(via Jose Otero) In 2010 Chile became one of the first countries in the world to enact a net neutrality legislation. The law 20.453 enacts a three-pronged approach to protect users against abuse, firstly by determining that Internet Service Providers (ISPs) may not differentiate content based on the origin; it creates an obligation for [...]]]>

(via Jose Otero) In 2010 Chile became one of the first countries in the world to enact a net neutrality legislation. The law 20.453 enacts a three-pronged approach to protect users against abuse, firstly by determining that Internet Service Providers (ISPs) may not differentiate content based on the origin; it creates an obligation for ISPs to allow users to use any legal equipment, and it also creates an obligation with regards to transparency of filters, speeds and quality of service. This is interesting because it is a very broad definition of net neutrality. Typically, net neutrality has been deemed as a principle of non-discrimination of content, which is present in the Chilean legislation  in this manner:

“a) [ISPs] May not arbitrarily block, interfere with, discriminate against, hinder or restrict the right of any Internet user to use, send, receive or offer any content, application or legal services through the Internet, and any other legal activity or use conducted through the network. In this sense, each user must provided with an Internet access or connectivity to the Internet service provider, as appropriate, without arbitrarily differentiating content, applications or services based on the source or ownership thereof, taking into account the different configurations of the Internet connection in accordance to its current contract with its users.”

This is clearly a pure net neutrality provision. However, as mentioned, the law also has provisions that are more relevant as consumer protection legislation, such as transparency and disclosure.

With this fact in mind, a Chilean Internet user made a complaint against their ISP to the Chilean telecoms regulator (SUBTEL) with regards to advertised Internet speeds, alleging that he had a contract for 40 Mbps, but he would get at the most 5 Mbps.  SUBTEL ruled in favour of the user, and ordered the ISP to change the tariff in accordance to the actual speeds that the user was getting.

So it is quite interesting that for the first time we have an application of net neutrality law, but for an offence that is not at all related to net neutrality. We will have to wait and see if in the future there is a more clear-cut net neutrality case.

For more than a year, those of us interested in intermediary liability have been waiting for an important Belgian case, Saban v Tiscali (now Sabam v Scarlet). This has been a long-running battle between Sabam, the Belgian rights management agency representing authors, composers and editors of musical works, and Tiscali, [...]]]>

Victory! We have victory!

For more than a year, those of us interested in intermediary liability have been waiting for an important Belgian case, Saban v Tiscali (now Sabam v Scarlet). This has been a long-running battle between Sabam, the Belgian rights management agency representing authors, composers and editors of musical works, and Tiscali, later Scarlet, a large internet service provider in that country. In 2004, Sabam sued Tiscali to try to put in place a large-scale filtering system that would try to catch copyright infringers using peer-to-peer technologies. The case made its way through the Belgian court system until it reached the Appeals Court of Brussels, who decided last year to forward the case to the European Court of Justice posing the following questions:

“(1)      Do Directives 2001/29 and 2004/48, in conjunction with Directives 95/46, 2000/31 and 2002/58, construed in particular in the light of Articles 8 and 10 of the European Convention on the Protection of Human Rights and Fundamental Freedoms, permit Member States to authorise a national court, before which substantive proceedings have been brought and on the basis merely of a statutory provision stating that: ‘They [the national courts] may also issue an injunction against intermediaries whose services are used by a third party to infringe a copyright or related right’, to order an [ISP] to install, for all its customers, in abstracto and as a preventive measure, exclusively at the cost of that ISP and for an unlimited period, a system for filtering all electronic communications, both incoming and outgoing, passing via its services, in particular those involving the use of peer-to-peer software, in order to identify on its network the movement of electronic files containing a musical, cinematographic or audio-visual work in respect of which the applicant claims to hold rights, and subsequently to block the transfer of such files, either at the point at which they are requested or at which they are sent?
(2)      If the answer to the [first] question … is in the affirmative, do those directives require a national court, called upon to give a ruling on an application for an injunction against an intermediary whose services are used by a third party to infringe a copyright, to apply the principle of proportionality when deciding on the effectiveness and dissuasive effect of the measure sought?”

In other words, the Belgian court sought guidance on whether it would be possible for a national court to order putting in place by injunction a widespread and indiscriminate filtering system which would require constant monitoring at the expense of the ISP, as it might violate fundamental rights and freedoms enshrined in various directives and conventions, and if so, if such relief would have to respect principles of proportionality. The Belgian court was clearly troubled by the implications of enacting such a system without a substantive ruling, and that copyright owners would be able to impose great costs to ISPs simply by asking it via injunctive relief.

