Holy copyfight, Batman! Copyright, merchandising and Hollywood

Posted by Kelly Griffiths ● Partner: Paul Kallenbach

Image courtesy of scottjlowe

On 26 January 2012, Judge Lew of the US District Court (Central District of California) denied a motion to dismiss copyright infringement proceedings concerning replica Batmobiles. His Honour held that the plaintiff, DC Comics, had pleaded sufficient facts to support a claim for copyright infringement, and that the Batmobile is not clearly excluded from copyright protection. Whether there are aspects of the Batmobile that are subject to copyright protection was, according to the Court, a question to be determined at trial.

The proceedings

On 6 May 2011, DC Comics commenced trademark and copyright infringement proceedings against Mark Towle, owner of "Gotham Garages". Mr Towle's business builds custom cars from popular films and television shows, including two models of the Batmobile.

On 25 January 2012, Mr Towle brought a motion to dismiss DC Comics' copyright infringement proceedings, arguing that the US Copyright Act affords no protection to "useful articles" or items with an intrinsic utilitarian function such as automobiles.

Judge Lew denied the motion, finding that there may be 'non-functional artistic elements of the Batmobile that may possibly be separated from the utilitarian aspect of the automobile' and protected by copyright. 

Does copyright subsist in the Batmobile?

Judge Lew's decision sparked hysteria in the blogosphere – the word was out that copyright subsists in the Batmobile! In fact, we don't yet have an answer to that question. Judge Lew's decision was limited to determining whether DC Comics had pleaded sufficient facts to support its claim of copyright infringement. Whether copyright does subsist in the Batmobile is a question for trial, including whether there are non-functional or artistic elements of the Batmobile that are protected by US copyright law.

Meanwhile, in a courtroom far, far away...

The Batmobile litigation is not the first of its kind (nor is it likely to be the last). In 2006, Lucasfilms sued Shepperton Design Studios for copyright infringement in the Californian District Court over its reproductions of the "Star Wars" Stormtrooper helmets. The defendant, who lived in the United Kingdom, did not defend the proceedings in the United States, and the District Court awarded Lucasfilms US$20 million in compensation.

Unable to enforce the judgement against the English defendant in the United States, Lucasfilms commenced copyright infringement proceedings in the United Kingdom. At all levels of appeal, the United Kingdom courts held that, under English law, the Stormtrooper helmets were not artistic sculptures or works of artistic craftsmanship subject to the protection of English copyright law.[1] However, in an associated ruling in July 2011, the British Supreme Court did recognise that Lucasfilms' copyright had been infringed in the United States, and that the Californian judgement was enforceable in the United Kingdom.

Whilst the decision of the British Supreme Court finding that no copyright subsists in the Stormtrooper helmet is certainly not binding on courts in the United States, it will be interesting to see if the Californian court in the Batmobile litigation is influenced by the approach of the English Courts in relation to industrial items and artistic works.

Where to from here?

Film merchandising is a multi-billion dollar industry. In 2003, film and media merchandising generated US$16 billion in revenue in the United States alone.[2] It's no surprise, then, that rights owners will look to the courts to protect their lucrative merchandising income streams. However, relying on copyright law to do the job may be fraught, particularly in jurisdictions such as England and Australia where copyright protection doesn't usually extend to artistic works that have been applied industrially.

Thousands upon thousands of Batmobile model toys have been sold worldwide under licence from DC Comics. Under Australian copyright law, the reproduction of Batmobile toys may well be considered the industrial application of the Batmobile design. Accordingly, in the absence of a current Australian design registration, the reproduction of the Batmobile design may not amount to copyright infringement (although, in a future post, we'll consider whether trade mark law might step in here). Holy loophole, Robin!
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[1] Lucasfilm v. Ainsworth [2011] UKSC 39.
[2] G. Saradhi Kumar and Sumit Kumar Chaudhur, 'Film Merchandising: The Hollywood Style' (2004) IBS CDC, available here.

