Laurence Kaye on Digital Media Law

Newzbin2 – Game Changer? / more on intermediary liability

Dear reader

My colleague Sherif Malak has taken a look at the ''Newzbin 2' case in July this year, continuing our theme of  “who should hold the can?” for illegal content on the networks.  Whilst the debate about the severity of sanctions in the Digital Economy Act against infringements by users rages on, rightsholders appear to have made some headway elsewhere in the case of Newzbin2.

The background to the case was cause for much celebration amongst rightsholders when, last year, a number of film studios succeeded in obtaining an injunction against the providers of file-sharing website, Newzbin, which enabled users to download copyright infringing content including films and TV-programmes.  There, Kitchen J emphatically concluded that Newzbin was not only liable for authorising infringement, but was also liable as a primary infringer, even finding that ‘flagrancy’ (and thus increased damages) had been proved under s. 97 of the CDPA.  Celebrations somewhat stopped when , after a quick shimmy of its servers to Sweden, the imaginatively  titled “Newzbin2” service rose from the ashes, moving beyond the jurisdiction of the UK courts.

Foiled? Well no, not quite.  Turning their attention to the ‘gatekeepers’ of the internet, the ISPs, rightsholders sought an injunction against the UK’s largest ISP, BT, to block access to Newzbin2 wherever it was located….. and succeeded!  Whilst the court batted away a number of legal arguments BT raised including those relating to the HRA and E-Commerce Regulations, of particular note is Justice Arnold’s seemingly broad interpretation of ‘actual knowledge’ of infringement required to make out BT’s liability under s. 97A of the CDPA – actual knowledge of the use of the service to infringe (rather than of a specific infringement) now appears to be enough.

On the face of it, together with the ECJ’s guidance in L’Oreal v. eBay (discussed here earlier), this looks like quite the bombshell for intermediaries. But before rightsholders begin flocking to the courts to apply for injunctions, they should keep a few points in mind:

1. The floodgates are unlikely to open following this test case as the facts were heavily weighted in favour
2. of rightsholders: Newzbin/Newzbin2 had few non-infringing users, BT knew of the facts of infringement from the previous case and rightsholders sought the blocking of a specific website (not the analysis of all user traffic), where the ISP already had filtering software in place (in the instance, BT’s Cleanfeed).  It cannot therefore be assumed that all services will share the same fate especially that the decision is not binding precedent on other High Court applications.
3. The type of blocking sought in Newzbin2 was quite precise and BT already had the Cleanfeed system at its disposal – not all ISPs will have the same technical capacities.
4. Although the judgment suggested that applicants would be likely to recover all their legal costs if successful, Arnold J made clear that there is no guarantee that this will be the case for anyone seeking an injunction.
5. The speed of the court process renders injunctive relief ineffective against short lived services - as communications minister Ed Vaizey pointed out last month, there is currently little recourse against online services that pop up for a few days to ‘cash in’ on a live sport event before disappearing again.
6. Finally, the practical effect of blocking an infringing site may not effectively reduce online copyright infringement – there is nothing to say that infringers won’t just move on to the next source of free (yet still unlawful) content.

All in all, the lack of certainty and costs that an injunctive remedy involves means that it’s not clear whether this will be preferred to the user level remedies available under the DEA.  However, now that the site blocking provisions of that Act have been dropped, it’ll at least be an additional, an no doubt welcome, option in a rightsholder’s legal armament for tackling online copyright infringement.

Have a good weekend.

Laurie

What's [still] Hot in Digital Media Law

Dear reader

I've always liked Bill Gates' observation that "We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten."

So I thought I'd apply that to my own observations back in the early credit crunch days of April 2008 about the changes we're seeing in digital media law.  You can find a transcript of my talk on 'What's Hot in Digital Media Law' here.

I identified four focal points of change: (1) What and how do you regulate? ; (2) Who carries the can?; (3) Where should you draw the boundary between the public and private domains? and (4) Making the transition from analogue to digital?

I think on all of them, Bill got it right. It will probably take us to around 2015 to get a true perspective (and, let's face it, hindsight is 20:20).  But it seems pretty clear that all the incremental changes taking place will add up a a profound 'digital shift'.

So where are we on those four focal points of change? In this post, I'll just mention a couple of developments on (1), the regulatory front.

 The picture on the regulation of online 'television-like' services has got a bit clearer (?) under the Audiovisual Media Service Directive 2010/13/EU, now implemented in the UK, which imposes more 'TV like' regulation on 'TV like services such as YouTube channel pages e.g. on rules on product placement and sponsorship. So just remember to check the rules if you're developing a service which has on-demand content. The Directive applies 'lighter touch' regulation to non-linear services, but the boundary between linear and non-linear, aka the increasingly convergent worlds of broadcast v. on-demand, isn't always obvious.

Also on the regulatory front,I  picked competition law as one to watch as a key to ensuring a level playing field in digital media. Joaquin Almunia, VP of European Commission responsible for competition policy, gave a lecture on 'Competition in Digital Media and the Internet' in London this July, and it's definitely worth a read to get the Regulator's perspective.

'Fair competition' and 'Fair Search' are themes which underpin the German Newspaper and News Magazine publishers complaint against Google filed before the German antitrust authority. Under the banner 'Fair Share', the publishers are requesting a fair allocation of Google's online advertising revenues. They cite a number of reasons to justify the claim, but at the heart of the claim is the fact that Google is monetising publishers' content without compensation e.g. by displaying 'snippets' in its advertising funded search service. They also argue that, in reality, publishers can't opt-out of Google's search engine because Google's dominance would result in a de facto ban of publisher generated content from the Internet.

OK, I hear you say, it's a lot more complicated than that and publishers are now starting to provide and charge for their own paywall-protected content. It is complex, but the point I am making is that anti-trust/competition law is one of the key battle grounds between incumbent and new players in the markets for paid-for services.