The ECJ has issued its ruling answering the first question in the negative, which is a great victory for the principle of limitation of intermediary liability. From the ruling, it was clear from the start that the ECJ was not amenable to rule in favour of indiscriminate monitoring as it would go against Art. 15 of the Electronic Commerce Directive 2000/31, which states unequivocally that Member States shall not require intermediaries “to monitor the information which they transmit or store, nor a general obligation actively to seek facts or circumstances indicating unlawful activity”. Any filtering system would be in violation of this rule, as it would require the following acts from the ISP:

“– first, that the ISP identify, within all of the electronic communications of all its customers, the files relating to peer-to-peer traffic;
– secondly, that it identify, within that traffic, the files containing works in respect of which holders of intellectual-property rights claim to hold rights;
– thirdly, that it determine which of those files are being shared unlawfully; and
– fourthly, that it block file sharing that it considers to be unlawful.”

Moreover, the court stated that rights protected under intellectual property legislation are indeed enshrined in the Charter of Fundamental Rights of the European Union, but that these rights are not absolute, and must be read in conjunction with other legislation. Specifically citing the Promusicae case, the court commented that the protection of IP rights “must be balanced against the protection of other fundamental rights”, and that “in the context of measures adopted to protect copyright holders, national authorities and courts must strike a fair balance between the protection of copyright and the protection of the fundamental rights of individuals who are affected by such measures.” I know, incendiary stuff, is it not?

The ECJ then considered that there are fundamental rights that would be affected by the filtering system proposed by Sabam, namely the freedom to conduct business by the ISPs because the system would be costly, and that cost would be footed just by them. To support this view they stated that Art. 3 of the Enforcement of IP Directive 2004/48 requires that IP remedies “shall be fair and equitable and shall not be unnecessarily complicated or costly, or entail unreasonable time-limits or unwarranted delays”.  For users, the filtering system would affect their “right to protection of their personal data and their freedom to receive or impart information”, protected by Arts. 8 and 11 of the Charter of Fundamental Rights.

Finally, the ECJ opined that there were some serious procedural problems with a system that would be enacted by injunction for works that were not even created at the time that the injunction was issued.

Nonetheless, specific injunctions are still allowed, what the ECJ has ruled against is a blanket filtering system suggested.The court then decided the following:

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

–        all electronic communications passing via its services, in particular those involving the use of peer-to-peer software;
–        which applies indiscriminately to all its customers;
–        as a preventive measure;
–        exclusively at its expense; and
–        for an unlimited period,

which is capable of identifying on that provider’s network the movement of electronic files containing a musical, cinematographic or audio-visual work in respect of which the applicant claims to hold intellectual-property rights, with a view to blocking the transfer of files the sharing of which infringes copyright.”

Excellent ruling! It is measured and respects the balance in IP enforcement. It is solidly supported by existing legislation. It is sensible. Why do I feel like there’s a monster lurking around the corner? Oh yes, that mus be SOPA.

A civil court in Amsterdam has delivered a throwback ruling that reverses a decade of legal practice in intermediary liability. The BREIN Foundation is an anti-piracy group in the Netherlands, and it sued News-Service.com Europe (NSE), one of the largest providers of Usenet services in Europe. BREIN brought the action [...]]]>

Usenet servers and clients

A civil court in Amsterdam has delivered a throwback ruling that reverses a decade of legal practice in intermediary liability. The BREIN Foundation is an anti-piracy group in the Netherlands, and it sued News-Service.com Europe (NSE), one of the largest providers of Usenet services in Europe. BREIN brought the action in an attempt to obtain an injunction to get NSE to remove infringing material from Usenet servers. The court agreed and ordered NSE to comply with the order, or to face fines of €50,000 EUR per day (reports here and here, and Dutch ruling here).

NSE might appeal the sentence, and their CEO was very critical of the ruling:

“We are very disappointed with the Court’s verdict. It is technically as well as economically unfeasible to check the contents of the 15 to 20 million messages that are exchanged on a daily basis. Added to which, there is no automated way of checking whether Usenet messages contain copyrighted material or whether permission has been obtained for the distribution of such material,”

This is indeed a very puzzling and disappointing decision that in the humble opinion of this commentator completely contradicts law and practice in the last few years. Europe has had in place since the year 2000 a system of limitation of liability for intermediaries, which arises from the fact that removing infringing content would be practically impossible for any service provider with a large user base. Art. 12 of the Electronic Commerce Directive establishes the principle of “mere conduit” for intermediaries:

“1. Where an information society service is provided that consists of the transmission in a communication network of information provided by a recipient of the service, or the provision of access to a communication network, Member States shall ensure that the service provider is not liable for the information transmitted, on condition that the provider:
(a) does not initiate the transmission;
(b) does not select the receiver of the transmission; and
(c) does not select or modify the information contained in the transmission.”

