Use it or lose it? The Scottish Law Commission reflects on copyright and limitation periods

The 1709 Blog has just heard news from the Scottish academic and amiable IP personality Hector MacQueen that the Scottish Law Commission has just published its Discussion Paper No 144 entitled "Prescription and Title to Moveable Property". This doesn't sound much like anything to do with copyright, but let Hector take up the story:

"In Part 11 it considers the possibility raised amongst many other points in Fisher v Brooker [2009] UKHL 41 [the "Whiter Shade of Pale" case, potted by the 1709 Blog here], namely that under Scots law's Prescription and Limitation (Scotland) Act 1973 non-use of a copyright work for 20 years could lead to the right-holder being unable to enforce the right and indeed losing it altogether. While Lord Hope in Fisher thought this could not be right, there is no provision in the 1973 Act to make the point directly. The Discussion Paper discusses the implications for the problem of orphan works, and suggests that the 1973 Act should have added to it a provision similar to section 39 of the Limitation Act 1980 in England, under which limitation rules do not apply to any right for which a fixed time period is provided by any other enactment, whether passed before or after the coming into force of the enactment in question.
This would apply to the copyright legislation and prevent any possible difference between Scotland and England in the application of copyright law.

One of the difficulties for the Commission is that, so far as it can tell, this suggestion could only be put into effect by the Westminster Parliament. This is because it seems that the amendment would apply only to intellectual property legislation, which is not devolved to the Scottish Parliament under the Scotland Act 1998. One of the things the Commission would like to know is whether section 39 of the Limitation Act 1980 has any application beyond intellectual property legislation. If it does, it might then be possible to say that the Commission's suggestion did not apply only to intellectual property and hence could be legislated upon by the Scottish Parliament. Para 1.12 of the Discussion Paper briefly explains the issues".

Hector adds, and we agree, that it would be very helpful if any of our readers who are expert in English law generally could point the Commission in any relevant direction on this.

Punishment by Press Release, as General Court raps Commission's knuckles

In Case T-19/07 Systran SA and another v European Commission, a General Court of the European Union decision of 16 December 2010 which is still available in French only, the Court ordered the European Commission to pay Systran liquidated damages of €12,001,000 for infringing the IP in Systran's copyright and know-how relating to the Unix version of Systran's machine translation software.

In short, the non-contractual liability of the European Union depends on the following conditions being satisfied: (i) the conduct alleged against an institution must be unlawful, (ii) actual damage must have been suffered and (iii) there must be a causal link between the conduct and the damage alleged. The General Court considered that the Commission's conduct ticked all three boxes.  According to the Curia press release,

"Between 22 December 1997 and 15 March 2002, the company Systran Luxembourg adapted, under the name EC-Systran Unix, its Systran-Unix machine translation software to the specific needs of the Commission in this field.

On 4 October 2003 the Commission published a call for tenders for the maintenance and linguistic enhancement of its machine translation system. The services required by the Commission from the successful contractor concerned, inter alia, ‘enhancements, adaptations and additions to linguistic routines’; ‘specific improvements to analysis, transfer and synthesis programs’ and ‘system updates’, as covered by the call for tenders.

Following that call for tenders, Systran – the parent company of Systran Luxembourg – contacted the Commission to inform it that the planned work appeared likely to infringe its intellectual property rights. For more than 40 years Systran has supplied companies and authorities with machine translation solutions based on the software which bears its name. In particular, Systran created and marketed a version of the Systran software capable of functioning on the Unix and Windows operating systems (Systran Unix) and of replacing the earlier, now obsolete version, which functioned on the Mainframe operating system (Systran Mainframe).

After correspondence between Systran and the Commission, the latter took the view that Systran had not produced ‘probative documents’ capable of establishing the rights which Systran might claim in respect of its EC-Systran Unix machine translation system. The Commission therefore considered that the Systran group had no right to object to the work carried out by the company which had been successful in the call for tenders.

Considering that, after the award of the tender contract, the Commission had unlawfully disclosed its know-how to a third party and that the Commission was infringing its copyright when unauthorised development of the EC-Systran Unix version was carried out by the successful contractor, Systran and Systran Luxembourg brought an action for damages against the Commission before the General Court.

Since the parties could not reach any agreement to resolve the matter when invited by the General Court following the hearing to attempt conciliation, the General Court now gives its ruling on the action for damages.

The General Court states, first, that the dispute concerns non-contractual liability. The contracts entered into in the past by the Commission to enable it to use the Systran software do not deal with questions of disclosure of Systran’s know-how to a third party or the carrying out of work which might infringe the intellectual property rights of that company.

