COPYRIGHT: ONLINE AND ON TRIAL?

INTRODUCTION
“The Internet is global. As such, it knows no geographic boundaries. Its basic lack of locality suggests the need
for a formulation of new legal rules to address the absence of congruence between cyberspace and the
boundaries and laws of any given jurisdiction.”
Those are the words of the Australian Supreme Court in their December 2002 decision in the defamation case of
Dow Jones & Company Inc v Gutnick [2002] HCA.
Writing about copyright today is like reporting on a soccer game that is being played as the sport‟s rule book is
being re-written. Some of the players are trying to play by the rules but are not sure what they are; others have
decided that there are no rules or, if there are any, that they make no sense and are therefore playing a „free for
all‟. Meanwhile, the referee is tearing his hair out! But despite these uncertainties, the game has to go on.
There is no doubt that the Internet and the digital world are truly transformative forces. In response, publishers,
individually and collectively, are developing new transactional models.
But even in the midst of radical change, most traditional principles still apply. And as new media divisions are re-
absorbed into the business mainstream, content is increasingly moving seamlessly between the online and offline
worlds.
The trick is in understanding the nature of these changes in the law, their business impact and developing sound
business processes to exploit the opportunities they offer and to manage the legal risks that they raise. Sounds
familiar? It is. It is good business practice and one that your legal advisors are likely to endorse.
„The laws, they are a changing‟
There is no question that substantial changes are being made to copyright laws at international and national level
to adapt them to the digital environment. These include the two WIPO (World Intellectual Copyright
Organisation) Treaties of 1996, seven harmonising Directives in the copyright field in the European Union since
1991 and the Digital Millennium Copyright Act of 1998 in the US.
WIPO has also recently published a report, “Intellectual Property on the Internet: A Survey of Issues”
(http://ecommerce.wipo.int/survey) that addresses the far-reaching impact that digital technologies – the
Internet in particular – have had on intellectual property (IP) and the international IP system. The Report goes
beyond copyright to cover patents, trade marks, domain names and other IP-related issues.
But changing the law is a slow and cumbersome process. Take Europe as an example. The EU‟s Copyright
Directive of May 2001 (2002/29/EC) is the latest piece of the European legislative puzzle that began with the
European Commission‟s Green Paper „on copyright and the challenge of technolology – copyright issues requiring
immediate action‟ published in June 1988! The Copyright Directive was due to be implemented this month but
virtually every member state has missed the deadline.
Even if all the legislative changes in the pipeline were implemented, we all know that we would still not be living
in a simple or perfect world. It takes time to apply those rules to new situations. For example, there are already a
range of conflicting decisions in Europe and US as regards deeplinking and infringement of copyright and
database right.
In many cases, changes in the law merely create a framework, leaving it rights owners and users to re-draw the
boundaries between exclusive rights and exceptions. For example, notions of „fair use‟ and „fair dealing‟ are being
re-examined as activities traditionally carried on under the guise of exceptions, such as inter-library lending and
document delivery, move into the arena of commercial exploitation.
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But, slow and cumbersome as it may be, it is in the long term interest of all participants in the creative industries
that this process of approximation of national copyright and other laws continues to take place. Only through this
process can we continue to reduce uncertainty in the scope and application of the law, both of which continue to
gnaw at the fabric of copyright.
The challenge of conflicting jurisdictions
Although international legal treaties such as the WIPO Copyright Treaty of 1996 are driving us towards closer
national laws, there remain significant differences between national laws and the remedies they offer.
As the judges observed in the Gutnick case, digital content‟s ability to move seamlessly around the globe seems
to conflict with national laws and jurisdictions. This is not a new issue – conflicts of laws, and the rules to resolve
them, have been in existence for some time. There will never be a „one size fits all‟ solution.
In part, this is because different laws address different issues or wrongs. Defamation concerns injury to
reputation. This will remain a powerful force in support of a claimant‟s right to bring proceedings before the
courts of the country in which that reputation resides, as an alternative to the country from which the publisher
operates.