Sending data overseas - don't worry, be happy?

Posted by Veronica Scott  ●  Partner: Paul Kallenbach

Image courtesy of lennysan



Any decision to host its email services offshore triggers privacy law compliance issues for Telstra.  Our focus in this blog post is on the transborder data flow requirements of National Privacy Principle 9 (NPP9) of the Privacy Act 1988 (Cth) as they apply to offshore hosting.

Last Friday, Telstra announced that BigPond customers will soon experience its new "BigPond with Windows Live" integrated email service.  It is rumoured that Microsoft will host the service offshore (though Telstra will retain a copy of all BigPond emails locally).

NPP9

NPP9 permits an organisation to transfer personal information about an individual to an organisation outside Australia, but only if the transfer meets one or more of the six conditions in NPP9.  The four conditions relevant to Telstra in this scenario are likely to be:

(a)  it has a reasonable belief  that Microsoft, as the recipient of the personal information, is obliged by law or otherwise to uphold principles substantially similar to the NPPs;

(b)  it has taken reasonable steps to ensure that Microsoft will not use or disclose the information inconsistently with the NPPs;

(c)  its customers consent (expressly or impliedly) to the transfer; and/or

(d)  all of the following apply:

• the transfer is for the benefit of the customers;
• it is impracticable to obtain their consent to the transfer; and
• if it were practicable to obtain their consent, they would be likely to give it.

Telstra's Customer Terms and Conditions (Terms) set out both Telstra's and its customers' rights and obligations in respect of the BigPond email service.

Interestingly, the 60-plus pages of Terms do not expressly confer on Telstra a right to store emails offshore.  Rather, the Terms provide that '[i]nformation concerning you will be held in a database' but without specifying any particular jurisdiction or geography.

The Terms also refer to the Telstra Privacy Statement, which is one of a suite of privacy documents Telstra has for its customers.  The Privacy Statement provides that personal information is disclosed to external organisations so that Telstra may 'deliver the services you require', including 'information technology services' among others.  Telstra has reportedly confirmed that its BigPond customers will need to sign up to a new set of terms and conditions to allow it to host their emails offshore.

If Telstra's current agreement with its customers does not confer on Telstra express or implied consent to transfer their personal information overseas, one of the other conditions in NPP9 must apply to allow the personal information to be transferred overseas.  Microsoft would no doubt argue that it meets condition (a), on the basis that privacy laws in the US are generally similar to, if not more stringent than, the NPPs.

However, is this argument reasonable given that certain US authorities will be able to access personal information held by Microsoft for purposes that would not otherwise be permitted if the data had stayed in Australia?  Such access would be permitted even if Telstra and Microsoft have entered into an agreement to ensure that BigPond customers' personal information is protected in a manner consistent with the NPPs – on the basis that NPP2.1(g) allows an organisation who holds personal information to disclose it if required or authorised by law to do so.  Telstra would no doubt argue that any compelled disclosure by US authorities falls squarely within NPP2.1(g).

Implications

To sidestep the (often difficult) issue of whether local privacy laws are 'substantially similar' to the NPPs, best practice would be to obtain express or implied customer consent for any prospective transborder data transfer (for example, in the organisation's terms and conditions).

Safety in the cloud?

Many businesses are concluding that their customers' personal information is likely to be more secure in the cloud than if stored by the business itself.  Small businesses in particular will generally have far less expertise in cyber and data security than large, professional technology organisations.  Moreover, protection of data for the likes of Telstra, Microsoft, Google and Apple is as much a reputational issue as a legal one.  If companies such as these cannot show that they can be trusted to protect personal data, their brands (and ultimately businesses) are likely to suffer.