It seems clear that this provision covers services like Usenet and NSE, where the infringing material is uploaded and downloaded by its users. Let us hope that this ruling is simply an aberration, and that NSE appeals and manages to overturn the injunction.

Nevertheless, the real question has to be… is there anyone out there who still uses Usenet?

This bit of news was reported by the Creative Commons Blog some weeks ago, but it deserves as much dissemination as possible. The regional court of Berlin (Landgericht Berlin) has effectively enforced a CC Attribution-ShareAlike (CC BY-SA) Unported licence against a far-right party. This is great [...]]]>

Thilo Sarrazin by Nina Gerlach / CC BY-SA

This bit of news was reported by the Creative Commons Blog some weeks ago, but it deserves as much dissemination as possible. The regional court of Berlin (Landgericht Berlin) has effectively enforced a CC Attribution-ShareAlike (CC BY-SA) Unported licence against a far-right party. This is great news because it is the licence used by Wikipedia and the Wikimedia Commons, lending strength to the licences in Civil Law jurisdictions, but also serving as a clear example of the way in which the licences are just as enforceable as any copyright document.

The facts of the case are quite straightforward. Nina Gerlach took a photograph of German politician Thilo Sarrazin and uploaded it to Wikipedia under a CC BY-SA licence, where it is used in his entry. The defendant, a German far-right party website (www.die-rechte.info, which seems to be down at the time of writing), posted the picture without attribution and without a link to the original, as specified by the terms of the licence. Ms Gerlach, a Wikipedia contributor, sued for licence breach with the help of German enforcement expert extraoidinaire Till Jaeger. The judge considered that the defendant was in breach of the licence, and therefore was infringing copyright due to unlawful use of the image. The judge therefore issued injunctive relief, ordering the website to remove the picture or face penalties of up to €250,000 EUR for each case of non-compliance, or alternatively suffer an arrest for disobedience of court orders of up to six months.

The relevant part of the ruling reads as follows (translated to English by John Hendrik Weitzmann, I’ve replaced some abbreviations):

PRELIMINARY INJUNCTION RULING

[...] it is commanded by way of preliminary injunction, due to special exigency without oral hearing, according to s. 935 ff., 91 of the Civil Proceedings Act:1. The Defendant is, in order to avoid a penalty to be ordained by the Court for every case of non-compliance of up to 250.000,00 EUR, alternatively arrest for disobedience to court orders, or an arrest of up to six months, the latter to be executed in the person of the party chairman, prohibited, to reproduce and/or make publicly available the following photo without naming the creator and adding the license text or its full internet address corresponding to the license terms of the Creative Commons license “Attribution ShareAlike 3.0 Unported”:

[photo of Thilo Sarrazin]

2. The Defendant has to bear the costs of the proceedings.

3. The proceedings value is set to 4.000,00 EUR.

Rationale:

I.
The Applicant has credibly shown the following:

She has created the photo mentioned in the decision and released it for further use under the terms of the so-called Creative Commons license “Attribution ShareAlike 3.0 Unported”. According to these terms, in case of use the creator must be named and there must be either a copy of the license text attached or the full internet address in the form of the Uniform Resource Identifier must be provided. The Defendant published the photo on its website under the address www.die-rechte.info without giving the aforementioned information. The applicant first took notice of the publication on September 9th 2010.

II.
This triggers the urgent entitlement to injunctive relief according to s. 97 ss. 1 in combination with s. 19a Copyright Act.

The photo enjoys copyright protection as a photographic work in the meaning of s. 2 ss. 1 No. 5 Copyright Act or as a photograph in the meaning of s. 72 Copyright Act. As the Defendant put the photo on its website while in breach of the aforementioned license terms, this constituted a use not covered by the permission of the Applicant and thus an unlawful use in the meaning of s. 97 ss. 1 Copyright Act.

The risk of recurrent infringement as a prerequisite for the entitlement follows from the occurrence of the breach; the risk could have been dispelled only by a declaration under penalty of law to cease and desist [sources snipped].

A preliminary ruling seems also “necessary” in the meaning of s. 940 Civil Proceedings Ac, because the Applicant cannot be expected to tolerate a possible further infringement of her rights until main proceedings are run.

The set value of the proceedings equals two thirds of the value of the main proceedings (see Berlin Supreme Court WRP 2005, 368, 369).

