Born in the USA: recording artists in America fight for their copyright termination rights

Posted by Mark Adair

Image courtesy of notsogoodphotography

It's the hot sticky summer of 1978 in New Jersey. Standing on the boardwalk is a young, hungry 20-something guitar hero, singing his songs about love and fast cars and the raging fire of youth. A major record label comes along and offers him a cash advance to record an album – what does he do? Of course he signs the record contract. Even if it’s a bad deal. He's hungry for fame and has no leverage or negotiating skills.

Copyright termination rights in America

Luckily for such naïve recording artists, s203 of the US Copyright Act of 1976 (Act) affords a way to regain copyright in both sound recordings and authorship of songs registered on or after 1 January 1978 through what are known as 'copyright termination rights'. Copyright termination rights are an equitable remedy enabling an author to terminate previous grants of copyright and renegotiate prior contracts to more accurately reflect the true value of the work, notwithstanding any prior agreement to the contrary.

Copyright (Infringing File Sharing) Amendment Act commences

Posted by Christina Ilinkovski

The New Zealand Copyright (Infringing File Sharing) Amendment Act (Act) commenced operation on 1 September 2011 (except that it will not apply to services provided by a cellular mobile network until 1 October 2013). The Act introduces a new 'three notice' regime to deal with online copyright infringements, in particular illegal file sharing (both uploading and downloading infringing materials). It also extends the jurisdiction of the New Zealand Copyright Tribunal to provide a low-cost means of resolving disputes where an alleged infringer ignores the three notices. This remains an unsettled area of law in Australia – with the 2:1 split decision of the Federal Court in the iiNet case (discussed below) currently on appeal to the High Court of Australia.

The Act amends the New Zealand Copyright Act 1994 in response to widespread concerns as to which internet service providers (ISPs) would be covered by the requirements. The Act introduces new requirements for a specific type of ISP, namely Internet protocol address providers (IPAPs). An IPAP is defined under the Act as:
'a person that operates a business that, other than as an incidental feature of its main business activities:
(i) offers the transmission, routing, and providing of connections for digital online communications, between or among points specified by a user, of material of the user's choosing;
(ii) allocates IP addresses to its account holders;
(iii) charges its account holders for its services; and
(iv) is not primarily operated to cater for transient users'.

The Act sets out a process by which illegal file sharing by users of IPAPs can be detected, brought to the attention of the user and subsequently handled if the user ignores that notification. Copyright owners may notify an IPAP of an IP address where they suspect an alleged infringement of copyright has occurred by file sharing. File sharing is defined in the Act as being where 'material is uploaded via, or downloaded from, the Internet using an application or network that enables the simultaneous sharing of material between multiple users' (uploading and downloading may, but need not, occur at the same time).

Once an IPAP receives a notification, it is required to co-operate with the rights holder by:
1. matching the IP address with the related account holder; and
2. within seven days of receiving the notification, issuing a detection notice (see below) to inform the account holder of the alleged infringement.

Three Notice Regime

Three types of notice can be issued successively to account holders:
1. Detection notice: (current for nine months) issued the first time the IPAP matches the account holder with an IP address at which an alleged infringement has occurred.
2. Warning notice: (current for nine months) issued when an IPAP matches the account holder with an IP address at which an alleged infringement has occurred and the infringement occurred 28 days after the date of a detection notice and that detection notice is still current.
3. Enforcement notice: (current for 35 days) issued when an IPAP matches the account holder with an IP address at which an alleged infringement has occurred and the infringement occurred 28 days after the date of a warning notice and that warning notice is still current.

Notices may be challenged by Account Holders

It is possible for an account holder to challenge a notice by notifying the IPAP of the challenge within 14 days of the issue of the notice. The IPAP is then required to send the challenge to the copyright owner who can either reject or accept the challenge as follows:

(i) If the rights owner rejects the challenge, it must send a response to the IPAP setting out its reasons for doing so within 28 days of the date of the infringement notice. The IPAP is required to send this to the account holder. If a challenge is rejected, it may be raised again by the account holder if the copyright owner commences enforcement proceedings.

(ii) If the rights owner accepts the challenge, or does not respond within the required 28 days, the notice is cancelled and treated as if it had not been issued. For warning and enforcement notices, if the challenge relates only to an infringement that was not an infringement that triggered a notice, the notice is not cancelled but the infringement is treated as if it were not included in the notice.

Enforcement and Remedies

If an enforcement notice has been issued (that is, three notices have been given) and the account holder continues to infringe, the copyright owner is entitled to take an enforcement action to the New Zealand Copyright Tribunal. The Tribunal has the power to award up to NZ$15,000 in damages. Account holders can make submissions to the Tribunal and the Tribunal can decline to make an order for damages if satisfied this would be 'manifestly unjust' to an account holder.

