Internet Law HA3
International perspectives on third party liability:
Roadshow Films Pty Ltd v iiNet Limited (No. 3)  FCA 24 (AFACT v iiNet) is a landmark case in third party liability for copyright infringement. The judgement is available both in summary and in full here:
The case is very interesting and the judgement is clear and well written, and you may want to review it if you have an interest in the detection and prosecution of copyright on the internet. For this assignment you need only read paragraphs 3-21 of the summary. (Paragraphs 13, 16 and 17 involve specific legal provisions in Australian copyright law beyond the scope of this course; you may ignore them for this assignment.)
– Review the facts and reasons for judgement in the summary of the judgement and discuss whether the same outcome would have been reached if the case was decided under UK copyright law.
– Also consider whether the facts in the summary judgement would allow the safe harbour provisions found in the Electronic Commerce Directive to protect iiNet (if they were a UK ISP).
– Discuss critically whether it is appropriate to regulate the actions of individuals by holding ISPs liable for authorising their customer’s copyright infringement.
– Are the guidelines in the draft industry code (published by Ofcom) a more or less appropriate regulatory approach?
Copyright and digital media
The Directive of Copyright in the Information Society
Textbook reading: Lloyd, Chapter 18
This week focuses on copyright and digital media, and you may like to begin by briefly reviewing the Week 2 materials on the basics of copyright, paying special attention to the exclusive rights of copyright owners and how they can be infringed. This week’s work builds extensively on the understanding you have gained regarding the exclusive right of a copyright owner to copy the protected work and to issue a copy of the work to the public.
You will now understand from your consideration of the Week 1 topic ‘Notion of information society’ that information technology is causing an ongoing transformation of the global economy. Beyond enabling traditional business to reach new customers and conduct transactions with other business and government bodies in novel and very efficient ways, information technology is an industry itself. The development, supply and maintenance of information technology accounts for an ever-expanding percentage of the Gross Domestic Product (GDP) of all developed nations.
Your textbook gives an example of the software and databases sector’s importance in the EU economy. This example has not been selected at random; you examined how copyright applied to computer software in last week’s work, and this week the final topic is on the protection of databases.
With any reading on technology law (in fact, any law in general), it is important to note the publication date of the references for any facts given. Your textbook gives examples that often span more than a decade, and older examples should be considered in the context of their publication. For example, current estimates of the information technology, communications and content sectors sit at around 8% of the EU GDP.
As you now understand, the exclusive rights granted to the owner of copyright in a work are very much ‘traditional’, and early attempts to apply them to the novel challenges presented by information technology have been unsatisfactory. Partly in response to this, the EU Directive on the Harmonisation of Certain Aspects of Copyright and Related Rights in the Information Society (Information Society Directive) was adopted in 2001, with implementation occurring in the UK in 2003. This directive is considered ‘evolutionary’ rather than ‘revolutionary’, as it does not create any new specific rights in copyright law; rather, it attempts to clarify the application of existing rights to the new technology.
One area where the Information Society Directive is revolutionary is in providing a new exception to the restriction on making copies of copyright work without authorisation from the owner. ‘Caching’ is the making of a temporary reproduction of information as a necessary or convenient step in some other process. The most basic example of this is where your Web browser stores a copy of an image on your local computer, because it anticipates you might want to visit the same Web site again. Rather than downloading the Google logo every time you go to www.google.com, your Web browser simply checks that the logo hasn’t recently changed, then loads it from your computer. This is quicker for you, and saves both you and Google from having to transmit the logo every time you visit their page.
Caching is a ubiquitous solution in information technology. Whenever data may need to be accessed more than once, caching can make things faster and cheaper. Almost every time you visit a site on the Internet you will receive data from ‘transparent’ caches that your computer is not even aware of; they automatically intercept the requests you make and supply the data you asked for if they can.