Dr. Scholz Klinger von Bresinsky [original PDF here]

This is an important ruling for one very important reason: the judge does not even bat an eyelid by being presented with a Creative Commons licence, and an unported version at that. Dr von Bresinsky simply notes the most relevant detail of the licence, namely that it requires attribution and a link to the original picture, and finds prima facie evidence of licence breach. This triggers the normal copyright infringement procedure, including the injunction issued in this case, and the possibility of the existence of damages in case of non-compliance. The importance arises precisely because of the ease with which the infringement was enforced, and this point cannot be overstated. It is common to hear Creative Commons opponents state that court cases are needed to ensure that the licences are legal. Well, here they have one more. Moreover, it is clear that CC is just another copyright licence, and when a court is presented with a case of licence breach, it will treat it as such. There are no lengthy questions about the validity of the licences, or whether a German court can enforce a document drafted in English. In the international licensing environment, courts have become sophisticated enough to enforce legal documents of all provenance, and this was not an exception.

This is yet another victory for CC. May the winning streak continue.

It has been a very interesting week for UK copyright, with some landmark decisions in Lucasfilm v Ainsworth and Newspaper Licensing Agency v Meltwater. However, everyone seems to be talking about Newzbin. In the case of Twentieth Century Fox Film Corp & Ors v British Telecommunications Plc [2011] EWHC 1981, the High Court of [...]]]>

It has been a very interesting week for UK copyright, with some landmark decisions in Lucasfilm v Ainsworth and Newspaper Licensing Agency v Meltwater. However, everyone seems to be talking about Newzbin. In the case of Twentieth Century Fox Film Corp & Ors v British Telecommunications Plc [2011] EWHC 1981, the High Court of England and Wales has instated a court-mandated system of Internet filtering against Newzbin, a popular copyright infringement site. Several Holywood film studios sought to obtain an order to get British Telecommunications (BT) to filter content from Newzbin following a successful copyright infringement suit against the site. The studios sought this order as they argue that it is the only way in which they will be able to implement the initial ruling. The High Court agreed with the studios, and BT will have to technically block access from its customers to Newzbin website. Kitchin J ruled that he will be accepting the suggested order from the studios, which reads like this:

“1. The Respondent shall adopt the following technology directed to the website known as Newzbin or Newzbin2 currently accessible at www.newzbin.com and its domains and sub domains. The technology to be adopted is:
(i) IP address blocking in respect of each and every IP address from which the said website operates or is available and which is notified in writing to the Respondent by the Applicants or their agents.
(ii) DPI based blocking utilising at least summary analysis in respect of each and every URL available at the said website and its domains and sub domains and which is notified in writing to the Respondent by the Applicants or their agents.
2. For the avoidance of doubt paragraph 1(i) and (ii) is complied with if the Respondent uses the system known as Cleanfeed and does not require the Respondent to adopt DPI based blocking utilising detailed analysis.
3. Liberty to the parties to apply on notice in the event of any material change of circumstances (including, for the avoidance of doubt, in respect of the costs, consequences for the parties, and effectiveness of the implementation of the above measures as time progresses).”

Much has been said already with regards to the ruling so there is really little for me to add, I highly recommend panGloss‘ and Richard Clayton’s blog posts on the subject.

However, I wanted to make a small comment about the troubling nature of the ruling from a wider regulatory standpoint. The scope of the decision initially is narrow, its purpose is to implement injunctive relief against copyright infringement. But in doing so, the High Court has produced a ruling that has wide implications, as it begins to enter into legislative territory. Internet filtering is a restrictive practice that borders on censorship, so there should be a legitimate question of whether the judiciary should have the power to impose this restriction without a clear legislative mandate.

Similarly, the efficiency of such an action should be part of any consideration made with respect to blocking and filtering. If the objective of the plaintiffs is to block access from UK customers to a specific infringing site, having this judicial order is not going to help, there are several ways in which this can be achieved easily. The movie studios must know this, but they also must realise that this strategy is ultimately futile. Even if Newzbin was to disappear overnight, there are dozens of services waiting to take over, so the copyright owners would have to sue each one to then obtain similar orders.

To me there is something else at work here. It seems to me that the target here is not Nezbin, the real target are the Internet Service Providers. The real objective of both the initial suit and the subsequent order is not really to send a message to other sites, but to UK ISPs. The Holy Grail of the industry is to have an ISP-level filtering or blocking against copyright infringers, and this ruling brings it closer to fruition. In the future, content owners will go to ISPs with this ruling in hand, and tell them “filter X site, or have a court order it for you”.