In future posts, I am going to look at some recent developments in my three other focal points of change, starting with 'Who carries the can' - intermediaries and the position of Google on keywords as well as the Digital Britain Act. I'll follow that up with a quick look at publisher contracts and 'e-book' rights, which received some attention in the light of the literary agent Andrew Wylie's recent exclusive deal with Amazon to sell electornic versions of 20 classics.

In the meanwhile, I'm off to the USA on hols. I hope you're enjoying/enjoyed yours!

Laurie Kaye

 

Legal Update - Contracts (BSkyB v EDS)

Dear Reader,

If you will indulge us veering slightly away from the usual digital media and IP topics, we would like to turn to matters contractual by drawing your attention to a very important recent case - BSkyB v EDS [2010] EWHC 86 (TCC). You can find the full 468 page Judgment here. Or, if you don't have a spare week to plough through it, we've picked out the key points in our legal update below.

The significance of this case extends to all industries so the publishers and media companies amongst you should take note of the below as much as the IT suppliers and outsourcers - and everyone in between.

The key point to draw from this case is a reminder that anything said by a party before entering into a contract might expose that party to a claim for misrepresentation, depending on the nature of the statement made, the other party’s reliance on it, and the provisions of the contract itself.

**Legal Update**

The recent case of BSkyB v EDS has emphasised that suppliers need to be extremely careful about what they say in the course of pre-contractual negotiations. This is because they might find that they make statements which amount to negligent – or even fraudulent – misrepresentations. This is the position EDS (a supplier of IT services) found itself in, having made pre-contractual promises to BSkyB (its customer) and then failing to deliver against those promises.

Fraudulent misrepresentations

Suppliers need to be aware that liability in respect of fraudulent misrepresentations cannot be limited by reference to any contractual term. This case demonstrates the way in which an employee who makes unsubstantiated statements during a pre-contractual pitch or tender can potentially incur huge penalties on behalf of his company. The interim award to BSkyB in this case was £200 million. This is despite the fact that the contract between EDS and BSkyB contained a cap on liability of £30 million. Such caps on liability cannot be made to apply to fraudulent misrepresentations.

Negligent misrepresentations

However, liability in respect of negligent misrepresentations can be limited by contract with careful drafting.

It is important for suppliers to include a properly drafted ‘entire agreement’ clause in order to exclude any liability for negligent statements made in pre-contractual negotiations (although as noted above, no such clause can exclude liability for fraudulent misrepresentations). It is also important for suppliers to include a cap on liability (supported by adequate insurance) and carefully thought out exclusions and limitations of liability provisions in order to exclude or limit liability for negligent misrepresentations.

Customers, on the other hand, should ensure that key representations and promises made by suppliers pre-contract are included in the contract. In this way, customers can avoid the argument as to whether or not they relied on pre-contractual representations – instead, they will be able to sue for breach of contract in the event the supplier fails to deliver against those promises.

Summary

Where your company is acting as a supplier (whether of goods or services), the main point is to have the right procedures in place to ensure no pre-contractual promises are made which you cannot deliver against. In addition, well-drafted contractual provisions can offer protection.

Where your company is acting as a customer (particularly in the purchase of IT services), it should identify those key pre-contractual promises on which it will rely (e.g. timescales, milestones, technical specifications) and include them as terms of the contract. It should consider the potential losses it may suffer as a result of the supplier failing to deliver as promised and whether or not it is prepared to allow the supplier to limit or exclude liability for such losses.

You can find more guidance on contracts in the Checklists & Guidance Notes in Knowledge Zone.

Yasmin Joomraty

Laurence Kaye Solicitors

Italy's data protection laws knock Google sideways

Dear Reader,

Last week brought the shock news that an Italian court was sentencing Google executives under Italian data protection laws in relation to user generated content (UGC) posted on a You-Tube type service operated by Google.

Bullies

The UGC in question showed a teenager with Down's syndrome being taunted and filmed by his bullies on a mobile phone. In a further act of harassment, the bullies posted the footage online for the world to see.

There is no doubt that the act of bullying itself was shameful and that the bullies should be punished for it (whether or not they were, I do not know). That is not the main point here.

Similarly, it is undisputed that the victim's privacy was invaded. Needless to say, he did not consent to being bullied in the first place, let alone being filmed and published online. In the UK, this could amount to breach of privacy (or, more accurately, the common law breach of confidence as stretched by the judiciary and Article 8 of the Human Rights Act 1998).

By publishing this private content, the bullies are the ones primarily in the wrong as their 'analogue' bullying becomes, in addition, cyberbullying (in the UK, the civil wrong and criminal offence of harassment). But that is not the main point either. They are primarily in the wrong, but the Italian court pointed the finger of blame beyond them to a 'bigger bully', Google.

Google

The shock factor in this case is that certain US-based Google executives were held criminally liable (in an Italian court) for hosting the UGC in question on Google's (internationally available) site. The sting in the tail is that the cause of action was under Italian data protection law (rather than, for example, defamation, privacy or e-commerce) laws.

We'll need to wait for the Italian judgment to be published in order to examine the exact facts of the case and the judge's reasoning. In the meantime, let's consider the headline issues raised by the case:

• applicable law and jurisdiction;
• the 'hosting exemption'; and
• data protection laws.

Applicable Law and Jurisdiction

Applicable law and jurisdiction in an online context is a can of worms so I will touch on it very briefly here.

Websites often state in their terms and conditions that use of the website is subject to the laws of a particular country. Despite this, there are certain 'mandatory provisions' of third party countries which will override that country's laws where the website is seen to target the citizens of those third party countries. This will depend on the type of law (e.g. data protection and consumer protection laws are often 'exported' in this way). This case has the added complexity of Italy being a member state of the EU and, as such, subject to certain Directives, etc.

Even if one country's laws apply, that doesn't mean that all disputes must be heard in that country's courts. There have been instances where one country has heard a dispute in its courts by applying the laws of another country. As Italy is an EU member state, appeals on European points of law may be made to the ECJ.