Furthermore, whilst publishers might prefer a „country of origin‟ doctrine to apply in the field of defamation, there
are other areas, particularly copyright infringement, where they will want to retain the ability to take legal
proceedings in the jurisdiction where the harm occurs i.e. the country in which the act of infringement takes
place.
One of the judges observed as follows: “The notion that those who publish defamatory material on the Internet
are answerable before the courts of any nation where the damage to reputation has occurred, such as in the
jurisdiction where the complaining party resides, presents difficulties: technological, legal and practical. It is true
that the law of Australia provides protections against some of those difficulties which, in appropriate cases, will
obviate or diminish the inconvenience of distant liability. Moreover, the spectre of "global" liability should not be
exaggerated. Apart from anything else, the costs and practicalities of bringing proceedings against a foreign
publisher will usually be a sufficient impediment to discourage even the most intrepid of litigants. Further, in
many cases of this kind, where the publisher is said to have no presence or assets in the jurisdiction, it may
choose simply to ignore the proceedings. It may save its contest to the courts of its own jurisdiction until an
attempt is later made to enforce there the judgment obtained in the foreign trial. It may do this especially if that
judgment was secured by the application of laws, the enforcement of which would be regarded as
unconstitutional or otherwise offensive to a different legal culture.”
Another judge put it even more succinctly: “If a publisher publishes in a multiplicity of jurisdictions it should
understand, and must accept, that it runs the risk of liability in those jurisdictions in which the publication is not
lawful and it inflicts damage.”
This issue of jurisdiction is a complex and intractable issue. But, it is not a „show stopper‟ – publishers will
continue to manage this risk as they have done in the past.
The challenge of piracy and the „Dark Net‟
But there is a challenge raised by the Internet that goes beyond the process of updating copyright laws and
understanding and applying the new rules to the Internet, the web and mobile communications services.
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In its most obvious form, this is the challenge represented by digital piracy. As we will note later on, the changes
to copyright law provide rights owners with clearly defined legal rights to combat piracy, although legal remedies
are one thing and successful enforcement is another.
But there is a more difficult challenge. The term „Dark Net‟ was recently coined to describe the alternative,
„copyright-free‟ world of „peer to peer‟ networks and other means by which copyright material may circulate
outside the confines of copyright. Whilst this can be characterized as piracy, the fundamental challenge is that, in
many case, the „pirates‟ are also the potential customers for paid for online services. Whilst this may more
applicable to the audio-visual industries, e-books and other consumer-orientated material in the publishing world
also come into this category.
A necessary response to this challenge is the enforcement of legal rights. Most notably, we have seen the
consequences of the legal action against Napster and, more recently, in the case involving the file-swapping
service Madster.
But, more fundamentally, the response is a business-driven one. This is the battle for users‟ hearts and minds.
This battle is being fought on a number of fronts, comprising education, public relations and the creation of new
business models.
The battle for hearts and minds
At the European Commission‟s bi-annual review of copyright in Santiago de Compostella this year, John Mogg of
the European Commission observed that copyright is on the defensive. The impact of competition law and new
media technology is raising questions about copyright‟s role in the digital age.
Geoffrey Yu, Assistant Director General in charge of Copyright, WIPO, argued forcefully that to counter these
threats, there is a need to raise copyright awareness and education to supplement enforcement measures. “To
win the battle for users‟ hearts and minds, rights owners need to change the copyright vocabulary from insisting
on rights to talking about copyright as source of cultural diversity, cultural enrichment, leisure and
entertainment.” He said that “We won‟t win the battle unless we find new ways of changing consumers‟
behaviours and attitudes…Business needs to find appropriate business models and work with partners.”
Put another way, it‟s all about converting pirates into paying customers.
The answer to the machine is the machine?
