceed particularly given Righthaven's alleged difficulty in posting a bond for the previous $34,000 award pending appeal.

Judge Hunt has also fined Righthaven US$5,000 for misleading the federal court about its lawsuits.

In the UK the MediaCat case ended with Judge Birss QC deliverying these words in the Patents County Court "On 26th January I received a letter from ACS:Law. It included copies of documents relating to the firm’s retainer with MediaCAT on the basis that I had asked to see them. In fact I had not asked to see them, the defendants had and I had not ordered them to be produced, ACS:Law had volunteered. In any event the letter also states that MediaCAT has ceased trading as it has become insolvent and that ACS:Law is no longer instructed save to perfect consent orders already notified to the court. The letter concludes with a statement that the claimant has asked Mr Crossley to notify the court that it has ceased all activities and will not at any time in the future be sending letters or pursuing anyone in relation to the alleged infringements of copyright. Also ACS:Law will close permanently on 31st January 2011 and there will be no successor practice".

I don't know about Righthaven's financial position or their resources. They may well be financially secure but Wikipedia seem to disagree, and suggests that on October 29th 2011 a Nevada federal court judge ordered the seizure of the company's bank accounts and property to provide for the payment of the $34,000 legal fee from the August 2011 ruling; by November 1st the Court authorised the US Marshals Service to seize cash and/or assets reflecting the due debt, now standing at $63,720. Wired seem to fear the worst, saying that Righthaven is "on the brink of shuttering". The links below might help you make your own mind up, as might Righthaven's website and Steven Gibson's own words in a 'Face to Face' interview on YouTube here

Some critical comments at - and a fascinating read here and more at

Image: Marco Bellucci

Make Mine a Brazilian

To add to Ben Challis’ report from Portcullis House, the event attendees were provided with a useful four page leaflet produced by Pictfor, co-the organisers of the event, for Consumer Focus . It led with the reminder that Recommendation 3 of Professor Hargreaves Report recommended that codes of practice for societies be introduced on the basis that the UK should be supporting moves in Europe for "a framework for cross border copyright licensing". Chris Johnstone from Music Choice, explained that the 2003 Music Choice complaint to Europe had been based upon a European licensing situation whereby potential digital users had to acquire licences for musical works from 4 j-v digital licensing bodies and 27 societies – and that is before one begins on the record labels. And British Copyright Council President, Maureen Duffy, reminded us that that the UK cannot possibly address this without reference to the plethora of international treaties and bodies (and anagrams) that operate in the sphere of IP regulation. Frances Lowe from PRS for Music, stressed that there was transparency of licensing tariff calculation – for users – and transparency of revenue calculations – for right owners. These are both commercially sensitive and need to be considered separately. These monopolies are managing a few strands of monopolistic rights and they have to serve both the user and the owner constituencies all the while balancing competition considerations against the demands of the single market.

So, for the benefit of those few collecting society junkies across the globe, who cannot get this subject entirely off their minds, Jeremy Silver’s answer to his own question deserves a wider airing. Silver reminded the gathering of the competition/single market balancing act and asked how we should proceed in the future – seeming to imply a rejection of new wine in old bottles as a solution. He endorsed the public need for public access to rights ownership – access which would make life simpler for would be licensees. This access to ownership data in the music publishing industry is being addressed by the Global Repertoire Database initiative. But, suggested Silver, the should be a detachment between the function of data gathering and management and the function of licensing, royalty collection and distribution. Those junkies should consider the model operating in Brazil. The CISAC website shows 11 collecting societies of varying stripes in Brazil. But the satellite system of membership bodies are circling a centralised data management system. I am sure there are readers of this blog who will be able to comment on issues such as transparency, competition for members, and probity (go, on, you know who you are), but Jeremy Silver’s wine bottle is out there, down in South America, just waiting for the Europeans to adopt for their terroir.

RIAA wants DCMA clarity from Congress

The USA’s The Digital Millennium Copyright Act (DCMA) has been criticised by many for being slanted far too much in favour of content providers, with the underlying suspicion that film, television, publishing and recording companies were effective in influencing the passage of the Bill. But now the Recording Industry Association of America is taking issue with the DCMA – or rather the US Court’s interpretation of the legislation - saying judges are far too favourable to Internet Service Providers, websites and even consumers. Jennifer Pariser, the RIAA’s litigation chief, told a US law conference:

"I think Congress got it right, but I think the courts are getting it wrong," adding "I think the courts are interpreting Congress' statute in a manner that is entirely too restrictive of content owners' rights and too open to [Internet] service providers.

"We might need to go to Congress at some point for a fix," Pariser added. "Not because the statute was badly drafted but because the interpretation has been so hamstrung by court decisions."

RIAA President Cary Sherman complained that the DMCA “isn’t working for content people at all” saying “You cannot monitor all the infringements on the Internet. It’s simply not possible” adding “We don’t have the ability to search all the places infringing content appears, such as cyberlockers like [file-hosting firm] RapidShare.”

At the heart of this is the provision in the DCMA that offers the so called “safe-harbour” protection to some technology providers, and in particular promotes the principle that content-sharing services like YouTube cannot be liable for copyright infringement by their users, even if they inadvertently host infringing content, providing the service has an effective ‘take down’ a system in place by which a content owner can remove infringing material.