You will immediately see that, for example, saving Google’s logo on your computer is a breach of their exclusive right to make copies of their logo. You have an express or implied right to see the logo on your computer monitor (by their using it on their Web site and inviting you to use the site), but saving it is another matter. You should carefully consider the material in the textbook regarding the legality of caching and its potential impact on advertising revenue.
Another technological advance dealt with in the Information Society Directive is digital rights management (DRM). DRM is also referred to by its critics as ‘digital restrictions management’; this is actually a more accurate description of what DRM is designed to accomplish. DRM is in essence the use of technology to restrict the use of a digital product of some sort. The textbook details steps taken to protect DRM systems by making certain acts that bypass or remove DRM an offence.
Think back to the Week 1 topic on Internet governance and regulation. DRM is a regulatory force on the Internet; it imposes restrictions on what may be done. It is backed by traditional legislative regulation, but the legislation does not ‘judge’ the DRM. In a trivial example, it is possible to publish a document using a programme that does not allow it to be changed or printed. This is an example of DRM. However, the DRM system cannot know why you intend to change or print the document; this means that you cannot print the material for study, which would be considered fair use in many jurisdictions.
Again, it is important that you understand the legal principles presented in this topic; especially regarding the implementation of the EU Directive on Copyright in the information society in UK domestic law. However, spending time reflecting on the challenges presented by the internet and what methods are best adapted to meet these challenges will improve your understanding of this module as a whole.
Third-party liability for copyright infringement
Textbook reading: Lloyd, Chapter 18
In the topic above, one of the key points was that the increasing technological sophistication of peer-to-peer (P2P) file sharing has made it increasingly difficult to directly identify and target individuals who engage in non-profit copyright infringement. The economics of prosecuting individuals who engage in this behaviour on a small scale is prohibitive. It is important though that you distinguish this ‘private copying for personal use’ from ‘commercial copyright infringement’ (that is, where the person or corporation providing the infringing copies does so for a profit, e.g. the Easy Internet Cafe example in the textbook) or initial ‘leaking’ of copyright materials (that is, the first person to ‘seed’ an infringing copy into a P2P network). Both commercial copyright infringement and being the first provider of a copyright work to the Internet are economically viable to prosecute, as there is a clearly defined person to target and somewhat well-defined economic loss caused by the actions of that person.
Owners of copyright works (or more often an industry body that represents a collection of owners) have increasingly looked to bring proceedings against corporations that may be seen as authorising, enabling, permitting and/or profiting from copyright infringement. These corporations are not themselves the primary parties to the infringing acts; thus this growing area of law is known as ‘third-party liability for copyright infringement’.
The most common target for third-party liability actions in copyright infringement are ISPs. ISPs represent a business that profits from providing the technology that allows P2P file sharing, and as they generally charge more where customers choose faster speeds or greater amounts of downloads, they can even be seen to profit from file sharing. Perhaps most importantly (at least according to those who oppose this sort of action) ISPs are technically in a position to monitor their customer’s Internet usage and disconnect customers who appear to be engaged in copyright infringement. Thus successful legal action against ISPs could result in a financial gain for the litigants that could also serve as an incentive to ISPs to take greater steps to prevent their services from being used for copyright infringement.
You should consider the history of third-party liability as presented in the textbook; it is important that you understand the distinction between ‘facilitating copyright infringement’ and ‘authorisation copyright infringement’. Merely facilitating infringement, that is making the copyright infringement possible in some way, is not sufficient to make a third party liable for that infringement. Authorisation will make the third party liable; for the applicable definition of ‘authorisation of copyright infringement’, consider the provision of the Electronic Commerce Directive as extracted in the textbook. This provision is known as a ‘safe harbour provision’ as it shelters a third party from liability as long as the third party complies with the provision. You may conclude that a third party that complies with the provision has merely ‘facilitated’ the infringement, where one that does not comply could be seen to ‘authorise’ the infringement.
