Can band expect payment of its $666,000 invoice for use of its music at Guantanamo Bay?

Posted by Nicole Reid and Paul Kallenbach

Over the last few years, there have been a number of news reports about the use of loud music as an interrogation or torture technique employed against prisoners at the Guantanamo Bay military detention camp.  Recently, Canadian electro-industrial band Skinny Puppy has generated further publicity on the issue with its members' response to the discovery that their music had been used in this way. Upset by this use of their work, they have reportedly sent an invoice to the US government for $666,000 for musical services. (The suggestive amount of the invoice was apparently chosen for its relevance to the 'evilness of the deed'.)

So far, we haven't seen any reports indicating that the invoice has been paid. We can still use this interesting scenario to speculate on the legal basis for any claim that Skinny Puppy could make if these circumstances arose in Australia and payment were not forthcoming, and how likely they would be to succeed.

Copyright infringement

Based on the media reports, the legal basis for Skinny Puppy's claim seems to be that copyright in its music has been infringed on the basis that it has been performed in public without permission.

A lawyer interviewed by Billboard.biz pointed to a number of potential snags that the band may encounter in making such a claim in the US, including that the detention camp may be covered by a blanket licence (perhaps an equivalent to the licensing scheme run in Australia by the Australasian Performing Right Association), limitations on the availability of statutory damages and the fact that Guantanamo Bay is outside of the United States.

Assuming that each of these hurdles could be overcome, would the playing of a musical work to prisoners in a detention camp be a 'performance in public'?

In Australia, the test that is generally applied is whether the work is performed to 'the copyright owner's public' or, in other words, in a commercial context where the copyright owner could be expected to be paid a fee. Clearly, a prisoner would not be expected to pay to have music blasted loudly and repetitively at them. However, the fee need not necessarily be expected from a member of the audience and could be from another person willing to bear the cost of the performance. Further, even if Skinny Puppy's music was played to individual prisoners (rather than throughout the Guantanamo Bay centre), an audience of separate individuals can still make up the public: in previous cases, the playing of films to individual motel rooms and the playing of hold music over the telephone have both been found to be communications to 'the public'.

Skinny Puppy would therefore at least have an argument that it was entitled to expect that the US government would pay a fee to play music to prisoners for the government's purposes, and that accordingly the exclusive right to perform a work in public was infringed. However, the (presumably) small number of listeners and the private and restricted nature of a detention centre would be arguments against their case. It would be fascinating to see what a court would decide given the opportunity.

Moral rights

US law only grants moral rights to the creators of visual works. In Australia, however, moral rights exist in relation to all of the categories of works that are protected by copyright, including musical works. If a similar situation were to occur in Australia, would the members of Skinny Puppy be able to bring a claim for infringement of their moral rights?

In Australia, the right of integrity of authorship gives the author of a work the right not to have anything done in relation to the work that is 'prejudicial to [his or her] honour or reputation'. This expressly includes the doing of anything that results in a material distortion or mutilation of, or a material alteration to, the work. Where an artistic work is concerned, it also includes an exhibition in public of the work that is prejudicial to the author's honour or reputation because of the manner or place in which the exhibition occurs. There doesn't seem to us to be any reason why a similar treatment of a musical work (ie, the performance of the work in public in a manner prejudicial to the author's honour or reputation because of the place in which it is performed or the manner in which it is performed) could not amount to derogatory treatment. Such an infringement would also not necessarily be premised on there having been performance in public of the work (as this is not a pre-requisite for showing that there was derogatory treatment), and would not rely on Skinny Puppy needing to demonstrate infringement of copyright.

Was the playing of Skinny Puppy's work in this context prejudicial to the band members' honour or reputation? Perhaps – the band could argue that it draws a connection between their work and practices of the US government with which they disagree, and the implication that listening to their music could amount to torture is hardly flattering.

Making a claim against the state

The other interesting question raised by this scenario is the effect of the government being the alleged infringer. In the United States, the federal government generally enjoys sovereign immunity from being sued (once exception being where it has consented to waive that immunity).

In Australia, on the other hand, Crown immunity is more limited. Although there is a presumption that legislation does not bind the Crown, this presumption can be displaced if the parliament intended for the Crown to be bound, even if this is not stated expressly.