As regards the unlawfulness of the Commission’s alleged conduct, the General Court considers
that the Systran group has established that there is a substantial similarity, in the core material and certain linguistic routines (programmes), between the Systran Unix and EC-Systran Unix versions, and that the Systran group can therefore rely on the rights held in the Systran Unix version, developed and marketed by Systran since 1993, to object to the disclosure to a third party without its consent of the derivative EC-Systran Unix version, adapted by Systran Luxembourg from 1997 onwards to meet the needs of the Commission.

For its part, the Commission was unable to establish over which parts of the core material and the linguistic routines of Systran Unix it claimed rights of property as a result, inter alia, of the rights it held in dictionaries encoded by its own staff.

Moreover, Systran has proved that, contrary to the claims of the Commission, the alterations
requested by the call for tenders require access to elements of the EC-Systran Unix version which are taken from the version Systran Unix and require their alteration.

Consequently, by granting the right to carry out work which necessarily entailed an alteration of elements of the Systran Unix version of the Systran software which are within the EC-Systran Unix version, without first obtaining the consent of the Systran group, the Commission acted unlawfully by infringing the general principles common to the law of the Member States applicable to copyright and know-how. That wrongful act, which is a sufficiently serious breach of the copyright and know-how held by the Systran group in the Systran Unix version of the Systran software, gives rise to non-contractual liability on the part of the European Union.
As regards the damage, the General Court rules that liquidated damages and interest amounting to €12 001 000 must be paid to Systran to compensate it for the damage suffered as a result of the Commission’s unlawful conduct, namely:

- €7 million corresponding to the total fees which would have been payable between 2004 and 2010 if the Commission had requested permission to use Systran’s intellectual property rights in order to carry out the work specified in the call for tenders, which requires access to and alteration of elements of the Systran Unix version reproduced in the EC-Systran Unix version;
- €5 million as compensation for the effect which the Commission’s conduct might have had on Systran’s turnover in the years 2004 to 2010, and more widely on the development of that company;
- €1 000 as compensation for non-material damage.

In addition, the General Court observes that it is for the Commission to draw all appropriate
conclusions in order to ensure that Systran’s rights in the Systran Unix version are taken into account as concerns the work relating to the EC-Systran Unix version. If they are not taken into account, given that the damage for which compensation is awarded in this case holds only for the period from 2004 to the date of delivery of this judgment, Systran would be entitled to bring before the General Court a fresh action seeking damages in respect of the further damage it might suffer.

Lastly, the General Court adds that the publication of this press release is also a form of
non-pecuniary compensation for the non-material damage caused by the harm to Systran’s
reputation as a result of the Commission’s unlawful conduct".

Music industry and copyright: can you recommend a book?

Add caption

A friend has written to ask for some guidance in terms of good reading materials. He says:

"I am writing in the hope that you will be able to recommend a practitioners' book that deals with copyright in the music industry and the various layers of rights that come with musical creations. I am interested in getting an overview of "licensing in" the rights to use music/lyrics and/or adapt them to create a new work and to get an idea what standard practice is in the industry. Any recommendation will be greatly appreciated! Many thanks in advance".

If readers have any recommendations or preferences, can they please post them below. If the jurisdiction(s) covered are not immediately apparent, can they give us a clue?

Artist Resale Royalty, Harmonisation and a Comment from Down Under

Following Monday's post ("Artist's Royalty Right: not as much impact as was hoped/feared"), The 1709 Blog has received the following thoughts and observations from a pair of Australians Dr Anne Sanders (an art historian) and John R Walker (an artist), who write:

"We have been following developments with regard to the derogation concerning the resale royalty legislation in the UK. Australia has recently enacted an artist resale royalty legislation that differs in major ways from the scheme created by DACS in the UK. The scheme adopted in Australia is nothing like the scheme that was lobbied for by DACS’ sister organisation, Viscopy (Australia). The tender for the implementation of the Australian scheme was not awarded to Viscopy (the CEO of Viscopy is Joanna Cave, ex CEO of DACS). The sole official Australian agency appointed by the government for the implementation and collection of the resale royalty is the Copyright Agency Limited (CAL). 

The Australian resale royalty scheme is not in any way a precedent for the adoption of a fully retrospective, compulsory scheme, as envisaged by DACS. The resale royalty differs so much from one country to another as to beg the question: harmonising with what? The UK is being forced to harmonise with a phantom construct. The EU directives are very vague on important detail and the Berne Convention expressly forbids formalities such as compulsory, collective management (rhe Berne Convention Article 5(2) expressly forbids any member country imposing registration on a rights holder as a condition of protecting his copyright. The enjoyment and the exercise of these rights shall not be subject to any formality). Any claim that there is a single, uniform model of artists resale royalty is extremely dishonest. 

