Optical Disc legislation: A new tool under copyright protection to digital piracy

Submitted To:Mr.Sanjit Kumar Chakraborty Assistant Professor of Law KIIT School of Law KIIT University

Submitted By:Sneha Roll No. 983061

SYNOPSIS
As the piracy of optical disc products (ODPs) remains a serious problem in many countries like US or in India The speed and ease with which the duplication of products protected by IPR can occur has created an urgent need for industries and governments alike to address the protection of IPR in order to keep markets open to trade in the affected goods. The levels of piracy in various industries such motion picture, music recordings and computer software exceed 70 per cent. New tools, such as writable compact discs (CDs) and, of course, the Internet have made duplication not only effortless and low-cost, but anonymous as well. The optical disc laws allows government to regulate the manufacturing and replication of optical discs manufactured through the mechanisms of licensing, So in the final paper there will be discussion on what are the key features of optical disc law. One of the dangers in adopting a broad optical disc law is over-regulation. There are several parties in the process of an optical disc product with embodied copyrighted content reaching the consumer. So the discussion will be on the Copyright and optical disc regulation In this project the discussion will be about the legislation which is been made in US to tackle this problem and Indian laws towards the problem of piracy which will include regulatory laws in US and as well as in INDIA. The research methodology will be based basically on the secondary data extracted from internet.

INDEX
Introduction4 Digital Piracy..5 Regulatory Laws in US..7 Regulatory Laws in India..11 Drawback of Optical Disc Law.14 Conclusion.15

INTRODUCTION
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According to the industrial representatives, intellectual property rights (IPR) infringement has reached critical levels in the United States as well as in India. The speed and ease with which the duplication of products protected by IPR can occur has created an urgent need for industries and governments alike to address the protection of IPR. New tools, such as writable compact discs (CDs) and, of course, the Internet have made unauthorized duplication not only effortless and lowcost, but anonymous as well. At the same time, an increasingly digital world has spawned vigorous debate about how to maintain the appropriate incentives afforded to creators of copyright content, given the ease of digital copying, while continuing to provide for certain non-infringing uses of works for socially beneficial purposes. In turn this debate has highlighted international differences in views among industrialized nations and developing countries. After going into the depth it has been set out that IPR protection has become a pressing issue with respect to international trade. The international community agreed on common IPR rules and enforcement programs during the last global round of trade negotiations establishing the World Trade Organization (WTO), and established new copyright norms in the World Intellectual Property Organization (WIPO) Internet treaties,1 which bring copyright into the digital age. However, problems remain in the implementation of these norms. For instance, the United States and other industrialized countries continue to urge many developing countries to live up to their new obligations by implementing the necessary legislation and enforcement mechanisms with respect to protecting intellectual property.

So to overcome this problem a comprehensive and efficient analysis process has to be adopted. In this paper I will be sketching the outcome of legislation used in the US and what can be used in India to counter this problem of piracy which costing a lot of losses to the economy of country.

DIGITAL PIRACY
1

The World Intellectual Property Organization (WIPO) Internet treaties refer to the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT)

Digital technologies have turned into reality the promise of innovative ways of distributing creative works on a global scale. With digital technology, a film lover anywhere in the world can view movies from India, Mexico, any music can be downloaded just at one click These same technologies advances have also given rise to serious form of crime which is known as piracy. Every industry that depends on copyright protection including the movie or the music and software industries is facing themselves losses from optical disc piracy. As piracy hinders the development of these industries in many countries and thus discourages potential investors, innovators and the creation of valuable job. Optical Discs include such as digital versatile disc (DVD) DVD recordable, compact discs (CD) CD ROM, compact discs with recording cores of dye instead of metal, video compact discs and laser discs. Optical discs are inexpensive to manufacture and easy to distribute, two features that make them highly vulnerable to piracy. Unlike traditional piracy involving analog technologies, the quality of a digital pirated disc is high as the original and a production facility can churn out a huge volume of illegal discs in a short time. In 2003, the US motion pictures industry, working with law enforcement agencies to tackle the problem of piracy Manufacturing optical discs is essentially a five-step process that involves premastering, mastering, electroforming or preparing the stompers and injection molding.2

PREMASTERING
In this stage, data to be embodied on a disc is converted by the replicator from a non-image ready format to an image ready format on to a CD-R (one off, gold master) or 8 mm tape. After customer approval, the CD-R goes on to mastering to be cut.