I should also add that the extent to which officers/directors can be held personally liable for their company's acts and omissions depends largely on the applicable law (e.g. Italian or US) and the cause of action (e.g. defamation or privacy).

Hosting Exemption

Of course, the Google executives did not - could not possibly - have known about the video in question. They did not make the video, did not post it, did not authorise it to be posted, and undoubtedly discouraged it from being posted (the terms and conditions would have made it clear that users are not permitted to upload unlawful UGC).

In considering whether Google is liable for displaying unlawful (e.g. defamatory) UGC, the question is whether it should have known about the video and removed it. This comes down to constructive, or imputed, knowledge, 'notice and take down' mechanisms, and whether Google went far enough to discharge its 'duty of care' as host of UGC. It seems that Google did, in fact, remove the video without undue delay upon notification.

Section 19 of the UK's E-Commerce Regulations contains a well-established exemption from liability for Google-type internet intermediaries hosting UGC. This exemption is what enables Google and countless other online companies, from ISPs like AOL to auction sites like eBay to forums like Mumsnet, to conduct their businesses. Without this exemption, they would face astronomical costs in moderating all content, and/or face countless lawsuits. This would have the effect of stifling UGC and the Internet as we know it would not exist. The US has similar provisions in its legislation. So does Italy, in line with Article 14 of the E-Commerce Directive.

The hosting exemption is, however, qualified by the requirement for Google et al to operate effective and expeditious 'notice and take-down' policies. That is, when they are notified of offensive content, they must act swiftly to remove it. This mechanism has worked to date in that it seems to strike a workable balance between fostering sharing of information (e.g. UGC) and safeguarding people's rights (e.g. privacy).

In ruling that Google's executives are personally, criminally liable for UGC hosted by a site owned by Google, the Italian court's decision would, at first glance, seem to upset this balance. However, upon closer examination, this is not the case because, in fact, one of the counts against Google was for defamation and it was dismissed (it can be safely assumed) on the basis of the hosting exemption.

Data Protection

The indictment of the Google executives, in fact, related to the second charge made against them of unlawful processing of personal data under the Italian Privacy Code.

I do not intend to examine this charge, or the judge's reasoning, until I have had the opportunity to review the judgment in full. The main point to bear in mind is that Article 1(5) of the E-Commerce Directive expressly states that its provisions shall not apply to the Directives governing data protection. Therefore Google would not have had the protection of the hosting exemption under this count of breach of Italy's data protection laws. Recital (14) of the E-Commerce Directive explains:

"The protection of individuals with regard to the processing of personal data is solely governed by Directive 95/46/EC ...and Directive 97/66/EC ...which are fully applicable to information society services; these Directives already establish a Community legal framework in the field of personal data and therefore it is not necessary to cover this issue in this Directive in order to ensure the smooth functioning of the internal market... the implementation and application of this Directive should be made in full compliance with the principles relating to the protection of personal data, in particular as regards unsolicited commercial communication and the liability of intermediaries; this Directive cannot prevent the anonymous use of open networks such as the Internet."

Conclusion

So the indictment of the Google executives under Italian data protection law does not threaten to deprive internet intermediaries of the hosting exemption in relation to unlawful UGC. However, it does highlight that online companies must be vigilant as to the multitude of data protection laws which may govern their activities. In our experience, all companies tend to underestimate the importance of complying with data protection laws. This case may herald a turning point that sees data protection compliance rising up the agenda for online businesses.

On a different note, I think it is quite telling that, although many people left outraged comments on Google's website against the video in question in this case, not one of them actually clicked the button to flag it. As Google cannot be expected to monitor every item of UGC uploaded, so it cannot be expected to monitor every comment made in relation to each post. If, at the time, the Google site did not feature such a panic button, then the lesson to online UGC hosts is to include one. If, however, there was a panic button but users did not think to click it, then users need to be educated to do so. The UK's click clever click safe campaign drives home the message of how to use the Internet safely by following simple steps. It is aimed at children, but adults and children alike would do well to observe its 'zip it, block it, flag it' mantra.

We all need to act responsibly online, from cyberbullies (who leave cyber footprints as evidence of their bullying), to teens and adults (who can be too free with the personal information they make available online), to the internet intermediaries, who cannot simply claim ignorance and blanket exemptions against all potential liability, particularly in the field of data protection.

Yasmin Joomraty

Laurence Kaye Solicitors 

Google Search as 'Facilitator' not 'Publisher'

Dear Reader,

There has been some doubt  in the UK as to whether search engines are 'publishers' and so responsible for: (a) displaying unlawful content in 'snippets' on the search results page; or (b) displaying a link to the page on which such content first appears.

But Mr Justice Eady has swept away this uncertainty by ruling in July that Google is a 'facilitator', not a 'publisher' and as such is not liable for defamatory text appearing in a snippet on its search results page (or, by extension, for displaying a link to the page on which the defamatory content was published in full, although Eady J did not specifically address this point).

MIS v Google

The claimant was a company trading as "Scheidegger MIS" offering a distance learning course called "Train2Game". The claimant noticed defamatory comments on a forum provider's website, some of which also appeared in Google's search results when searching for "Train2Game".

The position regarding forum providers' liability for UGC is relatively clear (essentially they can benefit from certain exemptions as long as they implement an expeditious 'notice and take-down' policy) so I won't rehearse it here.

The decision in this case was essentially that Google is not to be regarded as publisher of the defamatory comments so it is not liable for them. As such, although Eady J considered the defences available to Google under common law, the Defamation Act 1996 and the E-Commerce Directive, it was unnecessary for Google to rely on them - it is not liable in any event because "if a person is not properly to be categoised as the publisher at common law, there is no need of a defence."