For some time now, the RIAA has been pushing ISPs to start policing their users. “We’re working on [discussions with broadband providers], and we’d like to extend that kind of relationship–not just to ISPs, but [also to] search engines, payment processors, advertisers,” Sherman has said. Clearly the RIAA is frustrated by the perceived low threshold needed to fall under safe harbour protection and now wants the US government to refine and define what should and shouldn’t fall under safe harbour. The recent US decisions in Viacom v YouTube, MP3Tunes v EMI and the ability of services such as Grooveshark to fall under safe harbour provisions are clearly a major irritation for the record labels as I imagine was the recent decision in Germany which held that net firm HanseNet was not liable for the actions of its customers in accessing the Russian ‘E-Donkey’ illegal file swapping services.

Every coin has another side and some commentators feel that the content industries were hoodwinked by the DCMA which is actually more favourable to the technology sector, websites and internet service providers. And many point to the importance of safe harbour provisions in allowing small service operators and websites from having to spend time and money patrolling for infringing material posted by their users. Even the big boys agree and Lance Kavanaugh, You Tube’s product counsel, said “It’s our view that the DMCA is functioning exactly the way Congress intended it to ..... Congress was prescient. They struck the right balance”

The whole question of the extent of the liabililities of intermediaries is being tested around the World. In the UK the recent Newzbin 2 decision was a major triumph for content owners, and they are hoping for a similar result in Australia in the iiNet litigation – now on its second appeal. In the L’Oreal v Ebay case (2011) the European Court of Justice (looking primarily at trade mark issues) decided that a service provider such as eBay could be liable for users infringements under national law, unless it can rely on an exemption from liability provided by Directive 2000/31 on electronic commerce but explaining that the exemption would be subject to the following conditions being met: (i) the operator does not play an active role, i.e., it does not know or control the data provided by its customers; (ii) a diligent economic operator would not have realised that the online offers for sale were unlawful; and (iii) the operator must not have failed to act promptly to remove offers of counterfeiting goods from its website or to disable access to such offers.

Capitol Records, Inc. et al v MP3Tunes LLC et all (2011) No 07 Civ 9931 (“EMI v MP3Tunes”)

Twentieth Century Fox Film Corp & Others v British Telecommunications Plc [2011] EWHC 1981 (Ch) (“NEWZBIN 2”)

Roadshow Films Pty Limited v iiNet Limited [2011] FCAFC 23 (“IINET”)

Viacom International, Inc. v. YouTube, Inc., No. 07 Civ. 2103,

Wednesday 9 November 2011

Artist’s digital royalty beef will go to court

A class action between a number of recording artistes and Universal Music over how digital royalties are calculated will go to court. A federal judge in California has given the green light for a class action lawsuit against Universal Music by a number of long established artists, led by White Zombie, Whitesnake, and the estate of Rick James. The music major had requested the case be dismissed. The case will be a major test of how artiste digital royalties are calculated by record labels in the absence of specific contract wording: The label would like to calculate the royalty based on the same accounting process as a normal (physical) sale – whilst artistes want a share of the income which will almost certainly be a substantially greater share of the revenues. Almost all pre-internet contracts make no mention of digital releases beyond CD (and many predate CDs) let alone downloads and streaming and artistes have argued that because digital removes label's manufacturing and distribution costs, the risks of sales are almost non-existent, and when a label makes its catalogue available to a service such as iTunes, it is actually a licensing deal and therefore the higher artist royalty should be paid.

There is a precedent here – the so called ‘Eminen’ case that actually involved FBT Productions, the production house involved in some early Eminem recordings, who took Universal to court over digital royalties and succeeded in achieving the higher royalty rate: FBT argued they had a right to a 50/50 split of profits with Universal on sales of digital music and ring tones through online retailers such as iTunes and Sprint as these 'Master Licensing' deals attracting the higher royalty. The contract did not specifically mention income from download stores like iTunes, or what share the artist (and therefore FBT) should get from such sales but Universal have been treating download sales as being equivalent to CD sales paying a lower rate of 12-20%% as if these were physical sales. Whilst a district court refused summary judgment saying the agreement was ambiguous, The U.S. Ninth Circuit Court of Appeals in San Francisco agreed with FBT saying that the higher royalty should apply.

The major insists that the FBT case related to the specific wording of the production company's contract, and the precedent in that case did not apply to every other pre-download record contract. That said, the new litigation means that all artists signed to Universal with pre-internet contracts could benefit from any positive outcome, with lawyers for the claimants saying that they believed Universal "engaged in a broad scheme to underpay numerous royalty participants, including formulating an opaque and artificial method for accounting for and paying its royalty participants for income derived from such licenses and engaging in a sustained public relations effort designed to convince the public that it had employed 'groundbreaking' and 'enlightened' accounting practices that actually benefited (rather than cheated) the Class".

In a separate case, Sony have also been taken to court by a group of artistes including the Allman Brothers and Cheap Trick over how royalties should be calculated. The action, stated in 2006 in the United States District Court Southern District of New York, shows how the different parties calculate how the artist’s royalty should be paid. On the sale of 1000 downloads at 0.70c per unit (total income of $700) Sony BMG thought the appropriate payment would be a royalty payment based on 85% of all downloads sold after deducting mechanical royalties to the songwriters, a container charge of 20% and an audiophile reducer for new technology of a further 50%. This gave a total royalty payment of $45.05. The Allman brothers felt they should be paid one half of the income from 100% of all units sold, less just the mechanical royalty payable to songwriters. This gave a royalty due of by Sony BMG to the Allman Brothers of $315.50 with attorney Brian Caplan saying at the time "Sony Music is presently engaged in a widespread attempt to underpay its recording artists".

In the new Universal case the court said that the allegations were enough to justify the matter being treated as a class action.

Thank you Amanda for reminding me to post this blog!'ANV'