MASTERING

See 2001 IFPI Music Piracy Report at 3, www.ifpi.org/library/piracy2001.pdfnews, (June 2001)

A glass substrate with dried photo resist is prepared which is called the glass master. The glass master is then placed into a laser beam recorder (LBR) that is connected to a computer. The data image source or CD-R or 8 mm is then loaded into the computer and the data image is read from the computer and recorded to the photo resist on the glass master using the laser. The metalized glass master is then sent onto electroforming or preparing the stomper

ELECTROFORMING OR PREPARING THE STOMPER

The metalized glass master is placed into a tank of nickel sulphamate solution from which a layer of nickel grown onto the glass stomper is removed and called the "father". The "father" is a reverse image of the data and can be used to stamp discs. However, any damage to the "father" would involve going through the entire process again, therefore the "father" is then put through the same process of electroforming and a new nickel layer is grown called the "mother". From the "mother", again through electroforming another nickel layer called the "stamper" is prepared. The stamper like the "father" is a reverse image of the data and is used to create the discs.

INJECTION MOLDING
The stamper after punching the centre hole and polishing is placed into an injection molding machine, which is connected to a continuous supply of polycarbonate. Polycarbonate is the plastic material used to make compact discs. Through a process of heating, compression and cooling the discs are prepared with the stamping of the data on it. After stamping, which takes about 5-10 seconds, the discs are metalized, coated and dried, after which they proceed for printing and distribution. Optical disc piracy is unusually challenging due to the nature of the technology and the efficiency with which it can be replicated. One of the key reasons for the high frequency and volume of piracy is that the manufacturing capacity exceeds legitimate demand. A large portion of the manufacturing capacity is expended in pirated production. As optical disc piracy became commonplace in the 1990s, markets and street spaces emerged as semi-permanent points of sale. Places like National Market and SP Road have achieved an almost iconic status as the pirate centers of Bangalore, home to wholesalers of an assortment of
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counterfeit and pirated products: DVDs and DVD players, Chinese-made mobile phones and PDAs, MP3 players and jukeboxes, fake Ray-Bans, and gaming consoles. Even VHS players can still be found, servicing the legacy collections of video cassettes built up in the 1990s and early 2000s.

REGULATORY LAWS IN US

IPR industries are among the fastest growing in the world and are particularly important to the strength of the U.S They are characterized by above average growth in employment and higher than average wages and salaries. A study completed in 2002 showed that the share of U.S. gross domestic product (GDP) accounted for by U.S. copyright-based industries, including all types of computer software, printed materials, movies, home videos, CDs, audiocassettes, and other media products, rose during 1977-2001 at an annual rate of growth of 7 percent, compared to 3 percent for the remainder of the U.S. economy3 In 2001, those industries accounted for $531.1 billion in value-added, or almost 5 percent of GDP. Meanwhile, domestic employment in copyright-based industries more than doubled from 1977 to 2001 to 4.7 million workers, representing an average annual rate of employment growth of 5 percent, or almost three times the rate of the U.S. economy as a whole. Because of the importance of intellectual property industries to US and due to foreign IPR infringement are alarming to U.S. industry and government officials. In a February 15, 2002, report to the United States Trade Representative (USTR), the International Intellectual Property Alliance (IIPA) estimated losses due to copyright piracy in 51 selected countries for 5 copyright-based industries to be almost $8.4 billion (table1) 4 The Business Software Alliance (BSA)
3

Stephen Siwek, Copyright Industries in the U.S. Economy: The 2000 Report (Washington, DC: Economists Inc., 2000), p. 1. 4 The IIPA estimates that total global losses due to piracy at $20-22 billion annually, since losses in countries such as the United States and EU member countries are not included in the 51 selected countries for which estimates were made above. For further information on how these estimates were made, see International Intellectual Property Alliance (IIPA), 2002 Special 301 Report on Global Copyright Protection and Enforcement, Feb. 15, 2002, appendix A and pp. 1-5.

reports that losses due to Internet piracy have been rising rapidly in recent years, and are believed to contribute to an increasing percentage of overall global piracy losses.5 BSA has pointed out that over one-third of all personal computer software was pirated in 1999, and it estimates that by 2008 software piracy will cost the U.S. economy 175,000 jobs, $4.5 billion in wages, and nearly $1 billion in tax revenues.6 Table 1 Estimated 2001 U.S. sales losses due to copyright piracy in 51 selected countries U.S. Industry Estimated Losses (Millions of dollars) Motion Pictures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,288.0 Sound Recordings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,034.7 Business Software Applications . . . . . . . . . . . . . . . . . . . . . . 2,653.5 Entertainment Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,761.1 Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 636.4 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,379.7 -Source: International Intellectual Property Alliance, 2002. As to tackle this major problem U.S. industry and government have used various legislative policy approaches to combat IPR infringement as it became more prevalent in domestic and overseas markets. Like some music labels have incorporated strict anti-copying technology into new releases from popular artists.7 These technologies employ signatures (a technique similar to fingerprinting) that prevent the music from being read by a computer, thus eliminating the risk of ripping8 and illegal distribution.9 While similar technologies have been around for some time, their use has not been widespread due to the reluctance of music labels to alienate their consumers,
5