The scheme, as it exists in the UK, is already a violation of the fundamental concepts that it claims to honour. The current push to further extend it in the UK continues the violation of both copyright as an individual right of control of usage and of the Berne Convention’s requirement that there be no imposed formalities. The imposition of retrospectivity, under Australia’s constitution, raised fatal difficulties under two sections of the constitution; one of which deals with unjust enrichment and the other with what are effectively privatised, tax collections (such as hypothecated taxes). 

The Australian Act is not retrospective; it does not apply to the first resale of artworks that were purchased prior to the introduction of the scheme (9 June 2010). The scheme is not compulsory for artists. There is a case-by-case freedom (Clauses 22 & 23) to refuse consent to collection and if an artist wishes to, they can make their own arrangements regarding collection. Neither usage of the right nor collective management is compulsory. The foundational ethos of Australia’s polity is democratic, community-minded, pragmatic and liberal. In Australia, retrospective violation of individual property rights and compulsory collective management need much stronger justification than payments of benefits to those artists most favoured by the market. 

Speaking as a successful mid-career artist, retrospectivity, for me, is morally wrong. I have no right to and certainly don’t deserve a royalty on resales of the hundreds of artworks I have sold at good prices to buyers years ago; buyers who were innocent of the knowledge of a future royalty. These buyers gave me bread and wine for my journey. I am grateful for the help and support they gave me. If I had been forced to collect the royalty then I would, as a matter of conscience, have returned all of the money including the collection fee to the person it had been stolen from. 

Resale Royalties are of doubtful net value to artists. In 2004, Viscopy commissioned Australia’s highly respected economic modelling agency, Access Economics, to model the likely impact of the fully retrospective, and very draconian scheme, that Viscopy was lobbying for. In this report, Access Economics warned that the claim of net benefit to artists was: “based upon extremely unrealistic assumptions, in particular the assumption that seller and buyer behaviour would be completely unaffected by the introduction of RRR [ARR]” and that, “Access Economics considers that the results of this analysis are both unhelpful and potentially misleading” (see Access Economics' report). Viscopy suppressed this report. 

The harm caused by such schemes is in the form of what doesn’t happen, and therefore the harm is easily overlooked and underestimated. When an artist, such as myself, sells a painting for $10,000, I pay $4,000 to the costs of sales and marketing (through my representative agent) and retain $6,000 as income. In the case of $10,000 resale, I would receive $500 (according to the Australian scheme with its flat 5% rate). If buyer nervousness about the resale royalty, was to cause me to lose just one $10,000 first sale (on the primary market), I would need the royalty owed on $120,000 of future resales to recoup the lost income of that one primary market sale. These are very unattractive odds. 

The only clear beneficiary of the DACS model of the resale royalty scheme is the management of this piece of transaction fee velocity. The correct term for schemes such as this, and their advocates, is ‘rent-seeking’. The largest single payment will always be to the costs of running the scheme. In the current financial situation, the last thing needed is the imposition of further transaction costs on any market. 

The compulsory scheme advocated by DACS and Viscopy is a monopoly restriction of the terms of trade of artists. It is anti-market, anti-competitive and economically illiterate. It imposes significant opportunity costs upon artists as well as significant and unnecessary transaction costs upon the market in which artists make their living. For many artists, maximising first sale prices is a much better bet than gambling on payments when you are old or dead. 

The only argument for extending the scheme to long-dead artists is to further increase payments to management. The proposed extension of the UK scheme is rent-seeking par excellence. The principles of a free, civil society are far more important than the secondary, instrumentalist goals of efficiency and convenience for managements. 

We should not forgot to mention that the Australian legislation for an artists' resale right is sui generis; it was thought to be too tax-like to be incorporated as an amendment to the Commonwealth Copyright Act, hence recognising the profoundly different definitions and intentions of 'royalty' and 'tax', a point that has escaped the proponents of compulsory, collective management. It is significant again in that it does not conform to the harmonisation argument and being sui generis, does not compromise or set a precedent within the Copyright Act that encourages a diminuition of individual right of control".

This blog welcomes comments from Australia, from Europe and indeed from elsewhere on these observations.

Another M, another copyright reform

Judging by light attire, it appears that New Year
celebrations in Moldova are warm and sunny.  But will
the new Copyright Law be so warmly welcomed?