Kitchin J has given the industry leverage, it will be interesting to see how they use it in the next few months.

The European Court of Justice has finally ruled on the landmark case of L’Oréal v eBay (C-324/09) . It is true that the term “landmark case” gets used quite a lot in these virtual pages, but in this situation is more than accurate. The case has been a long-running legal saga between cosmetic manufacturer [...]]]>

The European Court of Justice has finally ruled on the landmark case of L’Oréal v eBay (C-324/09) . It is true that the term “landmark case” gets used quite a lot in these virtual pages, but in this situation is more than accurate. The case has been a long-running legal saga between cosmetic manufacturer L’Oreal and distributors of unauthorised sampler products which have had their packaging removed and then sold on eBay. The question at the heart of this case seems quite simple, but is of the most pressing importance for the always pressing question of Internet intermediary liability, and it is whether eBay can be held liable for trade mark infringement committed by merchants operating in its website. The facts are a bit more complex though. While it would seem that eBay is not to be held liable for whatever is sold on its site, eBay allowed the placement of sponsored links to infringing products. It also included the infringing products in its listings under the affected marks. Moreover, infringing merchants could purchase adwords and keywords in search engines that direct to the pages on eBay. The question then was whether these actions warranted liability.

The case was decided in the High Court of England at earlier stages by Arnold J in 2009 (L’Oreal SA & Ors v EBay International AG & Ors [2009] EWHC 1094). Arnold J found that there had been indeed trade mark infringement committed by some of the co-defendants by trading on sampler and de-marked goods on the site. He also ruled that eBay was not jointly liable of infringement, which was consistent with the limitation of intermediary liability that has been in place in the last 15 years or so. However, Arnold J referred some important questions to the ECJ.

“iv) Whether eBay Europe have infringed the Link Marks by use in sponsored links and on the Site in relation to infringing goods again depends upon a number of questions of interpretation of the Trade Marks Directive upon which guidance from the ECJ is required [...].
v) Whether eBay Europe have a defence under Article 14 of the E-Commerce Directive is another matter upon which guidance from the ECJ is needed [...].
vi) As a matter of domestic law the court has power to grant an injunction against eBay Europe by virtue of the infringements committed by the Fourth to Tenth Defendants, but the scope of the relief which Article 11 requires national courts to grant in such circumstances is another matter upon which guidance from the ECJ is required [...].”

The ECJ produced an interesting ruling which both maintains the principles of intermediary liability, but seems to damn eBay for its actions. It states:

“ 4. On a proper construction of Article 5(1)(a) of Directive 89/104 and Article 9(1)(a) of Regulation No 40/94, the proprietor of a trade mark is entitled to prevent an online marketplace operator from advertising – on the basis of a keyword which is identical to his trade mark and which has been selected in an internet referencing service by that operator – goods bearing that trade mark which are offered for sale on the marketplace, where the advertising does not enable reasonably well-informed and reasonably observant internet users, or enables them only with difficulty, to ascertain whether the goods concerned originate from the proprietor of the trade mark or from an undertaking economically linked to that proprietor or, on the contrary, originate from a third party.”

This has implications for adwords and search engines, as the ECJ gives the green light for enforcement against advertisers of infringing materials. Dealing specifically with the issue of intermediary liability present in the e-commerce directive, the ECJ declares:

“6. Article 14(1) of Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (‘Directive on electronic commerce’) must be interpreted as applying to the operator of an online marketplace where that operator has not played an active role allowing it to have knowledge or control of the data stored.

The operator plays such a role when it provides assistance which entails, in particular, optimising the presentation of the offers for sale in question or promoting them.

Where the operator of the online marketplace has not played an active role within the meaning of the preceding paragraph and the service provided falls, as a consequence, within the scope of Article 14(1) of Directive 2000/31, the operator none the less cannot, in a case which may result in an order to pay damages, rely on the exemption from liability provided for in that provision if it was aware of facts or circumstances on the basis of which a diligent economic operator should have realised that the offers for sale in question were unlawful and, in the event of it being so aware, failed to act expeditiously in accordance with Article 14(1)(b) of Directive 2000/31. “

This is a very interesting test. If an Internet intermediary plays an active role in assisting people to optimise the presentation of an infringing product, then they might be held liable. However, even if the intermediary did not play any active role in presenting the goods, they might still be held liable if ” a diligent economic operator should have realised that the offers for sale in question were unlawful”. This is a terrible standard in my view. There seems to be no determination as to volume of transactions, how is it possible for an operator to be able to know the legality of an item when it handles millions of transactions per day? To me this has to be part of any determination on Internet liability.