BSA, Enhancing Trade Opportunities, Trade Policy News, 2000-2002, p. 1, found at Internet address http://www.bsa.org 6 BSA, Software Theft - Stopping the Piracy of Intellectual Property, 2000-2002, Copyright Policy News, p. 1, found at Internet address http://www.bsa.org. 7 Sony Trials Anti-piracy CD, BBC News, Sept. 24, 2001, found at Internet address http://www.news.bbc.co.uk, retrieved May 23, 2002; and Eminem CD May Get Protection, Reuters, May 2, 2002, found at Internet address http://www.news.zdnet.co.uk, retrieved May 23, 2002

who would lose flexibility in where the discs can be played.10 For example, signature technologies can prevent some portable devices, PCs, and car stereos from playing the discs, limiting playback to standard CD players Digital watermarks and fingerprints can also be used to monitor the use of content, rather than prevent its usage outright. With monitoring applications, companies can track the actions of users to see where their content is going on the Internet. Rather than try to prevent the content from being stolen, the company tracks the entity that has illegally distributed copyrighted material, and can then send a takedown notice to the owner of the computer server that is hosting the data11 As these methods are used to tackle the problem of piracy but after all methods and technologies the problem remind the same because of which optical disc legislation has been brought into effect. The optical disc law allows Governments to regulate the manufacturing and replication of optical discs manufactured through the mechanisms of licensing. An optical disc law includes four key features
(1) REGISTRATIONS AND LICENCES;

The backbone of an optical disc regulation is the registration and licensing of optical disc manufacturing. As discussed above, optical disc manufacturing involves preparing the master, stamper and then replication. Therefore a comprehensive licensing scheme would involve authorizations for (i) the manufacturing process (including mastering, preparing stampers and replication); (ii) the manufacturing premises or plant; and (iii) importing or exporting of mastering or replication equipment, optical disc polyurethane and other raw material used to manufacture optical discs. The objective of a licensing scheme is to enable the administration to exercise control over pirate optical disc manufacturers. A licence would not be granted to persons or entities who have been held liable for copyright infringement or liable for actions against the interests of rights owners. In addition to pre-licensing checks, an optical disc law would allow the administration to cancel,
8

Ripping is defined as recording a song from a CD to a computer, often to modify its format and/or to record the song onto a blank CD. See What is Ripping? Sony Corporation, found at Internet address http://sony.storagesupport.com, retrieved May 31, 2002. 9 How it Works, key2Audio, found at Internet address http://www.key2audio.com, 10 See Eminem CD May Get Protection. 11 Brad King, Pirates Beware: Were Watching, Wired News, Jan. 3, 2001, found at Internet address http://www.wired.com

suspend, revoke and refuse renewal of licences to persons who subsequently engage in copyright infringement or other violations (2) IDENTIFICATION CODING; Coding Two forms of coding typically contained in an optical disc law are: (i) the manufacturer's code each manufacturing line (CD, DVD etc.) marked with a separate code; and (ii) the registered equipment code. Identification codes are normally granted by the administration, exclusive to each manufacturer and exclusive to each manufacturing line. (3) CRIMINAL REMEDIES; The effectiveness of anti-piracy laws depends more in being a deterrent than punitive. Since the incidence of optical disc piracy is large, criminal sanctions under optical disc laws include heavy fines and imprisonment. Three to four tiers of penalties are provided, each tier of penalties dependent on the magnitude of the offence. The first tier attracts the maximum penalties. Offences under this class include the committing of an act for which a licence is mandatory and the false or forged coding of optical discs or optical disc equipment12 Under the second tier acts such as the failure to maintain records of manufactured optical discs and wilful obstruction during enforcement, constitute offences. Wilful obstruction during enforcement attracts one-year imprisonment and level four fine in Hong Kong13 (4) ENFORCEMENT. Optical disc laws contain provisions of inspection, seizure, closure, forfeiture, and removal, disposal of any unlicensed equipment, raw material or optical discs. However, for searches and seizures to be constitutionally valid, they are normally conducted only on obtaining a warrant from a court. However, in case of delays in obtaining a search warrant, a search can be conducted without a warrant in order to avoid destruction of evidence.14 Provisions for making forcible entry are provided for in optical disc laws.15 Often enforcement officials encounter strong and

12 13 14 15

Prevention of Copyright Piracy Ordinance, 1998 Ibid Ibid

ibid

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sometimes armed resistance by pirates during raids. Therefore, forcible entry with police assistance sometimes becomes crucial.