It's all happening in countries beginning with 'M', it seems. First Macedonia's new copyright law moves into EU-friendly and theatrical-producer-unfriendly mode (see yesterday's 1709 Blog post here). Now it's the turn of Moldova, where copyright owners, users, collecting societies and no doubt infringers will all be sitting up till midnight to greet the Law on Copyright and Related Rights, No. 139/2010 when it enters into force on 1 January 2011. This new statute replaces the Law on Copyright and Related Rights, No. 293-XIII, which has survived for 16 years -- quite a feat in these digital days. According to East Europe IP specialists Petosevic:

"The text of the new law was drafted by the State Agency for Intellectual Property (AGEPI), in cooperation with the European experts, as part of the program Assistance in Implementing the Partnership and Cooperation Agreement (PCA), World Trade Organization (WTO) and EU-Moldova Action Plan in the Context of the European Neighborhood Policy, with the purpose of harmonizing the national legislation with the European and international provisions [This looks a bit like drafting by committee,not usually a good idea -- but any law is only as good as the courts let it be].

The text introduces new provisions concerning the videogram producer rights, the collective administration system, remuneration method and rates, the Mediation and Arbitration Commission organization and responsibilities, and the authorization procedure for institutions that will administer the authors’ patrimonial rights. The Mediation and Arbitration Commission is to be appointed by the AGEPI and will be responsible for examining and settling copyright disputes.

The text of the law defines the videogram as the first imprint of certain images, possibly accompanied by sound, irrespective of whether it represents an audiovisual creation. The physical or legal person whose name appears on a videogram is considered the author thereof until proven otherwise".

Source: Petosevic

Spain rejects 'US influenced' copyright bill

After a narrow vote, a Spanish parliamentary commission has rejected a controversial bill aimed at protecting content owners from internet downloaders. All of the main Spanish parties, except for Prime Minister Jose Luis Rodriguez Zapatero's Socialists rejected the so-called Sinde Bill, named after Culture Minister Angeles Gonzalez-Sinde. The draft legislation would have set up a government commission which would have then provided courts with details of websites offering access to copyright-protected material such as music, movies, video games or software. A judge could then have ordered the closure of offending websites.

The bill sparked furious opposition from internet users who accused the government of violating the freedom of expression but Gonzalez-Sinde said the law only intended to put an end to Spain's position as a 'paradise of piracy.' Techdirt put a different slant on things, firstly praising Spain’s “somewhat more reasonable copyright laws than other parts of the world” highlighting provisions that say that “personal, non-commercial copying is not against the law and also says that third parties should not be liable for copyright infringement done by their users” adding that obviously Hollywood ‘hates’ this and that Spain's recently introduced reform package seemed like a “checklist of the entertainment industry's wishes" and that one of the recent Wikileaks diplomatic cable leaks showed that “US diplomats played a role in pressuring the Spanish government to make these changes, at the behest of movie industry lobbyists”.

http://www.techdirt.com/articles/20101221/15434012367/spanish-legislature-rejects-hollywood-backed-copyright-law-changes.shtml

But is it art?

An interesting decision by the European Commission on the thorny issue of VAT prompted another post Meltwater muse, but this time on art – and whether we might be expecting an ‘Infopaq’ decision on what constitutes an “artistic work” - it might be marvellous darling – but ‘is it art?’

The case involves a light installation at the Hayward Gallery by Dan Flavin and the decision revolves around whether VAT on Flavin’s work was payable at 5% as an artistic sculpture or at full rate (17.5%) as a light fitting. HM Revenue & Customs unsurprisingly asked for VAT at full rate (£36,000) but the VAT & Duties Tribunal rejected the HMRC claim. I can’t find any details of the case on BAILII on the First Tier Tribunal (Tax) pages, but it seems that HMRC were not convinced and asked Brussels for a ruling on the question of whether or not the installation was “art”. The European Commission ruled that the work should be classified for tax purposes as simple light fixtures. Flavin’s work, they said, has "the characteristics of lighting fittings … and is therefore to be classified … as wall lighting fittings" saying “It is not the installation that constitutes a 'work of art' but the result of the operations (the light effect) carried out by it." Although why anyone would pay thousands of pounds for a light fitting doesn’t seemed to have been answered, it also affects the work of Bill Viola, another American whose work is video pieces, filmed in extreme slow motion...

Art Newspaper reports that Pierre Valentin, the lawyer who challenged the original HMRC ruling saying “To suggest, for example, that a work by Dan Flavin is a work of art only when it is switched on, is comical" adding "One is entitled to ask if the Commission has made a judicious use of its powers when overruling these judicial decisions. The reasons given in the regulation in support of the classification are absurd, and the regulation conflicts with the jurisprudence of the European Court of Justice." Is there one rule for tax – and one for copyright?