Third-party liability, especially with regard to ‘safe harbour provisions’ is currently undergoing dramatic review in the UK after the controversial passage of the Digital Economy Act in April 2010. The steps that ISPs in the UK must take to qualify for exemptions from third-party liability for their subscriber’s actions will be detailed in a code published by the UK Office of Communications (‘Ofcom’). Due to the emerging nature of this issue, you may wish to consider Ofcom’s statements about this code, such as Annex 5 to their draft ‘Initial Obligations Code’ (
What is a database?
Textbook reading: Lloyd, Chapter 19
You will recall from last week’s work that beyond copyright, trade marks, and patents there are many other intellectual property rights, generally dealing with a more specific or niche subject matter. You now understand that the use of copyright as a legal tool to meet economic goals (that is, to provide an economic incentive to produce and distribute original works) is increasingly difficult in the face of technological revolution. The EU responded to the specific challenges of using copyright to protect databases with the Directive on the Legal Protection of Databases (the Database Directive). This topic and the two following ones examine the implementation and impact of this directive on the protection of databases globally.
While the Database Directive is a response to the economic value of databases in an information society, a database itself is not necessarily stored electronically. Consider the definition of ‘database’ given in the textbook’s extraction of the Copyright and Rights in Databases Regulation 1997. The two elements of the definition that distinguish a mere collection (for example, the contents of your laundry basket) from a database are that the items in the collection are arranged in a systemic or methodical way, and that the items are individually accessible by some means. Note that it is irrelevant for this definition whether the individual items are themselves protected by copyright (or another intellectual property right). A methodical handwritten card index of the location of all of the socks in your house and a searchable visual record of all of the works of Walt Disney are both databases (though one may be of more economic value).
It is important that you see how this definition applies to a paper telephone directory as well as an electronic one. The development of the regulation of databases in jurisdictions worldwide can be examined in light of the seemingly inevitable litigation where an enterprising person takes a paper telephone book published by the telephone company and turns it into an electronic database, which they then sell or charge to access.
You might also consider whether, if special software is needed to access the database, the software itself will be considered part of the database or a separate work protected by its own copyright.
Traditional forms of protection for databases
Textbook reading: Lloyd, Chapter 19
You will recall that for a work to be subject to copyright, it must be ‘original’ in some way. The actual standard of originality may be quite low and vary from jurisdiction to jurisdiction, but there is some element of ‘newness’ required. Where a database is a mere compilation of facts, arranged in an obvious way, it can be difficult to see where this originality is evidenced. You will find examples in the textbook where sufficient originality to support copyright was found, generally under two themes. The first theme is that sufficient thought was applied to the ordering of the collection to be considered ‘creative’ and thus original. The second theme is that sufficient effort and expertise was brought to bear in the selection of which items to include in the collection to make the collection original.
You can see that a telephone book, which lists facts (unoriginal and not capable of copyright) in alphabetical order (a completely obvious functional decision) and includes every record (requiring no expertise or effort in selection), lacks sufficient originality to be protected by copyright.
Courts in the United States responded to this challenge by substituting the expenditure of sufficient effort, the ‘sweat of the brow’, for any requirement of originality. This is obviously an economic policy decision; this provides an economic incentive to people to make these compilations. However, the case of Feist (discussed in detail in the textbook) returned to a requirement of at least some originality; while effort and expense remained relevant, they were no longer sufficient in the absence of originality.
Against this backdrop, where database protection was arguably insufficient to protect the growing database services sector, the EU introduced a database protection right.
New database regime
Textbook reading: Lloyd, Chapter 19
This protection of databases is specific to the EU jurisdictions; in the United States and other countries databases remain protected by copyright law combined with certain other intellectual property rights (for example trade secrets, contractual confidentiality and patents). There are also possibly analogous rights found in copyright law that protects the published edition of a collection of works, whether or not the individual items in the collection are themselves the subject of copyright.