In the early discussions about the Copyright Directive, Charles Clarke famously coined this phrase. The WIPO
Copyright Treaty 1996, and national copyright laws, contain important legal sanctions that give legal teeth to
technological measures that may be used as part of digital rights management. But just as there is no bullet
proof technology that can fully preventunauthorized access or copying of copyright materials, so the enforcement
of copyright law will not provide a complete solution to the problem of digital piracy.
Where to from here?
The process of updating copyright is painfully slow. Even worse, we are still left with a patchwork of national
laws which, although moving to closer alignment, still have significant differences, leaving publishers exposed to
a range of jurisdictions and national variations. That will remain a fact of life for the foreseeable future.
But it also easy to downplay what is in the process of being achieved. Whilst there are still many unresolved legal
issues, it is probably fair to say that the key elements of the copyright framework are in place. The real challenge
lies in the re-shaping of business models and consumer attitudes as well as continuing the fight against piracy.
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What is certainly clear is that the continuing growth of online distribution places a greater emphasis on rights
because rights are the unit of trade in the online environment.
So a virtual stock take of the available rights is an important part of publishers‟ content strategies. In the
following parts of this Report, we look in greater detail at the developments that have been mentioned in this
introduction and point out their significance and implications in practice.
THE THREE PILLARS OF COPYRIGHT
In order to put these changes in copyright laws in context, and to provide a framework to assess their relative
importance in practice, it is helpful to group them into the „three pillars of copyright‟. These are:
 Rights and exceptions – the core of national copyright laws;
 Management of rights – from „one to one‟ licensing, collective licensing and digital rights
management; and
 Enforcement and Remedies – covering both criminal and civil sanctions.
The changes taking place within each of these „pillars‟ has implications for publishers‟ content strategies.
The first pillar of copyright: rights and exceptions
The majority of changes that have taken place in copyright laws at both international and national levels have
concerned the substantive rights of copyright and the exceptions to them. In other words, changes that concern
the scope of these rights and exceptions, rather than the management and exploitation of those rights. Most, if
not all of those changes, have been in response to technological change.
In looking at these changes, it is also important to bear in mind that they are a cocktail of newly-created and
updated rights and the application of existing laws to new modes of exploitation – a heady mix!
It is probably true to say that the significance of these changes is in how they shape the overall environment in
which publishers operate, including the attitudes of their customers and users, rather than their direct impact on
day to day operational activities.
But as publishers and content owners seek to transform free into paid-for services online, attitudes and
expectations play a key role in that process of change.
New and updated rightsAt an international level, the main driver was the WIPO Copyright Treaty of 1996
(www.wipo.int/eng/diplconf) that updated the Berne Copyright Convention.
The core of the copyright digital agenda is found in that Treaty. This also the legal source of parts of the US‟
Digital Millennium Copyright Act of 1998 (“DMCA”) as well as the EU Copyright Directive of 2001. Indeed, the
DMCA and the EU Copyright Directive are the legal instruments by which the US and EU member states
respectively are able to ratify the WIPO Treaty.
The Treaty confirmed copyright protection for computer programs and databases. It provides a technology-
neutral definition of the right of communication to the public to cover „one to many‟ broadcasts of copyright
works as well as the „making available‟ of works as part of an on-demand service on a „one to one‟ basis.
„One to many‟ is defined in the WIPO Treaty as the exclusive right of authors of literary and artistic works “…of
authorizing any communication to the public of their works, by wire or wireless means ”. „One to one‟, the so-
called „on demand‟ right, is included as a subset of the communication to the public right: “….including the
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making available to the public of their works in such a way that members of the public may access these works
from a place and at a time individually chosen by them.”
The Treaty also requires contracting parties to provide legal sanctions to protect anti-circumvention technological
measures and rights management information.
However, it ducked the challenge of re-defining the reproduction right so that it unequivocably covers electronic
copies. This is therefore a matter for national copyright laws. Nonetheless, there is little doubt that reproduction
covers all types and forms of copies.
As noted, the US was the first past the post in making the necessary changes to its copyright laws through the
DMCA to enable it to ratify the WIPO Copyright Treaty.