So the general position regarding search engines now appears to be that they are not publishers of the content they display on their search results page and, as such, they are not liable for any unlawful content contained therein. However, this is subject to the following provisos:

• This will depend on the facts of each case and the way in which each search engine operates (e.g. search engines acting as aggregators may still run into trouble as Google News did in Belgium in 2007 - see our article here).
• As a High Court decision in an interim application, this decision is not strictly binding legal precedent but is strongly persuasive and highly likely to be followed in future cases - and, perhaps more significantly, to act as a deterrent to claimants joining search engines as co-defendants in defamation claims.

Eady J made much of the fact that Google's service is fully automated and "Google has no control over the search terms entered by users of the search engine or of the material which is placed on the web by its users." It follows that "it has not authorised or caused the snippet to appear on the user's screen in any meaningful sense."

As there is no directly applicable case law and no specific legislation on the question of whether a search engine is a 'publisher' for the purposes of defamation, Eady J took the approach "to see how the relatively recent concept of a search engine can be made to fit into the traditional legal framework (unless and until specific legislation is introduced in this jurisdiction". In doing so, he referred to the ISP cases of Bunt v Tilley and Godfrey v Demon Internet.

The idea that one party can be liable for an unlawful statement published by another party goes all the way back to 1894 to the quirky English case of Hird v Wood. In this case, a man sitting in a chair pointing to a defamatory placard was held to be liable because by pointing out the sign, he had contributed to its publication. However, in the even earlier (and even quirkier) case of Smith v Wood in 1813, a man who showed a defamatory caricature to a stranger who had knocked on his door and asked to see his etchings, was held not to have published that defamatory caricature.

Eady J did not refer to either of these cases in his judgment. If he had, I imagine he would have seen Google as the caricature artist acting passively in response to the requests of strangers, rather than the man actively pointing to a sign. Google does not choose what it 'points to' - as Eady J held, it "has no role to play in formulating the search terms" and performs the search "automatically in accordance with computer programmes." In addition, Google has an "absence of knowledge...in relation to the offending material", so on this basis it can be distinguished from the caricature artist as well.

Notice and Take-Down

One of Google's arguments in its defence in this case was that "it is practically impossible and certainly disproportionate to expect [Google] to embark on a wild goose chase in order to determine where the words complained of, or some of them, might from time to time "pop up" on the Web". Eady J agreed with this point, saying "One cannot merely press a button to ensure that the offending words will never reappear on a Google search snippet...." As such, access to the specific link the claimant complained of may be removed  but this does not mean that the comments will not appear in Google's search results (e.g. if they appear on another site, Google may link to that site, unless the URL for that site is also specifically blocked).

When I Googled "train2game" to see what the fuss was about, the following message appeared at the bottom of the search results page:

 

So Google has removed the link to the offending comment. It is interesting to note that Google has a mechanism for people to file notices of copyright infringement (see here) but not for other types of unlawful (e.g. defamatory) content. Following this decision, there is no reason (in the UK, at least) for it to change this position.

We have previously advised a client who had written an article which aggravated members of the online community, causing them to attack him in blogs, forums, wikis, you name it. Needless to say, his 'net-rep' was in tatters and he was finding difficulty getting a job as a result. As it was fruitless to pursue all of the sites on which defamatory comments appeared, he went straight to Google to ask them to block the content. However, they said that this was not possible, for the reasons given above. Eady J's decision in this case further decreases his chances of any such remedy.

Eady J did, however, say that "there is no doubt room for debate as to what further blocking steps it would be open for it to take, or how effective they might be." We'll keep an eye out for any developments in this area.

No doubt this will be a welcome development for all search engines. It has created a degree of certainty in this area, bringing the UK into line with those EU member states which have opted to include a statutory exemption from liability for search engines (e.g. Bulgaria). However, there is still room for clarification on the notice and take-down obligations of search engines, which could be dealt with by a voluntary industry code or by the introduction of legislation.

Yasmin Joomraty

Laurence Kaye Solicitors

US Publishers and Google do a deal to settle copyright ligitation!

Dear reader

So a deal in the US litigation (subject to Court approval) arising out of the Google Book Search Library Project has been done! The stakes were high - I've always said too high - for Google to risk losing the ligitation class-action lawsuit brought by book authors, the Authors Guild and certain publishers against Google in 2005 which challenged Google’s plan to digitize, search and show snippets of in-copyright books and to share digital copies with libraries without the explicit permission of the copyright owner.

Under the agreement, Google will make payments totaling $125 million. The money will be used to establish the Book Rights Registry, to resolve existing claims by authors and publishers and to cover legal fees. 

 There are full details about the deal on the AAP website.

Quoting from their Press Release: "If approved by the court, the agreement would provide:

• More Access to Out-of-Print Books -- Generating greater exposure for millions of in-copyright works, including hard-to-find out-of-print books, by enabling readers in the U.S. to search these works and preview them online;
• Additional Ways to Purchase Copyrighted Books -- Building off publishers’ and authors’ current efforts and further expanding the electronic market for copyrighted books in the U.S., by offering users the ability to purchase online access to many in-copyright books;
• Institutional Subscriptions to Millions of Books Online -- Offering a means for U.S. colleges, universities and other organizations to obtain subscriptions for online access to collections from some of the world’s most renowned libraries;
• Free Access From U.S. Libraries -- Providing free, full-text, online viewing of millions of out-of-print books at designated computers in U.S. public and university libraries; and
• Compensation to Authors and Publishers and Control Over Access to Their Works -- Distributing payments earned from online access provided by Google and, prospectively, from similar programs that may be established by other providers, through a newly created independent, not-for-profit Book Rights Registry that will also locate rightsholders, collect and maintain accurate rightsholder information, and provide a way for rightsholders to request inclusion in or exclusion from the project. "

The deal could be described as 'win, win' for all concerned. But, above all, it proves that copyright remains absolutely at the heart of the digital media age.

In my '10 Principles of Digital Media Law', number 10 is 'Collaboration's the name of the digital media game'. This deal is proof positive of this.