But what is and isn’t art has long been debated. In 2007 a London art storage company was ordered to pay compensation to a Swiss collector after an Anish Kapoor sculpture ended up in a skip. In 2004 the Tate Gallery was embarrassed when a cleaner innocently threw out an overflowing rubbish bag. It was part of an installation by Gustav Metzger, aptly entitled Recreation of First Public Demonstration of Auto-Destructive Art. Pickled cows, sheep and sharks in a glass case? Step forward Damien Hirst. A Pile of bricks? Equivalent VIII by Carl Andre was bought by Tate in 1972 and featured in special displays in 1974 and 1975. Tracy Emin’s unmade Bed (1999)? Bags of rubbish? Art? Really?

In the UK, Artistic Works must be ‘original’ and a measure of skill, judgment and labour must be present. Section 4 of the Copyright Designs and Patents Act 1988 provide that these works are (1) (irrespective of artistic quality) a graphic work, photograph sculpture, collage; (2) works of architecture and (3) works of artistic craftsmanship not within category (1) or category (2). Cornish details that a simple drawing of a human hand showing where a vote should be cast, the label design for a sweet tin and drawings for patchwork bedspreads have all been accorded copyright protection (Kenrick v Lawrence [1890] 25 QBD 99, Tavener Rutledge v Specters [1959] RPC 355 CA, Vermaat v Boncrest [2001] FSR 44). In Wham-O v Lincoln even a Frisbee was held to be an engraving because of the concentric rings on the plastic body 91985)although the court in Metix v Maughan [1997] FSR 718 found that a sculpture was “a three-dimensional work made by an artist’s hand’.

But what of tax law and art .... of course some of these debates end up in Court and in 1926 a row erupted in the USA over the work of the Romanian sculptor Constantin Brancusi. The American collector Edward Steichen had bought a bronze version of his tall slender Bird In Space, and attempted to import it to the US. Since it had neither head, feet nor feathers, US customs refused to accept it as a zero-rated work of art, and instead classified it as "a manufacture of metal ... held dutiable at 40%". Steichen paid the $600 duty, but he and the sculptor then went to court – with his legal fees paid by the millionaire collector Peggy Guggenheim. Steichen succeeded in having the decision overturned and in 1928 the court ruled that "while some difficulty might be encountered in associating it with a bird, it is nevertheless pleasing to look at and highly ornamental". So free of tax.

I look forward to seeing where Mr Flavin gets with his claim - and comments most welcome.

http://www.guardian.co.uk/artanddesign/2010/dec/20/art-dan-flavin-light-euhttp://www.theartnewspaper.com/articles/Flavin+and+Viola+light+works+ruled+%e2%80%9cnot+art%e2%80%9d/22069

Photo A presumed Banksy of Michael 'Jay-Z' Eavis on a wall in Glastonbury Town. By Ben Challis (c) 2010.

Macedonia gets tough with infringers, collecting societies -- and theatrical producers

Levies are to be paid to artists
for use of their copyright works

The new Law on Copyright and Related Rights for Macedonia -- the former Yugoslavian bit rather than the current Greek bit, that is -- came into force on 8 September, as part of that country's efforts to bring its IP laws in line with the rest of the European Union, which it aspires to join (Macedonia applied in 2004 and became an official candidate in 2005).

The new law, in accordance with the EU IP Enforcement Directive 2004/48, treats copyright infringement as a criminal offence [this might surprise some readers, who only view the Directive as having civil application, but recital 28 of the Preamble states "In addition to the civil and administrative measures, procedures and remedies provided for under this Directive, criminal sanctions also constitute, in appropriate cases, a means of ensuring the enforcement of intellectual property rights"]. For this crime, the law provides a prison sentence of six months to five years for natural persons, and a fine for legal entities. The court is also given the power to order copyright infringers not to continue their business activities.  According to the 1709 Blog's sources,

"The new law is more precise and more structured than the previous one. The new regulations are meant to de-monopolize copyright collectives, which guarantee more effective protection and enforcement of copyrights. So far, in practice, a single copyright collective for authors and composers of musical works had a monopoly in copyright protection [It would be good to know more about this move and to place it in the context of the European Commission's current review of collecting society practices].

The law also abolishes copyright protection for theatrical producers. This change was made in accordance with comparative practices, which showed that these copyrights are considered most abstract and are not recognized in most legal systems [We'd love to know more about this.  Can anyone enlighten us?].

The new copyright law also sets more realistic copyright levies that should be paid to artists for use of their copyright works by third parties, and it clearly lists all possible cases of free use of copyright works".

Source: "New Macedonian Copyright Law Treats Copyright Infringement as Criminal Offense", PETOŠEVIĆ, 29 November 2010