At this stage, proposed provisions to allow a District Court to suspend an internet account for up to six months have not been brought into force. This provision will be reconsidered in 2013 and only brought into force if the three notice process and remedies available from the Copyright Tribunal prove to be ineffective.

The Act has been the subject of both positive appraisal and criticism in New Zealand. Rights holders will welcome the ability to challenge infringement and it is expected that there will be prompt action taken. As stated by New Zealand Commerce Minister Simon Power, 'this legislation will discourage illegal file sharing and provide more effective measures to help our creative industries enforce their copyright'.

However, there has also been continued opposition to the Act. One of the disputed aspects of the Act has centred on which party should be responsible to pay for the costs of sending the infringement notices to account holders: copyright owners or internet users. The Act provides that an IPAP may charge a copyright owner for performing the functions required of the IPAP.

The liability of ISPs for the actions of their subscribers remains a live issue in Australia. In a spilt decision, the Federal Court of Australia in Roadshow Films v iiNet Limited [2001] FCAFC 23 recently found in favour of rights holders – ie. ISPs can be obliged to take action against their customers. At the date of writing this article, this decision is on appeal to the High Court of Australia. Therefore the success of the new New Zealand regime in dealing with illegal file sharing, particularly the three notice process, will be closely watched in Australia.


Partner: Charles Alexander

UK Government endorses the Hargreaves Review

Posted by Christina Ilinkovski

The United Kingdom Government has released a formal written response broadly endorsing the recommendations and criticisms made by Professor Hargreaves in his review of UK intellectual property laws earlier this year (reported in our June edition of IP News).

The Government intends to release a 'White Paper' early next year setting out how it will address the issues raised by Professor Hargreaves. In the meantime, the Government's latest response provides a preliminary indication of their plans for action. Given that Australia is also in the process of reviewing its IP laws (eg. the pending Intellectual Property Laws Amendment (Raising the Bar) Bill 2011), it is timely to consider the relevance to Australia of the issues before the UK Government.

General Endorsements
The Government accepted Professor Hargreaves' overall conclusion that IP is important to growth. It also agreed that in some cases IP laws (particularly copyright laws) were obstructing growth and failing to adapt to new forms of technology and creativity.

Echoing Professor Hargreaves' concerns, the Government noted that past policy decisions on IP were, at times, based on a lack of high-quality evidence and an overabundance of lobbying. Accordingly, future policy decisions will focus on 'open and transparent' evidence and the United Kingdom Intellectual Property Office (UKIPO) will work with organisations to help them offer good-quality evidence.

Digital Copyright Exchange
The Government supports the creation of a Digital Copyright Exchange (DCE) to be used by sellers and purchasers of IP rights to '[enable] a functioning digital market in rights clearance and [act] as a source of information about rights ownership'. The Government believes it is important for the DCE to be commercially attractive to rights owners, and to this end suggests that participation in the DCE should not be compulsory; and that the rights owners can set the prices for their IP (subject to controls on unfair competition).

The Government proposes that the DCE will be self-funded through fees charged on licensing transactions made through the exchange (rather than fees for the upload or searches of rights data). The Government appears to be optimistic about the prompt implementation of the DCE, stating that a functioning licensing system should be in place by the end of 2012.

Modernising copyright licensing
Of particular interest to Australia are the UK Government's comments regarding orphan works – copyright works whose authors cannot be found by those wanting to use the works. The UK Government acknowledged orphan works as posing a significant economic problem. Similar problems also arise in Australia – for example, recently 16,000 radio plays at the Australian National Film and Sound Archive could not be released because the copyright owner could not be located.

The Government proposes to introduce a 'clearance' scheme within the next few months, under which prospective users of orphan works are required to conduct a diligent search for the owner. If no owner is identified, then the orphan work can be used subject to paying a license fee set by the Government (or its agent) based on market rates (in contrast, Professor Hargreaves recommended that the licence fee be set at a nominal rate only). If the owner of the orphan work is subsequently found, future use of the work would be subject to negotiation, but previous use would be subject only to the licence fee set by the Government.

These proposals will be monitored carefully in Australia, where there have been many calls for legislative reform in the area of orphan works.

Recognising the good work done by certain UK collecting societies, the Government plans to publish in early 2012 a set of minimum standards for voluntary codes and to consult with collecting societies to implement those codes. Further, the Government has also accelerated a proposal for extended collective licensing (ECL), with the aim of benefiting smaller creative firms and individual creators. The proposal is based on a Nordic model, whereby, once a collecting society has critical mass (eg. a majority) of people in a particular sector, the collecting society is granted the right to licence works owned by non-members unless they expressly opt-out of the ECL scheme.