In Europe, legislators are still in the process of implementation. For a more detailed overview of the Copyright
Directive, the reader is referred to the article published in the most recent edition of Interactive Media
International.
Database right – an additional layer of protection for compilations
In addition to copyright protection, the Directive for the Legal Protection of Databases (Directive 96/9/EC of 11
March 1996 introduced the valuable „sui generis‟ protection for substantial investment in made by database
producers in selecting, obtaining or verifying database content
(http://www.europa.eu.int/comm/internal_market/en/intprop/index.htm). A WIPO Treaty to provide protection
along similar principles at an international level is under consideration.
Fair dealing, fair use and other exceptions
As regards exceptions to copyright, the WIPO Treaty merely laid down the ground rules by acknowledging that
exceptions will be carried into the digital environment, but that they are subject to the traditional limitations.
Article 10 of the Treaty re-states the „three step test‟ to which all exceptions are subject: “ Contracting Parties
shall, when applying the Berne Convention, confine any limitations of or exceptions to rights provided for therein
to certain special cases that do not conflict with a normal exploitation of the work and do not unreasonably
prejudice the legitimate interests of the author.”
This test is an important qualifier to all individual exceptions. In Europe, rightsholders are seeking to have the
language of the „three step test‟ expressly incorporated into national copyright law aspart of the implementation
of the EU Copyright Directive. And the issue is important for publishers because the test defines the boundaries
within which exceptions are built.
Exceptions and non-commercial use
In carrying over traditional exceptions into the digital environment, the EU Copyright Directive has applied the
„three step test‟ in a number of important ways. These are particularly significant for publishers dealing with the
library, higher education and consumer markets. The key issue is where they allow the line to be drawn between
(permitted) non-commercial use and (prohibited) commercial exploitation that conflicts with rightsholders‟ rights.
Amongst others, the Directive allows member states to introduce the following exceptions:
 to the reproduction right for private copying and for specific acts of copying by libraries, educational
establishments or museums;
 to both the reproduction right and the „making available right‟ for teaching or scientific research.
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The precise wording of these exceptions deserves close scrutiny. The „private copying‟ exception has a number of
elements:
 it covers reproductions on any medium;
 the copy must be made by an individual i.e. corporate entities cannot rely on the exception);
 the copy must be made for private use “..and for ends that are neither directly or indirectly commercial”;
 it is a condition that rightholders receive “fair compensation”; in arriving at the amount of fair
compensation, a relevant factor is whether the rightholder uses technical measures to control access or
use of the work.
The teaching and scientific research exception is also carefully crafted. It covers:
 “use for the sole purpose of illustration for teaching or scientific research”;
 attribution to the author is required unless “this turns out to be impossible”
 use for this sole purpose is allowed “…to the extent justified by the non-commercial purpose to be
achieved.”
The exception for libraries, educational establishments or museums applies to “ specific acts of reproductions
made by publicly accessible libraries, educational establishments or museums, or by archives, which are not for
direct or indirect economic or commercial advantage.”
What are the implications for publishers? First, the exception for libraries etc. makes clear that it nnot be used as
a cloak for activities that have a commercial character. As an example, in its proposed implementation of the EU
Copyright Directive, the UK proposes to add language to the existing exceptions for libraries that expressly refers
to a “non-commercial purpose”. However, rightsholders argue that this language is not consistent with the
broader language of the Directive.
Second, reliance by educational establishments on the teaching or research exception is similarly circumscribed in
making copies, or making works available online, that cross the boundary between teaching or research into the
territory of commercial use. If that activity competes with, or substitutes for, a publisher‟s commercial service,
the institution will be at risk.
Third, there is considerable flexibility as regards private copying. Private copying, in the sense of copies made for
private study, will continue to be allowed subject to the limitations described above. As regards private copying in
the sense of making copies of literary and audio-visual material from medium to another, in exchange for levies,
the position varies. Some member states permit private copying in the analogue environment in exchange for
levies and will carry this forward into the digital world.. Others, such as the UK, have not incorporated such an
exception and do not intend to do so.