Have a good week!

Laurie Kaye

What's Hot in Digital Media Law: The transition from digital to analogue

So we’ve arrived at the concluding chapter of the digital media story. Previously, we've taken a quick overview of "digital media" and the febrile state of the market and gone on to look at three out of my four focal areas of change - 'What and How to Regulate?', 'Who Carries the Can?' and ‘The Boundary between the Public and Private Domain.’

This brings us to the 4^th are of focal change: the transition from digital to analogue, perhaps the most significant area of all.

Rushing slowly to change

“We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten”. Bill Gates

Google’s revenues were $0 in 1997; Google's profits were $1.21bn (£608m) for the three months to the end of December 2006! That's change!

Change is indeed both slower and quicker than we expect. Over the next 10 years, perhaps the most important developments will be those hidden in the Web’s plumbing. They will build more intelligence into the Web so that – to borrow a phrase I heard Simon Juden, The PA’s Chief Executive use  the other day – “Websites become Web services.”

Technical standards: not glamorous, but vital to the digital future

What I’m talking about here is the unglamorous world of technical standards which make it possible for machines such as search engines to talk ‘intelligently’ to other machines such as websites and other devices, so that, for you and me as users, we can find the content or service we want, see and pay for the permissions we need and then download and enjoy that content.

This is the arena of what I call ‘de facto’ law. Although the law (e.g. copyright law) may provide the overall legal framework for what can and can't be done with copyright content, standards control what happens. In that sense, they are a kind of 'de facto' law.

In the digital world, technical standards play a major role in determining how digital goods and services are exchanged. The ACAP ('Automated Content Access Protocol') project is developing a standard for 'machine to machine' permissions readable by search engines giving website owners much more control over what search engines can and can't do.

Technical standards and the publishing industry

In the publishing industry, ONIX for Licensing Terms is a “family” of XML document schemas which are being used to express licences in a machine-readable form. For example, ONIX for Publications Licenses (ONIX-PL) is a means of expressing the licenses agreed between publishers, hosting services, libraries and consortia in machine readable form.

Some of these tools simply mean that, on the click of a mouse, a user in a library can see what he or she is allowed to do with the content. It’s just a clever way of attaching and displaying permissions on screen. It’s then up to the user to respect the permission (or not!). In that way, it like the Creative Commons licence that is often used to encourage the sharing of content for non-commercial purposes.

In other cases, it is ‘machine actionable’. That’s where one machine – such as a search engine – interacts with another machine – a web browser.

Taken together, these software tools, built on common standards, are the building blocks of a 21^st century rights management system. In discussing these standards and software tools, I

have deliberately avoided using the term “digital rights management” or “DRM” because they are generally used to describe technical protection measures ("TPMs") such as Apple’s ‘Fairplay’ system which technically controls the number of copies that can be made as well as the devices on which the content can be played.

Of course, TPMs have a role, especially with regard to enduring content such as films and music, although many services are now offered TPM free. But I want to use DRM – or other terms – to describe the bigger picture of tools that can be used to locate works and express permissions, whether or not TPMs are used.

That's it?

So is that it? Have we covered the full gamut of digital media law? You bet we haven’t!

Working out which laws apply and which Court’s have jurisdiction remains a challenge when we have territorially-based laws and jurisdictions applied to cross-border services. But there are international treaties and legal frameworks to work out the answers in practice. It just takes time to evolve.

A good example of the old coexisting with the new in the world of digital media law is how Linden Lab, the owners of Second Life, use good old contract law in the form of their Terms and Service to deny service to participants who don't play by the rules.

And there’s plenty more. But they are for another day! Along with a whole load of other stuff.

Some concluding thoughts for the future

More changes in copyright law are in the wind, just as television, film and other audio-visual download services start to take off. We've got to get the rights management system 'fit for digital purpose', so that everyone in the content chain gets their fair reward whilst citizens and consumers get the content they want - when, where and how.

Lastly, you can’t work as  lawyer in this fascinating area without having your ‘10’ key principles of digital media law. So here are mine:

• There’s always a solution
• Online rules = offline rules (mostly)
• Living with uncertainty, so manage your risk
• Value your IP
• Copyright: permissions first, restrictions last
• Think privacy
• Collaboration’s the name of the digital media game
• Make it simple(r)
• Do the deal but allow for the exit
• What are the things you don’t know you don’t know? (Thanks Donald)

Laurie Kaye

Have a good week.

Thanks for reading and watch out for new themes in upcoming posts.

What's Hot in Digital Media Law - 4

The story so far. We've taken a quick overview of "digital media" and the febrile state of the market and gone on to look at the first of my four focal areas of change - what and how to regulate.

Deep breath - the hottest and probably most difficult area is the 2nd: the issue of liability (or not) of service providers and other intermediaries for user contributed/created content. My apologies in advance for a very lengthy post but it's probably best to get it over in one go!

WHO CARRIES THE CAN?

The issue of how far – if at all – intermediaries such as ISPs and social network sites should have responsibility for illegal content transmitted by users over their networks or hosted on web servers or other hosting services, is not, in Internet-time, a new issue.

Indeed, it was at the heart of the E-Commerce and Copyright Directives when they were negotiated during the mid to late 1990’s.

So why is it such a hot topic now? There are two reasons. First, it’s been put firmly at the top the digital media law agenda because of pirated audio-visual goods and illegal downloads.

Second, the legal rules about intermediaries’ liabilities, certainly in Europe and the US, were developed in the mid to late 1990’s in a pre Web 2.0 world, before social network sites and search engines became ubiquitous. As a result, there is a lack of legal certainty about how these rules apply to the likes of Facebook and YouTube.

So as legal fights continue, such as the ongoing litigation in the US between Viacom and YouTube, the emerging theme, I believe, is that voluntary agreements reached by collaboration and negotiation between all stakeholders underpinned, where necessary, with legal sanctions, is the best way forward.