In the case of copyright, the Copyright Act makes it clear that the Crown is bound by the Act. However, the Crown is afforded special treatment, including ownership of works made under its direction or control, and the right to use copyright material for the services of the Crown. The latter entitles the Crown to obtain a licence to exercise copyright, on terms either agreed with the copyright owner or fixed by the Copyright Tribunal of Australia.

In this case, the Australian government would have a strong argument that it had a right to use music for the purposes of managing prisoners as this would be for the 'services of the Crown', even if this did amount to a public performance of the work. If it considered that it was in the public interest to do so, it could delay informing the copyright owner of this use, and would only have to pay the royalty determined by the Copyright Tribunal (assuming that it could not reach agreement with the copyright owner).

However, as Crown rights under the Copyright Act do not displace moral rights, Skinny Puppy (or its hypothetical Australian equivalent) could still have recourse to those provisions and seek additional damages on that basis.

It seems, therefore, that if your music is to be used by a government to interrogate prisoners, you will have a better chance of enforcing your legal rights if this is done by the Australian rather than the US government.

Copyright and the Digital Economy – fourth time lucky for 'fair use'?

Posted by Paul Kallenbach

The Australian Law Reform Commission Final Report into Copyright and the Digital Economy is now publicly available.

The report controversially proposes that a broad-based 'fair use' exception should replace the current patchwork of 'fair dealing' exceptions under the Copyright Act.  You can read our analysis of the Final Report here.

Sherlock Holmes and the case of the literary character copyright protection

Posted by Nicole Reid ● Partner: Paul Kallenbach

Image courtey of gregwake

How is a character in a literary work, as distinct from the literary work itself, protected by copyright? This issue may arise in the case of fan fiction, sequels and parodies, where a character from an existing work is used in the new work, without many of the other elements of the original work being copied.

A United States court has recently considered the copyright protection of the fictional characters Sherlock Holmes and his colleague and friend, Doctor John Watson. It found that the characters are in the public domain, other than their characteristics that were only introduced in stories which are still under copyright. However, especially in Australia, the copyright protection of a character separate from the literary works in which he or she appears is not simple.

The Sherlock Holmes decision

The recent case came about because an expert in the Sherlock Holmes canon, Leslie Klinger, wanted to have published a collection of new stories inspired by and featuring the Sherlock Holmes and Dr Watson characters. However, he and his publisher had been threatened by the owner of copyright in the Sherlock Holmes stories (a company owned by members of the late Sir Arthur Conan Doyle's family) with an infringement claim unless a licence was obtained. He sought a declaratory judgment that no permission would be required to use various story elements. The elements in question are listed in his statement of material facts, and include various characteristics of Holmes and Watson, as well as a number of other characters.

The Sherlock Holmes character is in an interesting position in the US, because it was developed over a number of novels and stories by Conan Doyle, which have different copyright statuses under US law. Copyright in the novels and most of the stories has expired, but there remain ten stories that are still protected by copyright in the US. This is because when the term of copyright protection was extended in 1998, the extension applied only to works published in 1923 or after, so it only affected some of the Sherlock Holmes stories.

The Court found that the plaintiff was only entitled to a declaratory judgment that he was entitled, without permission, to use the story elements that were introduced in the pre-1923 stories. The story elements that were only introduced in the post-1923 stories were still protected by copyright (including that Dr Watson had a second wife and a background as an athlete).

The copyright owner had argued that the characters of Sherlock Holmes and Dr Watson would remain protected by copyright for as long as any of the stories were within their copyright term, on the basis that they were complex characters developed over the course of all of Conan Doyle's works. The Court rejected this argument, and instead followed authority that had held that 'increments of expression' in later works, including storylines and character traits, can be protected by copyright separately from earlier, related works. This applies even if it means that characteristics of individual characters are effectively divided between copyright protection and the public domain until all of the works delineating these characteristics have entered the public domain.

Copyright in literary characters in Australia

In this case, the plaintiff was apparently concerned about protecting his right to create 'derivative works' based on Conan Doyle's works. A derivative work is defined in US law as one that is based on one or more existing works. Previous case law referred to by the court has held that a sequel or series featuring the same characters as an earlier work is a derivative work.