The debate over levies versus licensed private copying, reinforced by technical measures, will undoubtedly
continue. For those dealing with the consumer market, and not the contract-based educational and institutional
markets, this debate has real commercial significance.
Exceptions – the position of ISP‟s
For publishers, the issue is achieving a procedure that works for rightsholders and ISP‟s in respect of copyright
infringing material. The US is ahead of Europe in this area.
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In Europe and the US, new legislation has addressed the problems faced by Internet Service Providers. In
Europe, a combination of the Copyright Directive and the E-Commerce Directive (Directive 2000/31/EC) provides
protection to ISP‟s against liability for copyright infringement arising from copies generated from the transmission
and caching of copyright materials as part of their communication services. Furthermore, liability for hosting
infringing material only arises if the IPS has knowledge of the infringing activity or fails to respond expeditiously
when put on notice. The exemptions in the E-Commerce Directive in respect of transmission, caching and hosting
apply to all forms of liability and not merely to copyright.
In the US, the DCMA deals in a similar manner but purely with copyright infringing material. However, there is a
significant difference in that the DCMA, unlike the Copyright Directive, details the key elements of the „notice and
take down‟ procedure to be followed when a rights owner alleges that the ISP is hosting infringing material. This
includes the required elements of the notice, the ability of alleged infringer to serve a counter-notice disputing
the allegation of infringement and „safe harbor‟ for the ISP from copyright infringement claims if it has followed
the prescribed procedure.
In Europe, both rightsholders and ISP‟s are working towards some form of agreed procedure that has as similar
effect to the position achieved by the DCMA. This is clearly an important component in achieving a workable
environment for online content services.
Rights and exceptions – end of year report
If the effect of those changes were summarized in an „end of term‟ school report, it is likely to read along the
following lines: “The student has tried hard and made progress but there is still considerable room for
improvement. The school has laid down a number of ground rules for the student to follow. It is now up to the
student to find practical solutions to the challenges set by the school by working together with all other members
of the student faculty. This will pose a number of challenges to the student. Inevitably, some give and take will
be required.”
The Second pillar of copyright: management of rights
The principal rights management channels are:
 Individual („one to one‟ contracts);
 Collective (e.g. photocopying and now digitization licences via the CLA); and
 Digital rights management.
The common theme running through each channel is the impact of users‟ demands for increased flexibility and
variety of rights. The ability to respond to demands for „flexi-rights‟ depends crucially on publishers‟ rights
acquisition strategy.
Rights acquisition
Any discussion about rights management begs the question “whose rights are being managed?”
Ownership of copyright remains the optimum position from the publishers‟ perspective. This still prevails in
particular industry sectors, either by assignment or by virtue of an employment relationship.
Publishers are also increasingly alert to the need to ensure that opportunities to acquire copyright or related
rights are not inadvertently missed. For example:
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 if the design and structuring of a database (which includes a website) is outsourced to a third party, the
contract should contain an express copyright assignment clause; and
 if the work in obtaining database content is outsourced, the contract should contain an appropriate
assignment of the database right.
Whilst publishers in some trade sectors are still able to rely on copyright ownership through assignment or by
virtue of an employment relationship, most content providers rely on licensing arrangements.
Many publishers take a pragmatic view to the issue of ownership versus licence. However, the licensing route
necessitates a grant of rights that is sufficiently broad to meet customers‟ demands, especially for digital re-use
on extranets, intranets and other networked use.
But when the courts look at existing contracts and whether the rights granted extend to new forms of
exploitation, they take a restrictive approach.
In Tasini v. New York Times, the Supreme Court considered the position of freelancers who wrote articles for the
New York Times, which the paper then licensed to LEXIS/NEXIS for inclusion in their online service, and to a CD-
ROM publisher. The contract was silent in respect of electronic databases. The court decided that the display of
the authors‟ individual articles online infringed their copyright in those articles and that copyright was separate
and distinct from the NYT‟s copyright in their newspaper as a collective work.