While it will be up to the national court to decide what happens on each specific case, I believe that the new European standard for intermediary liability opens the door to a barrage of actions. Interesting times lie ahead.

Last year an Australian judge gave an important ruling in the landmark case Roadshow Films Pty Ltd v iiNet Limited [2010] FCA 24. You can read a full report on the case by yours truly here. iiNet is an Australian internet [...]]]>

You're right Skippy, maybe the movie industry will finally give up this time.

Last year an Australian judge gave an important ruling in the landmark case Roadshow Films Pty Ltd v iiNet Limited [2010] FCA 24. You can read a full report on the case by yours truly here. iiNet is an Australian internet provider, which was sued by Australian film producer Roadshow Films, part of the Village Roadshow conglomerate. The question at the heart of the case in first instance was whether an ISP is to be held liable for the copyright infringement committed by its customers. The judge delivered an excellent decision in 2010 declaring that while there was direct infringement being committed by iiNet’s customers, the ISP was not secondary liable because it had not authorised such infringement.

Roadshow films and the lawyers for the movie industry appealed the decision alleging that the judge had erred in his interpretation of what constituted authorisation under Australian Copyright law. iiNet of course argued that the judge had been correct and stood by the decision. The Federal Court of Australia agreed with both the defendant and the first judge, and it denied the appeal. The ruling is very interesting because it is a split decision, Emmett J and Nicholas J voted for dismissing the appeal, and Jagot J voted to allow the appeal and have the case sent back to the primary judge.

As with the ruling in first instance, the matter came precisely to the question of whether or not iiNet had authorised copyright infringement committed by its customers. Emmett J encapsulates the issue thus:

“112. It is common ground that there have been primary infringements of the copyrights of the Copyright Owners by use by iiNet users of services provided by iiNet. However, there is a dispute as to the number of primary infringements that have occurred. The conclusion in relation to that dispute may be relevant to any limitation on remedies under the Safe Harbour Provisions, in so far as that limitation depends upon repeat infringement.
113. The principal issue in the appeal is whether iiNet authorised the acts that constituted those infringements. However, authorisation cannot be considered in the abstract. Rather, it must be determined in the light of the specific acts that are said to have been authorised. Accordingly, it is desirable to deal with the issues relating to primary infringement before considering the question of authorisation by iiNet.”

Regarding that important question, Emmett J considered:

“204. iiNet accepts that it had general knowledge of copyright infringement by use of the services provided to its customers. However, it contends that it had knowledge at a level of abstraction that was difficult to act on in any meaningful way. iiNet says that the only evidence of infringement at a level of specificity was the Infringement Notices but that the Infringement Notices did not make clear that the information provided by them was different from thousands of unreliable robot notices received from overseas. It says that, if a positive response was to be expected, AFACT should have explained in detail, when providing the Infringement Notices, how the allegations of infringement came to be made. iiNet says that AFACT was not entitled to keep its method of investigations secret if it expected a carriage service provider such as iiNet to be convinced of the reliability of the allegations of infringement and to act on such allegations. iiNet contends that it was not unreasonable for it to take the position that it wanted an independent third party to attest to the reliability and authenticity of the evidence provided by the Infringement Notices.”

Emmett J then concludes that there is no authorisation:

“257. However, while the evidence supports a conclusion that iiNet demonstrated a dismissive and, indeed, contumelious, attitude to the complaints of infringement by the use of its services, its conduct did not amount to authorisation of the primary acts of infringement on the part of iiNet users. Before the failure by iiNet to suspend or terminate its customers’ accounts would constitute authorisation of future acts of infringement, the Copyright Owners would be required to show that at least the following circumstances exist:
•    iiNet has been provided with unequivocal and cogent evidence of the alleged primary acts of infringement by use of the iiNet service in question. Mere assertion by an entity such as AFACT, with whatever particulars of the assertion may be provided, would not, of itself, constitute unequivocal and cogent evidence of the doing of acts of infringement. Information as to the way in which the material supporting the allegations was derived, that was adequate to enable iiNet to verify the accuracy of the allegations, may suffice. Verification on oath as to the precise steps that were adopted in order to obtain or discern the relevant information may suffice but may not be necessary.
•    The Copyright Owners have undertaken:
◦    to reimburse iiNet for the reasonable cost of verifying the particulars of the primary acts of infringement alleged and of establishing and maintaining a regime to monitor the use of the iiNet service to determine whether further acts of infringements occur, and
◦    to indemnify iiNet in respect of any liability reasonably incurred by iiNet as a consequence of mistakenly suspending or terminating a service on the basis of allegations made by the Copyright Owner.”