In Australia, it is less clear that a literary work featuring characters from an earlier work would necessarily infringe any copyright in the earlier work. This is because there is no exclusive right of a copyright owner to create derivative works. The adaptation right in relation to literary works is limited to the creation of translations, picture versions, dramatic versions (of non-dramatic works) and non-dramatic versions (of dramatic works).

Accordingly, in Australia, the Sherlock Holmes character as delineated in Arthur Conan Doyle's works would (if still protected by copyright) only be protected from being appropriated for use in another novel or short story by the reproduction right. An Australian court would need to consider whether a sufficiently substantial part of a copyright work was reproduced via the appropriation of one or more characters, and any other related story elements, from the work. This would depend on a consideration of the distinctiveness of the character in the original work and the quality and quantity of the elements of the original work that had been reproduced. US law appears not to require the same amount of appropriation as would be required in Australia to make out reproduction of a substantial part, and thus provides stronger protection to literary characters.

Although the outcome in the Sherlock Holmes case seems reasonable on its face, it will not necessarily be easy to apply in practice. It seems to us that it would be difficult to determine when a particular character trait was introduced, and whether it has been used in a subsequent work. A character is developed not only by simple references to his or her characteristics, but by descriptions of their thoughts, interactions and actions. To what extent will a court need to delve into literary interpretation in order to determine the traits that been bestowed on that character, and when that trait was developed?

Conan Doyle's estate has also filed an appeal, so perhaps the sequel will provide some more answers.

Enforcing IP rights globally - evidentiary challenges

Posted by Matt Davies and Paul Kallenbach

The recent decision of the Australian High Court in Aristocrat Technologies Australia Pty Ltd v Global Gaming Supplies Pty Ltd [2013] HCA 21(Aristocrat) serves as an intriguing illustration of the evidentiary challenges confronting those seeking to enforce their intellectual property rights in a global marketplace.

The somewhat complex facts involved the manufacture and refurbishment of pokies machines in Australia by the respondent (Global) which were sold to purchasers located principally in South America.  The applicant (Aristocrat Tech) alleged that infringing copies of its computer programs (constituting the games and the artwork displayed on the gaming machines) were contained within the refurbished machines. 

Interestingly, of the 54 impugned export transactions identified by Aristocrat Tech, which involved some 618 pokies machines, there was no evidence identifying precisely which components in each machine were allegedly infringing. This was the case even following the execution of search orders in respect of Global's premises.

In an attempt to overcome this evidentiary hurdle, Aristocrat Tech tendered a number of business communications, including 6 email chains between Global and certain international purchasers. These emails were described on appeal as 'essential' to the primary judge's reasoning process and His Honour's conclusion that, although their content did not reveal an offer to act in a manner constituting an infringement of the Copyright Act, it did indicate a 'willingness to assist the "serial counterfeiters" in South America in carrying out their actions'.

On appeal to the Full Federal Court, Global argued, and the Full Court held, that use of the emails to demonstrate the credit of the witnesses and the existence of a joint venture which involved the production and sale of infringing pokies machines amounted to tendency evidence.  This finding was made notwithstanding the absence of the term 'tendency' in the primary judge's written decision.

Section 97 of the Evidence Act 1995 (Cth) creates a general rule excluding the use of tendency evidence with exceptions when evidence is considered by the court to be of 'significant probative value' and provided that strict notice requirements are complied with.  As Aristocrat Tech did not recognise that the evidence it adduced was tendency evidence, the notice requirements were ignored and consequently, on appeal to the Full Court, the evidence was ruled to be inadmissible.

The importance of this case is underscored by the High Court's decision to refuse special leave yet still publish reasons for its decision (something it is not required to do).  In finding the decision made by the Full Court to have been reasonably open, the joint judgement of the High Court stated: 'it would be difficult to find a clearer indication of the use of evidence as indicative of a tendency'.

Aristocrat provides a reminder of the strict requirements accompanying the use of tendency evidence, and that the assessment of whether evidence is being adduced to establish a tendency will be a matter of substance over form.  It is also highlights the practical evidentiary hurdles facing those seeking to enforce their intellectual property rights globally.