Traditionally, licences tie the work to the medium – e.g. the right to publish in book form.
So in Rosetta Books, the grant of rights dealt with publication in “book form”, in other forms such as anthologies
and digests and so on. No mention was made of e-books.
Because the courts take a restrictive view, contracts that therefore spell out specific forms of exploitation without
more general wording are vulnerable.
Compare this to a grant of “… the worldwide right to produce, publish, sell and distribute the Work in whole or
part (including extracts) in print or in any electronic form and to communicate and make it available to the public
by any wire or wireless means through any on-demand or broadcast service and the right to licence third parties
to exercise all or any of those rights.”
Publishers have generally taken this message to heart. In cases where they rely on acquisition by licence rather
than by assignment of copyright, they have been busy updating model contracts to give them the flexibility they
require.
The key message from the cases is to review existing model contracts so that the language emphasises the
rights to exploit the work itself across multiple media, and not on the individual forms which contain the work.
„One to one licences‟
Consensual, contractual relationships form the building blocks of „one to one‟ licences.
We have already noted the trend to increased segmentation of rights. This is reflected in contracts in the the
move away from grants of „electronic publishing rights‟ to much more specific grants of rights to for public, semi
public and private networks (the web, extranets, intranets).
At the same time, there is a need to avoid inadvertently give away rights by contract hat may generate income
from another source. For example, licences may include photocopying and scanning rights that are covered by
collective licences.
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Copyright contracts and territoriality

Although national copyright laws are becoming more closely aligned, there remain significant differences. Here
are some typical examples:
 The copyright laws of five member states have so-called „bestseller provisions‟ that expressly allow
authors to ask for a retrospective modification of a contract if the agreed remuneration proves to be
disproportionate to the income generated by the work;
 There are different rules governing future forms of exploitation and future works. For example, in
contrast to the position in the UK and the US, the German Copyright Act (Article 31 (4)) states that „a
licence purporting to grant rights with respect to unknown means of utilization, and any obligation with
respect thereto shall have no effect.‟
To some extent, legal uncertainty due to the disparity of national laws can be reduced by the choice of the law
that governs the contract. Typically, rights owners will select the law of their home state assuming it is „rights
holder friendly‟. However, this is only a partial solution because the choice of law cannot override what are
termed „mandatory rules‟. These include rules governing the proprietary aspects of assignment of rights.
The European Commission commissioned a Study on the issue to help it decide whether to seek to harmonise the
rules governing copyright contracts – „Study on the Conditions Applicable to Contracts relating to Intellectual
Property in the EU‟ by Lucie Guibault and P. Bernt Hugenholtz. It can be found at
www.ivir.nl/publications/guibault/contracts.html.
The authors concluded: “It is impossible, without conducting an economic survey among rightholders, to assert
with any certainty whether the existing differences in the law of copyright contracts in members states of the EU
affect the functioning of the Internal Market.”
The European Commision accepted this conclusion but also endorsed the recommendation that the European
Commission should promote model contracts.
What is the message for publishers? Copyright nirvana is to arrive at a position where we have a unified set of
copyright laws, either by virtue of one single law promulgated by WIPO or by eliminating all differences between
national copyright laws.
Well, nirvana is a long way off! In the interim, it is unlikely that publishers will seek to arrive at standard set of
copyright contracts to fit all national jurisdictions. Apart from the effort and cost involved, it would require
conformity with the „highest common legal denominator.‟
But it would be equally inappropriate to disregard the implications of the increasing need to develop standard
contracts to respond to global business models.
At the very least, contracts that cover markets whose national laws contain some of these important inhibitions
need to be adapted to suit that market. For example, whilst very broadlanguage to cover all forms of
exploitation, present and future, may work in certain jurisdictions, it will not in others. So more precise language
will be needed for other territories.
Collective Licences
Collective licensing bodies continue to play an important role for publishers in generating revenue outside their
core, „one to one‟ activities.