The ECL scheme would also apply to orphan works included within a collection of copyright works. After a diligent search to check whether the orphan works are in fact owned and opted-out of the ECL scheme, the relevant collecting society would be entitled to issue a licence to use the orphan work. The collecting society would hold the licensing fees until either the owner is identified or a reasonable period of time lapses. In the latter case, the fees would then be used for social or cultural purposes.

Copyright Exceptions
The Government acknowledges that 'copyright currently over-regulates to the detriment of the UK', for example by restricting activities in a way that creates no direct commercial benefit and may even impede desirable activities. The proposed solution is to introduce broader exceptions to copyright infringement to permit:
(i) limited format-shifting of legally obtained copyright works for personal use;
(ii) parody of another's work without authorisation; and
(iii) wider non-commercial research also covering text and data mining (eg. to give scientific researchers greater freedom to analyse published research).

The aim of removing perceived obstacles to growth under current copyright laws appears a sensible one. However, proposals to extend copyright exceptions are not new (see the earlier Gowers Report on UK IP laws in 2005), and it remains to be seen whether these proposals are in fact implemented.

Patent and Design Law
The Government shares Professor Hargreaves' concern that, in some business areas, patents are anti-competitive and may stifle innovation. It therefore intends to resist extending patents into sectors which are currently excluded unless there is clear evidence of a benefit to innovation and growth. This higher threshold will likely be tested by those lobbying the Government to make the UK more 'patentee friendly' by broadening patentable subject matter (eg. to allow software patents) to mirror developments in other countries.

To further the objective of encouraging research and innovation, the UKIPO will publish findings by November 2012 on the scale and prevalence of patent thickets (the practice of filing a number of overlapping patents); and set out plans later this year to improve accessibility to the IP system.

In relation to designs, the Government accepted Professor Hargreaves' concerns that the UK's design rights system is not adequate for the needs of business and is a 'patchwork of provisions'. The UKIPO is tasked with researching the level of design registration and its impact on UK competitiveness. By the end of the year, the UKIPO will publish its findings on the proposed simplification of the design rights system, including whether there is need for a separate UK registered design right alongside the current pan-European registered design right system.

Further issues on the Government's agenda
The Government's response to Professor Hargreaves' report is an encouraging one and indicates a commitment by the Government to address the concerns raised in the report. There will be considerable interest in the Government's 'White Paper' due early next year and the various research and reports due over the coming year. Will the report prompt meaningful changes to UK's IP laws or will it share the fate of the similar Gowers Report of 2005?

Click here to access the UK Government's Response.

Partner: Charles Alexander

Codifying customer care

Posted by Jessica Newman

Image courtesy of Bob Goyetche

Under the new draft of the Telecommunications Consumer Protections Code (TCP Code), the telecommunications industry's peak representative body, the Communications Alliance (CA), has moved to address recommendations made by the Australian Communications and Media Authority (ACMA) in its Reconnecting the Customer report for improved customer care.

The draft revision to the TCP Code has been prompted by many telecommunications service providers welcoming the opportunity to address ACMA's recommendations within the TCP Code. And, because compliance with the TCP Code is mandatory for all telecommunications service providers under the Telecommunications Act 1997 (Cth), all industry participants will need to be ready to implement measures to comply with new obligations and standards under a revised TCP Code.

Feedback: who is liable for user generated restaurant reviews?

Posted by Nicholas Stewart and Veronica Scott

The service was lax, the lamb was undercooked, you feel you didn't receive value for your meal and leave the restaurant reeling after the maitre d' smiles at you and says, 'Please come again soon!'. You rush home, turn on the laptop and log onto deliciousfeedfback.net (Delicious*) to tell the world what you think of Barney's Newtown (Barney's*). And boy do you sock it to them:

The staff are lazy! The lamb was raw and the restaurant looks like a brothel! 0/10

Barney's might give a second thought to suing a customer, but let's imagine it really wants to. You've got no money, so that leaves the cashed-up Delicious for Barney's to go after. The question comes to mind: is Delicious publishing defamatory material?

UK: customers of online media monitoring services require a licence from news publishers to avoid infringing copyright

Posted by Siobhan Doherty

On 27 July 2011, the Court of Appeal of England and Wales confirmed that customers of Meltwater, an online media monitoring organisation (MMO), require the consent of the online news publishers in order to avoid infringing copyright in the news content.

This case has implications for both providers and users of media monitoring services in the UK.

Technology licensing – 5 tips for avoiding ‘oh dear’ moments

Posted by Julia Murray

Image by Alex Proimos

There’s no secret formula for negotiating successful technology licence agreements. But it’s not always the ‘big ticket’ items – such as liability caps and termination rights – that cause licence agreements to come unstuck. As the following five pointers demonstrate, the old adage about preparation still holds true.