Google Books, fair use and fair dealing

Posted by Nick Liau and Paul Kallenbach

Since the inception of the Google Books project in 2004, Google has scanned and digitised over 30 million books.  Google Books enables users to search for text within digitised books.  Users' search results return short extracts of books together with title and other bibliographical details.  Google's search engine can thus be employed to perform complex analyses of the Google Books database, for instance, by enabling users to search for how frequently certain words or phrases are used across time.  Users are not, however, able to view or download the full content of the books contained within the Google Books database.

Many of the books scanned during the project are protected by copyright.  Google did not seek the permission of all copyright owners before scanning those copyright works and incorporating them into the Google Books database. 

In The Authors Guild & Ors v Google, a number of publishers and authors sued Google for copyright infringement, asserting that Google's scanning and digitisation of books constituted a breach of copyright.  However, on 14 November, the United States District Court dismissed this action, finding that Google had not breached copyright, on the basis that Google's use fell within the 'fair use' defence under section 107 of the US Copyright Act.

The 'fair use' defence in the US is a broad-based defence to copyright infringement.  Whether a particular use is 'fair use' is assessed on a case-by-case basis; US case law tells us that, in general terms, a finding of fair use is more likely where:

·                the use of the material was educational, as opposed to commercial;

·                the original work had already been published;

·                only a small amount of the work was reproduced; and

·                the alleged infringer's use of the work is unlikely to affect the market or value of the original work.

In the Google Books case, the US District Court held that Google's reproduction of books did not infringe copyright on the basis of 'fair use' because:

·                Google Books is not a tool which can be used to read books – instead, it 'adds value to the original' due to the new search and analytical methods it makes available;

·                the proportion of each book which could be viewed by users was limited; and

·                the service was likely to enhance the sales of books by showing users small extracts of books, encouraging them to buy the original to read the whole text.

Australia's Copyright Act 1968 (Cth) lacks any equivalent broad-based 'fair use' exception.  Rather, the Australian Copyright Act sets out a number of narrowly defined 'fair dealing' defences, which include use of a copyright work for the purpose of news reporting, criticism or review, parody and satire, and study or research.

While, on its face, the 'study or research' fair dealing exception (in section 40 of the Australian Copyright Act) might appear to cover Google's activities in this case, this exception has been interpreted narrowly by Australian courts.  That is, it is not enough that the copied materials will ultimately be used for study or research purposes.  Rather, the party who is doing the copying must be the same party doing the study or research.  Thus, while a student's use of quotes obtained from digitised content stored on an online platform may well fall within the fair dealing exception, the platform's digitisation and communication of the content itself may not meet the requirement of being for the purposes of study or research.

This is a threshold issue under Australian copyright law – it simply does not matter how fair or reasonable the dealing may be, if the dealing does not fall within one of the defined 'fair dealing' (or other) exceptions under the Copyright Act, it will constitute copyright infringement. 

As we have previously discussed on this blog, there is ongoing debate in Australia as to whether it should follow the US and adopt a broad-based fair dealing exception.  The Google Books decision neatly illustrates the practical ramifications of the divergence between US and Australian copyright law in the area of exceptions to copyright infringement. 

As has been widely reported, Australia is currently involved in negotiations with eleven other countries, including the US, over the Trans Pacific Partnership (TPP) trade agreement. The TPP includes a large number of clauses devoted to intellectual property issues.  The negotiations are being conducted behind closed doors, but a recent draft of the agreement has been leaked via WikiLeaks.  The most recent available clause dealing with limitations and exceptions to copyright infringement is not prescriptive on the issue, which suggests that a broad-based fair use exception would not be inconsistent with the TPP (or at least with the current draft of the TPP).

The vexed issue of 'orphan' copyright works

Posted by Genevieve Watt and Paul Kallenbach

The application of copyright law to works for which the rights holder (or holders) cannot be found (so-called 'orphan works') is a question that has recently been under consideration in several jurisdictions. Given the ease with which works can be de-identified when reproduced or transmitted using digital means, this is not surprising.

In many jurisdictions, orphan works have been in a state of limbo in which it is not possible to obtain permission to legally use them, nor to work out whether copyright may in fact have expired.   Those who may wish to use orphan works are, for this reason, usually left to adopt a 'risk management' approach of weighing up the benefit of using the works against the risk of a potential infringement action.