With that background in mind, I am going to look first at the position of ISPs and then at hosts.

Liability of ISPs

This is arguably hot topic numero uno. The issue is being driven by the music industry but there’s no doubt that it is of equal significance to providers of on-demand services of all types of digital content. 

The position of the two main protagonists is clear. The BPI says that “Studies show that more than six million ISP customers regularly use their broadband accounts to unlawfully download and distribute music online.” As a result, the BPI wants UK ISPs to help cut down unlawful downloads by operating a three step procedure which could ultimately result in them cutting off their offending subscribers.

In response, Charles Dunstone, of TalkTalk says: “We give access to the internet, we do not control it, nor do we control what are users do on it. I cannot foresee any circumstances in which we would disconnect a customer’s account on the basis of a third party alleging a wrongdoing. The music industry has failed to adapt and seeks to foist their problems on someone else”.

This is tough talk but he’s right to point out there is a vital link between the fight against illegal downloads and the available of legitimate, commercially available online services. This link is also one to which the Regulators’ pay a lot of attention. However, Mr Dunstone is likely to be proven wrong about the future role of ISP’s on this issue.

Following the Gowers Review on Intellectual Property, the Government has given a commitment to legislate by April 2009 if ISPs are unable to reach a voluntary agreement or code of practice with industry.

So here are the key questions:-

1.     Given the fact that ISPs enjoy a number of legal immunities, how can they be forced to play a role? (The short answer is they can, because they are immune from damages, but not absolved from all legal responsibilities).

2.     If they can be forced to play a role, how active a role will that be? In particular, will they have to use filtering technologies to detect infringing content? Can they be compelled to disclose personal information about their subscribers?

Let’s take a closer look at ISP immunities.

Under the E-Commerce Directive and the implementing UK Regulations, service providers have immunity from damages for all types of illegal content transmitted or ‘cached’ in their networks at the initiation of their customers. This immunity covers all types of illegal content, from copyright and defamation to obscenity and blasphemous material.

In the EU, this ‘across the board’  immunity for service providers is complemented by ‘mere conduit’ and ‘caching’ exemptions in the Copyright Directive (and now in UK copyright law) specifically for copyright materials carried or ‘cached’ on their networks.

In addition, the E-Commerce Directive reinforces these exemptions by providing that there is no obligation on service providers to monitor the information they transmit or store, nor a general obligation to actively seek facts or circumstances indicating illegal activity.

However, immunity from damages does not equate to exemption from all responsibilities. Both the E-Commerce and Copyright Directives contain provisions which allow member states to introduce legal rules to force ISPs to play a ‘middleman’ role in dealing with illegal content, although there is debate about their precise scope.

These provisions could lead to legislative measures in member states allowing the Courts to compel ISPs to terminate or prevent infringement or to require them to provide information to competent public authorities of alleged illegal activities by their customers “with whom they have storage arrangements.” This could information such as IP addresses.

But this is a tricky and complex area of the law. As I try to navigate you through this complexity, you may think like me that cross-industry voluntary codes have got to be the preferred route, with the legal rules as ‘backstop’ measures.

Let me give you an example of that complexity. In March this year, the European Court of Justice (ECJ) made a somewhat Delphic decision in Promusicae v. Telefonica. This arose out of an action which the Spanish music collecting society brought against Telefonica in the Spanish Courts for an order to force the ISP to disclose the names and physical addresses of its users who exchange illegal copies of copyright works using KaZaA' P2P software. 

The ECJ were asked to answer this question: does European law require member states to impose an obligation on ISPs to disclose personal information about their users in the course of civil proceedings Answer: "no".

But the ECJ's decision does leave the legislative door open for rights holders. The ECJ said that what it had to do was balance the provisions in Community law that protected intellectual property rights (IPRs) with those that protected personal privacy. So introducing legal measures that could, in carefully prescribed circumstances, force the disclosure of user information is not precluded.

We have also had a few interesting Court cases which show that the ISPs’ mantra of “hear no evil, see no evil’ is becoming increasingly unsustainable as the digital world evolves. The issue is therefore this: how far will an ISP have to go in dealing with infringing material on its services in order to preserve its immunities?

In a recent case in Belgium, (May 2007) SABAM, a collecting society in the music industry, sued the ISP Scarlet (formerly Tiscali) for handling peer to peer traffic containing musical files which breached copyright.

The Judge noted that there was no obligation on the ISP to monitor, the Court decided in favour of SABAM. Nevertheless, he decided that to be able to take advantage of the immunity, the ISP in this case had a duty to use filtering technology. He was influenced by one of the introductory paragraphs in the E Commerce Directive that said that the absence of a duty to monitor "should not preclude the development and effective operation of technical systems of protection and identification and of technical surveillance instruments made possible by digital technology.” But whether and to what extent the use of such technology should be mandated by law is a moot point.

Following that decision, four major record companies – EMI, Sony, Warner and Universal - are suing Ireland’s largest ISP, Eirecom, demanding that it takes action to prevent users from illegally downloading or sharing music.

As a result, it’s clear that the UK Government has a mandate to legislate if the ISP and music industries cannot reach a voluntary agreement. Whilst the issue has been driven by the music industry, it’s of equal concern to all sectors of the media industry as they build their online businesses. It seems to me that it’s far better to negotiate a cross-industry deal than risk the heavy hand of legislation.

Against this background, the BPI on behalf of the music industry is trying to negotiate a ’3 strikes and you’re out’ procedure with UK ISP’s, through the Internet Service Providers Association (ISPA).

The BPI routinely gathers evidence about illegal downloads by logging on to sites which offer files and downloads via peer to peer. Under the BPI’s proposals, instead of using the evidence to begin a process of legal action against the individual customer, the BPI would send the evidence to their ISP, who can identify that customer from the IP address and send them an advisory letter. That way, it would avoid the issue of disclosure of personal information by the ISP.