In a similar argument, Nicholas J argued that there was no infringement either, and while he commented that he disagreed with the primary judge on various lines of reasoning, the conclusion on authorisation was correct.

Jagot J did vote to allow the appeal. His argument is as follows:

“476. In summary, in this case:
(1) There was a contractual relationship between iiNet and its customers by which iiNet obtained income in return for the provision of internet services.
(2) iiNet knew that the internet was used by customers to download legitimate and copyright infringing content. iiNet also knew (through Mr Malone) that peer to peer software, including BitTorrent, was frequently used for file sharing of films and television shows in a manner that infringed copyright. Indeed, Mr Malone knew that half of all of the traffic on iiNet’s service (in terms of quota or megabytes) is via BitTorrent and a substantial proportion of BitTorrent traffic involves the infringement of copyright.
(3) Through its CRA, iiNet had available to it control over its customers’ use of the iiNet internet service as specified in the CRA’s terms. iiNet also had a range of powers available to it to prevent or avoid copyright infringements including issuing warnings, recording the issuing of warnings against customer accounts, as well as shaping, suspending or terminating accounts.
(4) iiNet received the AFACT notices over a lengthy period, in the same form from the third week. The AFACT notices contained prima facie credible evidence of widespread and repeated infringements of the appellant’s copyright by iiNet customers and users.
(5) iiNet adopted a position almost immediately after receipt of the AFACT notices that it had no obligation to do anything in response. Despite this, it asserted to AFACT that AFACT’s information did not identify customers. While this was technically accurate, it was inconsistent with iiNet’s knowledge that IP addresses were sufficient for it to identify customers and its treatment of customers as responsible for all use on their account in other contexts. It was also inconsistent with iiNet’s position that the reliability of the evidence was immaterial to its position.
(6) iiNet, by its press release, ensured its customers knew that their accounts would not be terminated, irrespective of the terms of the CRA, unless AFACT could prove in court the alleged copyright infringements.
(7) iiNet asked Westnet to change its position on allegations of copyright infringement to be less proactive on the basis that being proactive would harm the interests of internet service providers.
477. These circumstances support my conclusion that iiNet authorised the primary infringements of copyright. In terms of the meaning of “sanction, approve, countenance”, iiNet at least countenanced the primary infringements. It tolerated, indeed permitted, those primary infringements. More than that, by its conduct in all of the circumstances identified, it moved beyond mere indifference to at least tacit approval of those primary infringements.”

I am truly glad that this opinion did not prevail. Knowledge of infringement may be abstract, and also highly unreliable, as the ACS:Law case has demonstrated. It cannot be expected that ISPs will be able to act accurately against infringers, at least in the foreseeable future. Thankfully, we have obtained a good ruling on ISP liability once more, may this streak continue.

The U.S. Court of Appeals for the Ninth Circle has decided on the interesting and important case of MDY v Blizzard.

First some background information. In December 2006, Blizzard, the makers of World of Warcraft, sent a cease-and-desist letter to MDY, the makers of a cheat program called Glider. This program allows users to [...]]]>

The U.S. Court of Appeals for the Ninth Circle has decided on the interesting and important case of MDY v Blizzard.

First some background information. In December 2006, Blizzard, the makers of World of Warcraft, sent a cease-and-desist letter to MDY, the makers of a cheat program called Glider. This program allows users to run the game on autopilot by becoming a bot that allows the user to kill monsters and farm their loot without having to spend hours in front of the system. You just install Glider, leave the computer running, and see the Gold rush in. Blizzard argued that MDY was in breach of their Terms of Use, which is a condition which would translate into a termination of the licence. The ToU states clearly:

“You agree that you will not (i) modify or cause to be modified any files that are a part of the Program or the Service; (ii) create or use cheats, bots, “mods”, and/or hacks, or any other third-party software designed to modify the World of Warcraft experience; or (iii) use any third-party software that intercepts, “mines”, or otherwise collects information from or through the Program or the Service. Notwithstanding the foregoing, you may update the Program with authorized patches and updates distributed by Blizzard, and Blizzard may, at its sole and absolute discretion, allow the use of certain third party user interfaces.”