The blurred line between inspiration and infringement in copyright law

Posted by Ella Biggs, Nicole Reid and Kylie Diwell

The popular US hit 'Blurred Lines' has been the subject of allegations of copyright infringement for the song's similarity to two other songs, Marvin Gaye's 'Got To Give It Up' and Funkadelic's 'Sexy Ways'.  The reported response of the owners of the copyright in the two earlier works (Gaye's family and Bridgeport Music Inc), seeking compensation from Pharrell Williams, Robin Thicke and Clifford Harris, Jr (the composers of 'Blurred Lines'), raises significant issues for copyright law in relation to where the line between inspiration and infringement lies.

In a highly publicised move, on 15 August 2013, Williams, Thicke and Harris filed for a declaration from the Central District Court of California that 'Blurred Lines' did not infringe the copyright in the earlier works.  In their submissions to the Court, the plaintiffs stated that, although 'Blurred Lines' was inspired by Gaye's music and the song was intended to 'evoke the era' of Gaye, this did not amount to copyright infringement.  They sought a declaration by the Court to this effect.

A fundamental principle of copyright law is that it protects expression, not ideas.  This principle forms the basis for consideration of whether or not copyright has been infringed.  The 'Blurred Lines' case raises the question of whether merely being reminiscent of the sound of a musical work infringes the copyright in that work (ie, whether it is the reproduction of a substantial part of that work).  Although this is an American case, the facts provide a useful way to hypothesise about how copyright law would apply in Australia, if a similar case were to arise.

To establish copyright infringement in Australia, a court's analysis focuses on whether a substantial part of the original work has been used in the allegedly infringing work.  In EMI Songs Australia Pty Ltd vLarrikin Music Publishing Pty Ltd[1] (the Kookaburra Case), it was alleged that the Men at Work song 'Down Under' infringed the copyright in the song 'Kookaburra Sits in the Old Gum Tree'.  The Full Federal Court found that the copyright in the earlier song had been infringed on the ground that the tune of the flute riff that was used in 'Down Under' was a substantial part of the Kookaburra song, notwithstanding that the flute riff formed only a small part of the infringing work.  The Court made the comment that '[t]here will be an infringement [of copyright] if that in which the whole meritorious part of the original work consists is incorporated in a new work'.[2] 

Applying the judgment in the Kookaburra Case to the 'Blurred Lines' case, it appears that an assessment would be undertaken with regard to the specific melody or arrangement of notes (or, potentially, another musical element of the work, such as the rhythm, or a combination of musical elements) in order to determine whether or not a substantial part of the original work has been reproduced (the expression of the work).  Without direct reference to notes or melodies (being the basis on which the Kookaburra Case was decided), in Australia at least, it would be significantly more difficult to establish that a substantial part of the original copyright work had been taken, as this would require consideration of the more amorphous aspects of the works (such as the fact that 'Got to Give It Up', like 'Blurred Lines', is sung in a high male voice and the similar tempo, use of a cowbell and what one commentator referred to as a 'slinky bass line' in both of the songs), which are more likely to be considered (non-protectable) ideas.  The plaintiffs are seeking to make this argument in their lawsuit, arguing that 'Blurred Lines' evokes the era of Marvin Gaye, in an homage to him, rather than amounting to an (infringing) copying of his work.  We will wait to see if the case does make it to a judgment and, if so, whether the defendants can succeed in arguing that the musical elements of 'Got To Give It Up' and 'Sexy Ways' are sufficient to attract copyright protection and have been appropriated in 'Blurred Lines'.

In the Kookaburra Case, upon finding that copyright had been infringed by Men at Work, Justice Emmett commented on the significance of cultural works providing tribute to iconic works without fear of copyright.[3]  (A similar argument is made in this article by Partner Paul Kallenbach.) No doubt these arguments will be relevant in the case of Williams, Thicke and Harris in their attempt to ascertain the blurred lines between inspiration and infringement in copyright law. 

---

[1] (2011) 191 FCR 444.

[2] Ibid [45] (Emmett J).

[3] Ibid [100].

The 'Australia tax' and the report into IT pricing

Posted by Genevieve Watt and Paul Kallenbach

The question of IT pricing, and the perception that Australian consumers and businesses are overcharged for IT products, was referred to the House of Representatives Standing Committee on Infrastructure and Communications (the Committee) by then Minister for Broadband Communications and the Digital Economy, Stephen Conroy, on 18 May 2012.