Here is how the BPI describes the procedure it would like to see:

·        If an ISP’s customer’s account is being used to file share music illegally, they would be informed about what is happening and advised as to how they can avoid it happening again.

·        If the advice is not followed, the customer does not act on the letter and the account continues to be used unlawfully, the account is suspended pending a signed undertaking from the customer to the ISP that the unlawful activity will cease.

·        If, after the suspension and undertaking, the customer‘s account is used unlawfully a third time, the contract is cancelled.

But ISPs are not happy with these proposals and these negotiations will be protracted and difficult. For example, ISPA wants an indemnity for ISPs in the event that it transpires that an innocent customer has his or her account wrongly terminated. 

But in my view, however difficult to achieve, a voluntary agreement is preferable to surrendering to the uncertainties of legislation.In Europe, there are already initiatives underway to create more collaborative arrangements with all the stakeholders in the digital media industries.

In France– home of author’s rights – there is already quite a far-reaching agreement in place. The Memorandum of Understanding, otherwise known as the 'Accord Olivennes', is an agreement sponsored by the French Government between the public authority, rights holders and service providers, including ISPs and hosts. Interestingly, it imposes obligations on all participants and makes a direct link between the development of legitimate business models for online delivery and the fight against piracy.

There are several other features of the agreement which are interesting:-

·        The procedure is more heavily Court-based than the proposed UKprocedure. The warning messages are sent out via the ISP in the name of the public authority, not the ISP’s. Court authority is needed to suspend or terminate the account.

·        ISPs and rightholders have agreed to work together to test filtering technologies and ISPs have agreed to use them where technically and financially realistic.

·        As regards hosting and content-sharing platforms, ISPs have agreed to cooperate in good faith with rightholders regarding the potential use of fingerprinting and watermarking technologies.

That’s a sensible approach in my view. As compared with technologies used to identify content, there are freedom of speech issues to be taken into account when deploying filtering technologies which, for example, could have the effect of barring legal forms of communication.

Interestingly, as their part of the deal, Audiovisual, film and music rights holders undertake a number of obligations. These cover technical issues and potentially far reaching changes to existing ‘windows of exploitation’ to accelerate the availability of films online.

What about the liability of social networks and other hosts?

Hosts, including social network sites, also have immunity under the E-Commerce Directive from damages claims for content posted by users to their platforms. Furthermore, there is no general duty to monitor content.

But there are several problem areas in how the law works here. The E-Commerce Directive shows its age when it refers almost quaintly to “information society service providers.” Article 14 says that “Where an information society service is provided that consists of the storage of information provided by a recipient of the service, Member states shall ensure that the service provider is not liable for the information stored at the request of the service”, provided certain conditions are met.

Does Facebook, MySpace, YouTube sound to you like an information storage service? Think about AOL’s recent $850m acquisition of Bebo to enable it to become, in the words of its CEO, “a social medium powerhouse”. You can immediately see why many rightsholders say “no” or, at the very least, “in some aspects “yes” and in others “no”.

Rightsholders point to sites like YouTube and argue, essentially, that they are not service providers as envisaged by the E-Commerce Directive or DMCA but are, in essence, content providers and therefore are either directly infringing copyright or inducing its users to infringe copyright.

But even if a service provider is covered by the exemption, their immunity disappears with knowledge of the infringing activity, such as the posting of copyright infringing material.

The immunity therefore only applies on condition that:

• The provider does not have actual knowledge of illegal activity nor aware of any facts or circumstances from it is apparent; or
  
• On obtaining knowledge or awareness “acts expeditiously to remove or disable access to the information”.

So in its legal action against YouTube in 2007, another argument raised by Viacom was that YouTube knew its users were posting copyright infringing material and did nothing to stop it.

The issues here are essentially practical ones. What constitutes “knowledge”, how quick does a service provider have to be to be “expeditious”? There is no prescribed form of notice.

So the solutions here need to be developed on a cross-industry collaborative basis rather than through the Courts.

Generally speaking, ‘notice and take down ‘procedures do seem to work. But there are uncertainties, especially as regards user contributed content. For example in 2007, a French Court, in Zadig Productions v Google, Inc had to decide whether a hosting site is liable for subsequent re-postings of the same infringing content, having been notified about it and taken it down once.

The Court looked at what Google needed to do in order to 'act expeditiously' to remove infringing content from Google Video, and so be able to rely on the exemption from liability for hosts. The problem here was that although Google removed the infringing content, it was re-posted. The Court rejected Google's argument that each post required another takedown notice. It took the view that, having received the first notice of the infringement, Google was responsible for implementing technical measures to block posting of the same content. This follows the same logic as the judge applied in the case of SABAM v Scarlett to which I referred earlier.

The law, being the law, will continue to evolve. Cases will continue to test the boundaries between ISP and social network immunities, filtering and information disclosure obligations and freedom of speech.

But this takes time and is imperfect. As a result, the relationship between technology, business and the law is never truly in sync. That is why self-regulation and voluntary codes, backed where necessary with legal sanction, will increasingly be the regulatory instrument of choice.

If you're still reading - well done and enjoy a well deserved weekend break.

Laurie Kaye

What's New in Digital Media Law (2)

Well, for those of you who spent the weekend waiting anxiously for the 2nd installment of 'What's New in Digital Media Law', here is. In it, I'm doing some further scene setting with an overview of "Digital Media" and the "Digital Media Market."

“DIGITAL MEDIA”

You can take your pick of definitions of the phrase “digital media”. But I’m using it to mean two things:

First, digital delivery channels – the Internet, mobile and digital television – to deliver content and to provide a platform to sell physical products online.

Examples include:

o        Online music services.

o        Books sold through publishers’ websites as well as distributors such as Amazon.

o        TV programmes delivered on-demand via ‘catch up’ services such as the BBC’s i-player and Channel 4’s 4OD.

o        The emerging market for Internet-distributed movies. For instance, Apple recently signed deals with all Hollywood Studios for itunes rental, although not for digital purchase.