REGULATORY LAWS IN INDIA

Copyright in India is governed by The Copyright Act, 1957 as amended last in 1999, and related laws and regulations.16 Amendments to the Copyright Act have been considered for many years (the previous known draft dated from 2005). On April 19, 2010, the Copyright Bill 2010 was introduced into the Indian Parliament and referred to a Standing Parliamentary Committee which requested comments from stakeholders and held extensive hearings through the summer and fall of 2010. The Bill makes few changes to the 2005 draft but adds a number of new provisions, some of
16

According to the explanation of the Indian Government in its 2010 Special 301 Submission, Chapter XIII of the Indian Copyright Act, 1957 provides for penalties for offences committed under the Copyright Act and empowers the police to take necessary action. These are the following: Imprisonment for a term of six months to three years and a fine of Rs. 50,000 (US$1,096) to Rs. 200,000 (US$4,385) for the offence of infringement of copyright or other rights under the Act. (section 63). Imprisonment for a term of on year to three years and with fine a of Rs. 100,000 (US$2,192) to Rs. 200,000 (US$4,385) on second and subsequent convictions. (section 63 A). Imprisonment for a term of 7 days to three years and with fine of Rs. 50,000 (US$1,096) to Rs. 200,000 (US$4,385) for knowingly using an infringing copy of the computer programme (section 63 B). Seizure of infringing copies (Section 64). Imprisonment for a term up to 2 years and with fine for possession of plates for purpose of making infringing copies (section 65). Disposal of infringing copies or plates used for making infringing copies (section 66). Imprisonment for a term up to one year or fine or both for making false entries in the register (section 67). Imprisonment for a term up to one year or fine or both for making false statements for the purpose of deceiving or influencing any authority or officer (section 68). Imprisonment for a term up to three years and with fine for publication of a sound recording or video film in contravention of provisions of Section 52A (section 68 A). 11

which are troubling to copyright owners. The Bill does not make amendments that adequately implement the WCT and WPPT, nor does it properly address dealing with online infringement/Internet piracy or contain adequate measures promoting ISP responsibility and fostering cooperation with right holders to combat such infringements.17 IIPA submitted extensive comments to the Bill to the Standing Parliamentary Committee overseeing the MHRD on May 31, 2010 as did IIPA members, MPA and BSA, and many local stakeholders. IIPA members and local stakeholders also presented lists of deficiencies in the Bill in the hearings before the Standing Committee. On November 25, 2010, the Standing Committee issued a detailed report of its views of the Bill 34 and agreed with a number of positions taken by right holders, but failed to recommend changes to remedy key deficiencies outlined in IIPAs and IIPA members submissions. The Committees report is not binding on the Copyright Office in the MHRD and it is as yet unclear if even the positive changes recommended by the Committee will be accepted. It is expected that the Amendments may be re-introduced in Parliament during the spring budget session. IIPA urges the U.S. government to engage the Indian authorities on an expedited basis to correct these deficiencies, many of which could result in violation of Indias international obligations. As the bill suggests certain measures but it also have some loopholes in it like The Bill does not deal adequately with the issue of online infringement and the role to be played by ISPs over infringements of third parties.18 Clarity on such issues is indispensable to the fight against online piracy. IIPA urges that detailed provisions which provide expeditious remedies to removing
17

The Indian Government, not surprisingly, has taken a more generous view of the amendments, stating, The Department of Higher Education has moved another proposal to amend the Copyright Act, 1957 in order to address the newer issues that have been seen in the context of the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT), which were negotiated in 1996, (collectively called the Internet Treaties). The proposed amendments would address the challenges posed to the protection of Copyrights and Related Rights by digital technology, particularly with regard to the dissemination of protected material over digital networks such as the Internet, the protection for the authors of literary and artistic works, such as writings, computer programs; original databases; musical works; audiovisual works; works of fine art and photographs.
18