However, regardless of whether the ‘database right’ (that is, the bundle of rights afforded the owners of a database in the same way copyright is a bundle of rights held by the owner of a copyright work) appears similar and analogies can be drawn with other rights, the database right is considered ‘sui generis’, that is a unique right, not merely a specialised form of copyright or another intellectual property right. In fact, it removes copyright protection from some databases which would have previously been so protected; it substitutes its own specific bundle of rights. You should carefully review the actual content of this right as extracted in the textbook, and of course the full text of the rights as implemented in UK law in the Copyright, Designs and Patents Act 1988.
There are perhaps two critical concepts you need to understand regarding the application of this right to litigation in the UK. The first is that, as a database is continually updated, regardless of the actual technological facts, the database is considered a single thing that is protected, not a constant stream of new databases, each slightly different.
The second is that the prohibition against repeated acts of extraction only applies where, taken together, the extraction results in the re-creation of a substantial part of the database. This is perhaps logical considering that ‘insubstantial’ extraction, even when repeated, may not threaten the value of the database to the owner of the database right. It is important that you carefully consider the conclusions regarding the application of this right in the UK presented in the textbook. Lloyd presents significant criticism and commentary while discussing British Horseracing Board Ltd, the Jockey Club and Weatherbys Group Ltd v William Hill Organization Ltd.  2 CMLR 12; this should be balanced against the review outlined in the conclusion to Chapter 19.
Lloyd, I. (2011) Information Technology Law, 6th Ed. Oxford University Press. Chapters 18 and 19.
Chapter 18 reviews specific challenges that drive the development of copyright in the information society, and some legal and technological responses to those challenges.
Chapter 19 explains the development and application of the new legal protection of databases in the EU generally and UK specifically.
The Copyright, Designs and Patents Act 1998
A&M Records v. Napster, 239 F. 3d 1004 (9th Cir. 2001)
MGM Studios v. Grokster, — F.Supp.2d –, 2004 WL 1989129 (9th Cir. 2004)
Universal Music Australia Pty Ltd v Sharman License Holdings Ltd  FCA 1242
British Horseracing Board v William Hill Organisation http://www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWHC/Patents/2001/517.html&query=british+horseracing+board&method=all
Shetland Times v Wills, 1997 SLT 669; 1997 SCLR 160 (Notes)
CBS Songs Ltd v Amstrad Consumer Electronics plc  AC 1013;  2 All ER 484
Sony Music Entertainment (UK) Ltd v Easyinternetcafe Ltd  E.C.D.R. 27  EWHC 62 (Ch) Ch D
Stokes, S. Digital Copyright Law and Practice, (2nd ed, Hart Publishing, 2005)
Pedley, P. Digital Copyright, (2nd ed, Facet Publishing, London 2007)
EU Copyright Directive 2001/29/EC (Directive 2001/29/EC)
UK: Digital Economy Act
US: Digital Millennium Copyright Act 1998
Department for Business Enterprise and Regulatory Reform, ‘Consultation on Legislative Options to Address Illicit Peer-to- Peer (P2P) File-Sharing’ (July 2008); Available here:http://www.berr.gov.uk/files/file47139.pdf
‘What is Peer to Peer — and What Isn’t?’ (http://www.openp2p.com/pub/a/p2p/2000/11/24/shirky1-whatisp2p.html)
This article provides a definition for ‘Peer to Peer’ (p2p) networking and applications for those who are not familiar with the concept.
Vincents, B. ‘When Rights Clash Online: The Tracking of P2P Copyright Infringements Vs. the EC Personal Data Directive’ (2009) International Journal of Law and Information Technology, 16 (3), 270
Henslee, W. ‘Money For Nothing And Music For Free? Why The RIAA Should Continue To Sue Illegal File-Sharers’ 9 J. MARSHALL
REV. INTELL. PROP. L. 1 (2009) (24 pages)
Larusson, H. ‘Uncertainty in the scope of copyright: the case of illegal file-sharing in the UK’ (2009) EIPR, 31(3), 124-134
Kretschmer (Opinion), “Digital Copyright: The End of an Era”  EIPR 333
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