Second, I am using “digital media” to cover new, ‘born digital’ content and services which would not have existed but for digital technology and the Web. For example:

o        ‘3D’ Movies. 

o        Social Network/community sites such as Youtube, Myspace and Facebook.

o        E-books and digital audio books which, with their searchability and other features in digital form, are really different to their paper and analogue audio counterparts.

o        New advertising-supported services such as interactive Internet TV services like ‘Babelgum’ which offers independent and new content, including professionally created user content with ‘Web 2.0’ features such as tag searches and collaborative filtering.

In fact, this distinction between new distribution channels and new digital services is artificial. Increasingly, new digital services act both as a channel to distribute what one might call traditional content such as films and as a platform to deliver new services. For example, MySpace is in talks with music labels for downloads; there are film clips available on YouTube and blogs like the ‘HuffingtonPost.com’ are morphing into online newspapers.

Over time, these distinctions will disappear and digital media will simply become “media”.

And let’s not forget that content moves just as easily from digital to analogue as the other way round.  Look at the current litigation in New York, in which JK Rowling is suing for copyright infringement arising from the unauthorised publication of a book, The Harry Potter Lexicon, which consists substantially of JK Rowling material first published on the Web.

STATE OF THE DIGITAL MEDIA MARKETS

How do the markets for digital media content look to our Regulator? They’re in a febrile state; “living with uncertainty and ambiguity” you might say if looked at from a psychological perspective. Markets characterised by change, experimentation and upheaval as well as the prospect of significant growth. An independent study on the interactive content market in the EU projects that revenues from online content will more than quadruple from €1.8b in 2005 to €8.3b by 2010.^[1]

The biggest challenge facing the media industries today is, I think, commercial rather than legal. It’s how to re-shape existing business models, and to develop new business and revenue models, in the face of 3 major trends:-

1.       Consumers’ reluctance to pay for Internet-distributed content. Currently, 99.9% of video consumption over the Internet is advertising supported.

2.       The shift in advertising revenues from traditional to digital media outlets;

3.       The impact of the Internet on “traditional” distribution models. For example, the market’s desire for on-demand movie services is putting the film industry’s traditional windows of exploitation – theatrical release, DVD, Pay TV and sell-through – under increasing strain.

What’s more, the content industries are faced with massive losses through counterfeit DVDs and large-scale piracy via P2P file sharing. Interestingly, as the TV industry moves to compete with online videos, television now ranks in the US as the fastest growing category of internet piracy.[2]

So what our Regulator sees are nascent markets where he or she must tread warily! With that in mind, in the next installment we'll start to tread the Regulator’s path and examine the four focal points of change in the world of digital media law.

Have a good week and enjoy the sunshine.

Laurie Kaye

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[1] Study on Interactive Content and Convergence; Implications for the Information Society”, commissioned by InfoSoc and Media Directorate General, published 25 January 2007.

[2] According to ‘BigChampagne’ a consultancy that measures online file-sharing, as reported in the FT on April 7.

What's Hot in Digital Media Law

In case you missed it, April 30th was the Web's 15th birthday. April 30th 1993 was the day that CERN announced that the Web was free for use by anyone. So it turned out to be an auspicious day for the talk I gave that day 'on What's Hot in Digital Media Law'. I had a great turnout - around 100 people - and thought that you might enjoy reading it in bite sized chunks on my Blog. So I'll start the 1st installment with my Introduction, a bit of scene setting.

Introduction

Things used to be so simple. The law was securely locked up in expensive tomes sitting on the shelves of its custodians, we the lawyers, encased in archaic language.

And then along came Tim Berners-Lee, the inventor of the World Wide Web, in the early 1990’s and it all changed. His specifications for HTTP, HTML and URIs have democratised access to content and empowered digital citizens and consumers.  Ever since, the law has been chasing the long tail of digital content.

From the moment we set foot on the Information Superhighway and entered the world of multimedia – remember them? –the law, technology and business models have never been in sync. They’re each in the grip of different forces and processes, moving at their own speed of change, from warp to weary!

But the one constant in all of this is powerful, even systemic, change.

We see new actors – search engines, social network sites, online content providers and, of course, the citizen consumer as content creator.

We have new technological tools, technical standards, and software applications which enable digital content to be created, located, moved, and shared – legally or illegally - across broadband networks.

At the same time, analogue media, especially the printed word, continue to co-exist with digital media and are likely to do so for the foreseeable future.

So is the law fighting a losing battle in the midst of this upheaval? Is it losing its own case in Court over its right and ability to regulate the world of online media?

As we stride (or, perhaps, stumble!) into this new environment, we can, I think, see four focal points of change.

1.    “What and how do you regulate?” In the traditional world of broadcast television and spectrum scarcity, this was fairly clear. But what’s the right approach to regulating content when we move to new online services that deliver a mix of programme-based and on-demand services, mixing film and TV material along with blogs and literary content? And what are the right kinds of regulatory tools to be used, ranging from prescriptive laws to voluntary codes of conduct?

2.    “Who carries the can?” What legal responsibilities should ISPs, social network sites and users have for illegal and harmful content?

3.    “Where should the boundary between the public and private domains be drawn?” The private is the domain of intellectual property rights, especially copyright, data privacy and notions of permissions and consents. The public is the domain of access, use and re-use of all types of content and information. The fundamental challenge faced by regulators, and by all of us as digital citizens, is to decide where the digitally-blurred boundaries should be set. 

4.    “Making the transition from analogue to digital”. Here, the fundamental issue is how we move from a world of paper-based contracts, dusty files and rights holders we can’t locate to one in which, at the click of a mouse, users can locate works, instantly see permitted terms of use and obtain permissions.

In the next installment, I'll give a very brief overview of “digital media” and the digital media market.

Enjoy the long weekend!

Laurie Kaye