MDY’s actions seem to be unequivocally a breach of these terms and conditions. However, it must be stressed that the above is not the licence itself. WoW’s End-User Licence Agreement (EULA) is a separate document which grant the user the right to perform actions which otherwise would be infringing, in this case, install the program into a computer. Under normal circumstances, a breach of licence usually translates into the termination of the agreement, and therefore, the termination of the licence to use the work, but it does not immediately translate into copyright infringement. Breach of licence will normally herald the termination of the permission to use the work, and further uses would be infringing. Does a breach of the Terms of Use mean that the licence has also been breached? Blizzard’s EULA clearly states that the user must comply with theToU, but nowhere does it say that breach of those terms will translate into a breach of the licence! Similarly, it seems clear to me that the licence was drafted to accomodate the theory of termination described above, as it sets out the effects of termination:

“Blizzard may terminate this Agreement at any time for any reason or no reason. In such event, you must immediately and permanently destroy all copies of the Game in your possession and control and remove the Game Client from your hard drive. Upon termination of this Agreement for any reason, all licenses granted herein shall immediately terminate.”

As we know, a copyright licence is an agreement that allows a user rights which they would otherwise not have. In this case, if the licence is removed, the user would be infringing copyright. MDY initiated an action to try to obtain a declaration that Glider does not infringe copyright.

In first instance, the United Stated District Court of Arizona decided on the case. The case hinged on the question of whether a breach of terms of use constitutes copyright infringement. Blizzard argued to the court that it did, while MDY on the other hand argued that even if their actions breached the TOU, this would not constitute copyright infringement because MDY’s actions are not infringing an exclusive right protected by copyright; copyright does not prohibit cheating in a game. MDY presented Storage Technology v Custom Hardware Engineering as a relevant authority that explicitly recognised that there cannot be copyright infringement on rights that do not exist, but the court dismisses this claim. Similarly, the court agreed that existing licensing law in the United States admits that granting a licence usually innoculates users against copyright infringement claims. The Court cites Sun Microsystems v Microsoft:

“Generally, a copyright owner who grants a nonexclusive license to use his copyrighted material waives his right to sue the licensee for copyright infringement and can sue only for breach of contract. If, however, a license is limited in scope and the licensee acts outside the scope, the licensor can bring an action for copyright infringement.”

Similarly, this case is not only about MDY, it is about all MDY users. Blizzard’s argument is that each user who is installing MDY’s cheating software are in breach of their ToU, therefore in breach of the licence, and therefore are infringing copyright. MDY therefore is guilty of contributory and vicarious copyright infringement, akin to Grokster and other P2P providers. The District Court of Arizona therefore ruled in Blizzard’s favour, and MDY was held accordingly liable.

MDY appealed the decision and the Ninth Circuit Court of Appeals reversed the Arizona ruling. The Appeals Court agreed with MDY, and has declared that MDY are not liable for secondary copyright infringement, but might be held liable for circumventing technological protection measures. The Appeals Court explains on the important interaction between contractual covenants and copyright licence conditions:

“To recover for copyright infringement based on breach of a license agreement, (1) the copying must exceed the scope of the defendant’s license and (2) the copyright owner’s complaint must be grounded in an exclusive right of copyright (e.g., unlawful reproduction or distribution). [...]

Here, ToU § 4 contains certain restrictions that are grounded in Blizzard’s exclusive rights of copyright and other restrictions that are not. For instance, ToU § 4(D) forbids creation of derivative works based on WoW without Blizzard’s consent. A player who violates this prohibition would exceed the scope of her license and violate one of Blizzard’s exclusive rights under the Copyright Act. In contrast, ToU § 4(C)(ii) prohibits a player’s disruption of another player’s game experience. Id. A player might violate this prohibition while playing the game by harassing another player with unsolicited instant messages. Although this conduct may violate the contractual covenants with Blizzard, it would not violate any of Blizzard’s exclusive rights of copyright. The antibot provisions at issue in this case, ToU § 4(B)(ii) and (iii), are similarly covenants rather than conditions. A Glider user violates the covenants with Blizzard, but does not thereby commit copyright infringement because Glider does not infringe any of Blizzard’s exclusive rights. For instance, the use does not alter or copy WoW software.

Were we to hold otherwise, Blizzard — or any software copyright holder — could designate any disfavored conduct during software use as copyright infringement, by purporting to condition the license on the player’s abstention from the disfavored conduct. The rationale would be that because the conduct occurs while the player’s computer is copying the software code into RAM in order for it to run, the violation is copyright infringement. This would allow software copyright owners far greater rights than Congress has generally conferred on copyright owners.”

This is the right decision. While as a gamer I never liked what Glider is doing, their actions never amounted to copyright infringement, even if the licence itself would have been void. There has to be a clear distinction between copyright licences and contractual obligations, and thankfully MDY has clarified the important distinction.

However, this ruling comes at a bad personal time. I quit WoW earlier in the year, and with Cataclysm out, this decision has reminded me that I miss playing my mage.