Cognisant of this issue, Microsoft's Chief Privacy Officer, Brendan Lynch, said in December on Microsoft's website:

I recently returned from a two-week trip to discuss a range of privacy topics with customers and regulators in Australia and New Zealand. In virtually every conversation, I was asked about Microsoft’s approach to data protection in our cloud services. Microsoft representatives around the world report hearing similar questions regularly in each of their regions. These questions are understandable [...] At Microsoft, we understand that unless we are responsive to our customers’ and to regulators’ questions about data protection in public clouds, we will not earn the trust necessary for our cloud services to satisfy our customers’ needs.

In the next 12 months we'll see the continued rollout of the National Broadband Network (NBN), together with faster and more reliable mobile internet services (such as 4G LTE).  This will no doubt further bolster the adoption of cloud apps by both businesses (think Salesforce.com, Microsoft Windows Live, Google Apps and many more besides) and consumers (think Apple iCloud, Dropbox, Spotify, Evernote, amongst many others).  Indeed, as reported in today's Communications Day, KPMG has estimated that the total GDP impact of cloud computing adoption over the next decade in the finance, property, business services and education sectors, will be around $1.6 billion a year. 

However, with a number of serious data breaches having occurred in 2011, demonstrably strong data protection will be required in order to maintain business, consumer and government confidence in cloud services.

Federal Court finds Optus' TV Now service does not infringe copyright

Posted by Li Yen Ng

On 1 February 2012, Rares J handed down his decision in Singtel Optus Pty Ltd v National Rugby League Investments Pty Ltd (No 3) [2012] FCA 34, finding that Optus had not infringed the copyright in free-to-air broadcasts of AFL and NRL games, by operating its TV Now service.

The Australian Football League (AFL) and the National Rugby League (NRL) claimed that Optus had infringed their copyright in free-to-air television broadcasts of their respective football competitions. They were joined in their allegations by Telstra, the exclusive licensee to stream AFL and NRL games footage over the internet and mobile telephony devices.

The AFL, NRL and Telstra (the rights holders) alleged that Optus had made infringing copies of cinematographic films of those broadcasts and had communicated those films to users of TV Now. Optus contended that its users, rather than Optus itself, had made the copies of the films and those users had not infringed copyright as their actions fell within section 111 of the Copyright Act 1968 (Cth) (Act), known as the time shifting exception.

In a decision very much focused on the practicalities of modern media consumption, Rares J held that the time shifting exception applied to TV Now. The decision (if upheld on appeal) creates opportunities for new media services but will force content owners and distributors to re-evaluate the value of exclusive rights to content on mobile and online platforms, at least where that content is also broadcast on free-to-air television.

Optus TV Now – the technology

Optus' TV Now service allows users to pre-select which free-to-air television programs they wish to record (including AFL and NRL games) and then play them back on any one of four compatible devices, namely PCs, Apple devices, Android devices and 3G devices, within 30 days. When users chose to record a particular program, Optus' system records the program in four different formats, which are stored in Optus' network attached storage (NAS) computer in its data centre. When a user later chooses to play the recorded program, Optus' data centre streams a copy of the program in a format appropriate to the device being used to view the program. If no user instructs TV Now to record a program, no recording occurs (an exception being the Apple QuickTime Streaming system which was not resolved in this proceeding). While any copy of a program made on the NAS is associated with a particular user, the copy of the program is not stored on the user's device. 

Issues to be resolved

The dispute focused on section 111 of the Act, which provides that:

(a)  This section applies if a person makes a cinematograph film or sound recording of a broadcast solely for private and domestic use by watching or listening to the material broadcast at a time more convenient than the time when the broadcast is made.

(b)  The making of the film or recording does not infringe copyright in the broadcast or in any work or other subject-matter included in the broadcast.

Rares J considered that there were three main issues to be decided.

1.  When a user clicked the 'record' button to record a program, who made the film recording stored in the Optus' data centre – Optus or the user?

Rares J held that it was the user that made the recording.