The Bill deals in a very rudimentary way with this issue, at least in part in Section 52(1)(c), but that treatment is far too terse and oversimplified as to be appropriate for this complex area. IIPA notes, for example, that obtaining a court order within 14 days is required to mandate the taking down of infringing material for which the right holder has provided a takedown notice. The Committee concluded that the 14 day period be reviewed. 12

infringing material be adopted, including provisions encouraging ISPs to cooperate with right holders in dealing with online infringements. The industries note that based on their comments, the Parliamentary Committee urged that the Bill be brought in tune with the Information Technology Act, 2000, which provides for power to intercept, monitor or decrypt information through any computer source on certain grounds mentioned therein. The IT Act provides that local ISPs bear responsibility for infringements on their networks after they have been put on notice and have knowledge of infringement. The Committee recommended that a designated authority for managing copyright issues and piracy should be created with sufficient policing powers. Industry is thus awaiting the Ministry of Information, Communications, and Technology issuance of comments and explanatory notes that accompany IT Act Sec 79. These will have significant bearing on the interpretation of service provider liability, and will hopefully inform the direction of the Committee with the Bill on this issue of critical importance to all the content industries. IIPA also calls upon the Indian Government to: 1) deal with damaging pre-release piracy, with provisions comparable to those adopted in the U.S. (the Family Entertainment and Copyright Act of 2005, containing effective civil and criminal provisions to deter online pre-release piracy), 2) allow restitution in criminal cases, and 3) adopt statutory damages, since proving actual damages, e.g., in end-user software piracy cases, can be difficult, and order to expedite the slow civil judicial processes and provide much-needed deterrence to a civil regime which relies almost completely on interim injunctions and Anton Pillar to deal with piracy. Because of all these bills and suggestions it was suggested that India should adopt an effective optical disc law. FICCI has been engaged in the drafting process and IIPA has weighed in. Adopting an effective OD law has long been delayed by the controversy over coverage of blank discs.

DRAWBACK OF OPTICAL DISC LAW

One of the dangers in adopting a broad optical disc law is "over-regulation". There are several parties involved in the process of an optical disc product with embodied copyrighted content reaching the consumer. They include
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 Copyright owner (content or data) Manufacturer (mastering, preparing stamper, replication) Distributors (finished products) Retailers (finished products) Consumers

An optical disc law aims at regulating only the manufacturing level in the chain (viz. manufacturers and suppliers of raw materials). Over-regulation could lead to regulating even the distribution channels of data embodied optical discs, the dangers of which would be several. For example (a) slowing or inhibiting trade, (b) administratively burdensome as the number of parties increase lower in the chain, and (c) overlap with copyright protection that prevents unauthorized distribution of copyrighted content. The optical disc bill in the Philippines borders on these precise dangers discussed above.19 The Entertainment Media Anti-Piracy Bill, under consideration in the Philippines, contemplates regulating all forms of entertainment media including analog technology (video, audio etc.).20 Secondly, it proposes regulation of not just the manufacturing of entertainment media but also distribution, copying, sale and lease. Foreseeable dangers are inhibiting free trade and an overlap with copyright protections. Optical disc regulation aims at controlling manufacturing of the unlicensed optical discs and not replacing the protections offered under the copyright or other intellectual property protections. As seen from the chain of parties, an optical disc law would regulate manufacturing of optical discs themselves, while copyright laws would control reproduction, distribution and communication of the content or intellectual property embodied in the optical discs. Overregulation would in itself be a violation of the member country obligations under the Agreement on Trade Related Aspects of Intellectual Property (TRIPS). Section 1 Article 41(1) of TRIPS sets out the general obligations of member countries and specifically prevents barriers to legitimate trade:

19 20

Entertainment Media Anti-Piracy Bill, 2000 Ibid

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Members shall ensure that enforcement procedures as specified in this part are available under their law so as to permit effective action against any act of infringement of intellectual property rights covered by this Agreement. ... These procedures shall be applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse. (emphasis added) Many high piracy countries, particularly in Asia, have taken up as a priority, enactment of optical disc laws as part of their obligations under TRIPS. The precise relationship between adopting an optical disc law and World Trade Organization (WTO) obligations is unclear. However, an indirect obligation arises under enforcement provisions of TRIPS.

CONCLUSION
As seen above, the optical disc regulatory laws are only just the beginning. While the actual effectiveness of this new piece of regulation is yet to be fully seen, the optical media piracy problem has gained full momentum. No one law can address the vast levels of optical disc piracy around the world. It is the synchronized enforcement of the various anti-piracy laws that will together bring about a significant impact. The WTO obligations of member countries do not extend only to adopting new laws but more in their implementation and tackling the problem at hand.

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