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For example, in the UK, the Publishers Licensing Society, one of the co-owners of the Copyright Licensing
Agency, has expanded its range of licences to cover digitisation in a number of sectors. So Press Cutting
Agencies and PR Agencies can now obtain licences to scan materials and send to clients in electronic form.
The role of collecting societies is on the agendas of both WIPO and the European Commission and the key issues
concern:
 the acquisition of rights by Collecting societies (by law or by contract with rightsowners)
 intra collecting society relationships
 relationships with users.
The questions that the regulators are asking about these issues are these:
 Are competition rules sufficient or, as in Germany, should there also be a specific regime governing
collecting societies?
 Does there need to be any change in the current EU regime whereby, broadly, authorities of member
states are free to impose (or not) collective administration and, if they do, to make it obligatory or
voluntary?
Publishers will continue to move forward cautiously as distinctions between primary and secondary sources of
licensing income become blurred (e.g. scanning to digital form). They will continue to want to remain free to
choose whether and on what terms to use collecting societies. They will continue to move forward cautiously as
distinctions between primary and secondary sources of licensing income become blurred (e.g. scanning to digital
form).
With that caveat, the collecting societies, especially through their cross-border reciprocal relationships with other
collecting societies.
It is also important to recognise the valuable work being done by collecting societies on the „front line‟ of
copyright enforcement. In the UK, the Copyright Licensing Agency has recently achieved notable successes in
closing copy shops which were photocopying text books and selling them at a per page price.
Digital rights management (“DRM”)
The legal framework for DRM is in moving into place, consistent with the WIPO Treaty provisions. There are two
elements to these provisions. First, the prohibition on trafficking in software and devices that circumvent copy
protection technology by requiring WIPO Contracting Parties to provide legal protection against circumvention of
technology (hardware and/or software) designed to control access or use of copyright works. Second, to provide
effective legal remedies to prevent the removal or alteration of electronic rights management information.
However, the issue is not whether the legal framework is in place but the role that DRM will play. It is already
clear that DRM will never be a „one size fits all‟ solution for publishers. However, it will undoubtedly have a key
role to play for particular sections of the industry as part of their content strategies. Having said that, there is a
complex legal interplay between these DRM measures on the one hand and the exceptions to copyright and, in
the US, freedom of speech issues on the other.
The first judicial look at this issue was the US district court decision earlier this year in US v. Elcom Ltd aka
Elcomsoft Co Ltd. It is worth examining the issues that were considered by the Court (with acknowledgment to
John Kennedy, Morrison & Foerster, New York, whose article on the case was published in World eBusiness
Report – www.worldebusinesslawreport.com).
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Elcomsoft distributed the Advanced eBook Processor, a software program that enables users to remove digital
restrictions from files used with Adobe's eBook Reader. The government sought and obtained an indictment of
Elcomsoft under the anti-circumvention provisions of the DMCA. The government's case achieved notoriety
initially when the Russian programmer named in the complaint was arrested
Elcomsoft moved to dismiss the government's case on several constitutional grounds, including violation of the
Due Process Clause of the Fifth Amendment and several violations of the First Amendment.
The district court rejected each of the defendant's arguments. The court found no violation of due process in the
application of the DMCA because the statute's ban on technologies that defeat copy protection in digital works is
total and does not impose on potential defendants the task of determining which technologies are permissible for
fair use purposes.
The court also rejected Elcomsoft's challenge that the DMCA is overly broad, finding that although the statute
may make fair use of copyrighted works in digital form more difficult, it does not prohibit such fair use, nor does
the statute extend the protection of copyright to works in the public domain.
Elcomsoft's claim that the act is unconstitutionally vague was likewise rejected on the ground that it does not
include any content-based restrictions on speech.
What are the implications of the case?
First, the „anti-circumvention‟ provisions of the DMCA have held up under fist judicial scrutiny. But the battle will
go on.