The rights holders argued that Optus had made the recordings because it owned and operated the complex system that picked up the free-to-air broadcast, recorded it in the four formats and subsequently streamed it. However, His Honour considered that fundamentally, the user was solely responsible for the creation of the films – the user decided whether or not create a recording. If a user did not click 'record', no recording was brought into existence. Rares J construed the word 'make' in section 111 as referring to the creation of a recording by initiating a process using equipment that records the broadcast to reproduce someone else's content. Optus simply supplied the technology that allowed users to create the film recordings. His Honour considered that TV Now was analogous to the situation where a person uses a VCR or a DVR to record a television broadcast. 

2.  If the user made those recordings, did section 111 of the Act apply so that the recordings were not infringements of the rights holders' copyright in the broadcasts? 

Rares J noted that when users subscribed to TV Now, they were taken through a sign up process during which a notice stating: 'it is a breach of copyright to make a copy of a broadcast other than to record it for your private and domestic use'. Further, a user is directed to read and agree to terms and conditions that include the terms: 'Optus TV Now is for your individual and personal use .... You are advised that it is a breach of copyright to make a copy of a broadcast other than to record it for your private and domestic use by watching the material broadcast at a more convenient time'. Those terms draw on the key elements of the section 111 exception. 

The rights holders argued that Optus had not proved that the copies were made solely for private and domestic use for viewing at a more convenient time. His Honour rejected this contention, finding that it was contrary to the purpose of the section 111 exception (being to provide users greater flexibility to take advantage of technological advances) if a service provider was required to submit evidence of each user's individual purpose for each instance of use. Rares J was willing to infer that users of TV Now were playing the recordings for their own private and domestic use. He held that this was consistent with the Optus TV Now terms and conditions that users had agreed to and is also a 'recognition of ordinary experience of life'. He also commented that users viewed the recordings on their mobile devices and PCs, which by their nature, are private. 

3.  When a user clicked the 'play' button causing it to be streamed to their compatible device, did the user or Optus communicate the film to the public or make it available online to the public? 

Under the Act, a copyright owner has the exclusive right to communicate a film to the public, meaning to electronically transmit the film to or make it available online to the public. Section 22(6) of the Act provides that a communication other than a broadcast is taken to have been made by the person responsible for determining the content of the communication. 

Rares J held that the user was the maker of the communication. This was because the user had previously selected the program and had chosen the content of the transmission that they would later play. Again, his Honour drew parallels with other technologies, stating that it was 'just as if he or she had inserted a video cassette or DVD into a VCR or DVD player and pressed play'. 

His Honour acknowledged that it was a somewhat incongruous finding that Optus did not 'communicate' the films given that it had stored the films in its data centre and its technological systems enabled the streaming to each user's device. However, his Honour held that s 22(6) operated such that the person who determines the content – in this case, being the user, and not Optus – is the maker of the communication. 

This raised the issue of whether that communication was 'to the public'. His Honour found that there was no communication to the public. 

When a user clicks the play button, the compatible format of the film stored on Optus' systems is streamed to a user's device. The copy of the film that the user sees is a separate copy from those saved for other users, who only see compatible versions that were specifically recorded for each of them. Further, His Honour found that there can be no communication 'to the public' where a user makes a recording to view it solely for private and domestic use at a more convenient time within the meaning of section 111 of the Act. 

Comment

Rares J's application of the time shifting exception to copyright infringement certainly reflects the internet-enabled shift in the way that the public increasingly consumes its entertainment and media. The very public outcry this week from the AFL and NRL over the decision exposes the internet age's enduring dissonance between the free flow of digital content, on the one hand, and the ability of content holders to maintain exclusive control over that content and segment and monetise it across different platforms. Telstra, for example, is reported to have invested $153 million for exclusive internet rights (although presumably, this includes games that will not be shown on free-to-air TV). 

The press has today reported that Senator Conroy, the Minister for Broadband, Communications and the Digital Economy, has given clear indication that while the government will await an appeal to the ruling, it is considering amending the Act to protect the broadcast rights of sporting bodies.

Partner: John Fairbairn