Second, the „anti-circumvention‟ provisions of the DMCA do not amount to a „fair use‟. The US Copyright Office
recently published a notice stating that “it is currently conducting the rulemaking proceeding mandated by the
Digital Millennium Copyright Act, which provides that the Librarian of Congress may exempt certain classes of
works from the prohibition against circumvention of technological measures that control access to copyrighted
works. For more information, please see the notice of inquiry”.
In the EU Copyright Directive, there are parallel provisions. Their effect is that if rightholders fail to implement
voluntary measures to allow users access to encrypted materials for the purpose of certain exceptions, member
states can compel them to do so. But there are important caveats.
First, this compulsory licensing provision only applies to the act of circumvention. It does not lift the ban against
the manufacture, sale etc. of hardware of software that is marketed or designed primarily for circumvention
purposes.
Second, if private copying is allowed by member states, this compulsory licensing provision does not prevent
rightholders from limiting the number of copies that can legitimately be made. Third, it does not apply to works
that are made available under licence as part of on-demand services “on agreed contractual terms”.
Accordingly, „fair use‟ access will need to be provided either through contractual measures or by being built into
the DRM system.
The third pillar of copyright: enforcement and remedies
The WIPO Treaty is succinct on this vital element of the international copyright framework:
“(1) Contracting Parties undertake to adopt, in accordance with their legal systems, the measures necessary to
ensure the application of this Treaty.
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(2) Contracting Parties shall ensure that enforcement procedures are available under their law so as to permit
effective action against any act of infringement of rights covered by this Treaty, including expeditious remedies
to prevent infringements and remedies which constitute a deterrent to further infringements.”
Generally, there are a range of remedies available in national courts for copyright infringement. In addition, the
European Commission is also expected to publish a draft Directive on Anti-Counterfeiting and Enforcement of IP
Rights.
Whilst legal remedies to combat piracy and counterfeiting may exist, and may soon be further strengthened, that
is not the complete answer to the challenges posed by the Internet and, specifically, by peer to peer networks.
Napster would have had no liability for copyright infringement unless Napster users were liable for direct
copyright infringement. The case against Napster rested on called “contributory” liability i.e. it contributed or
facilitating copyright infringement by third parties – Napster users.
The plaintiffs in the case argued that by uploading and downloading MP3 files via Napster, users were directly
infringing copyright – in the language of the plaintiffs they were “…engaged in the wholesale reproduction and
distribution of copyright works, all constituting copyright infringement.”
This highlights two points. First, the practical, commercial and other factors that make it impossible for rights
owners to pursue consumers who are, in the last analysis, actual or potential customers. Second, it becomes
increasingly difficult to take infringement action where the file swapping service does not provide a central
directory in the way that Napster did.
All this serves to illustrate that whilst legal action has its place, the commercial threat to publishers posed by the
Internet has, in the final analysis, be answered by a range of commercial solutions. Far better to have a paying
customer than a paying (or non-paying!) defendant.
Concluding thoughts
As we have seen, we have already accumulated a lot of new law since the Internet first emerged into the public
arena in the early 1990‟s. The courts have, in reality, only just began to apply them to the world of online
content distribution.
As Bornkamm, a German judge, recently put it: “We are still applying domestic (German) law rather than the
acquis (EU law) because there is a lack of legal rulings in which the acquis has been in issue.” We are therefore
still at the start of a long term – perhaps permanent – process of change.
But the long term goal of global legal norms to match global content strategies is a vision that is worth pursuing.
Laurence Kaye
Laurence Kaye Solicitors
© Laurence Kaye 2002
T: 01923 352 117
E: laurie@laurencekaye.com
www.laurencekaye.com
http://laurencekaye.typepad.com/
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This article is not intended to be exhaustive and it does not constitute or substitute legal advice,
which should be sought on a case by case basis.
Please feel free to copy or make available this article without modification in print or electronic form for non-
commercial purposes. If you do so, please include this disclaimer and copyright wording with attribution. If you
want to re-publish or make the whole or part of this article available in a commercial service or publication,
please contact the author at laurie@laurencekaye.com.