Following a 12 month inquiry, the Committee released its report, entitled 'At what cost? IT pricing and the Australia tax', on 29 July 2013.

The referral letter for the inquiry pointed to the 'growing interest in the differentials that exist in prices for IT hardware and software sold in Australia', particularly in light of the increase in the value of the Australian dollar, and also highlighted the increasing importance of the internet to Australian consumers and businesses.   In this context, the letter raised a concern that Australian businesses' ability to compete internationally may be compromised if they are faced with higher prices for IT products (including hardware and software). The report also specifically discusses how IT pricing can affect low income consumers (including students and people with disabilities), noting that access to technology and the internet is central to participation in modern society.

The report analyses the various explanations generally given for the higher prices paid by Australians for IT goods, including our geographical remoteness, small and scattered population, and historically weak currency, while questioning whether there are in fact any structural or market-based reasons for vendors to charge higher prices.

The overriding conclusion reached by the Committee is that Australians are often charged higher prices than their counterparts overseas, and that in many cases this is not justifiable on the basis of the cost of doing business in Australia. Instead, the Committee found that, along with a range of goods in general, many IT products are more expensive in Australia simply because of regional pricing strategies (colloquially referred to as the 'Australia tax').

The inquiry

The terms of reference for the inquiry required the Committee to:

• inquire into whether a difference in prices exists between IT hardware and software products, including computer games and consoles, e-books and music and videos sold in Australia over the internet or in retail outlets, as compared with markets in the US, UK and economies in the Asia Pacific;
• establish what these differences are;
• determine why these differences exist; 
• establish what the impacts of these differences might be on Australian businesses, governments and households; and
• determine what actions might be taken to help address any differences that operate to the disadvantage of Australian consumers.

During its inquiry, the Committee received 133 submissions and 15 supplementary submissions, more than half of which were from consumers. The remaining submissions were from business and industry bodies. In contrast to the high level of participation from consumers, who expressed dissatisfaction at their perception that Australians pay higher prices for IT goods, certain industry players were less willing to contribute to the inquiry. As was widely reported at the time, the Committee ultimately took the unusual step of summonsing the Vice President of Apple Australia, the Managing Director of Adobe Australia and New Zealand, and the Managing Director of Microsoft Australia to appear and give evidence at a public hearing.

 

Report

 

It is clear from the content of the Report that the Committee relied heavily on evidence received via consumer submissions, including those that provided a comparison of prices paid for particular IT products across different countries. While the report acknowledges the limitations of such price comparison evidence, the Committee points out that there is a lack of statistics on IT pricing and e-commerce retail sales in Australia, as they are not currently collected by the ABS. While largely relying on consumer submissions for evidence of the existence (or otherwise) of price differentials, the report does carefully analyse many of the main arguments given to explain charging higher prices for IT products in Australia.

 

One such explanation is the idea that Australians face price discrimination because businesses price products based on what the market can bear, rather than on the basis of a mark up of production costs. According to the report, this type of price discrimination can arise when consumers in different geographic locations are willing to pay different amounts for particular goods or services, and those consumers can be practically separated into different markets. In other words, Australians are charged more because they are willing to pay more, and are unable to obtain goods from neighbouring markets at a lower price.

 

Some IT vendors admitted to such practices. Microsoft, for instance, stated that in a free economy it will set prices according to what a regional market would stand. Both Adobe and Microsoft also stated that if consumers are not happy with the prices they charge, they can buy a competitors' products, although Adobe also justified price differentials on the basis of the costs of doing business in the region and running a regional operation.

Such market-based justifications were not entirely accepted by the Committee, which suggested that certain software vendors 'digitally handcuff' customers to their products by making interoperability difficult. Consumer groups also rejected claims that market forces effectively impose competition restraints.

 

A related issue raised by the report is the imposition by certain IT vendors and rights holders of geoblocking techniques, which verify a consumer's location based on their IP or residential address or credit card details, and prevent Australian consumers from purchasing IT products from overseas websites at cheaper overseas prices. In defence of this practice, the report discusses the view of many IT vendors that geoblocking is a legitimate tool enabling them to set regional prices, which is often used to protect the rights of distributors who have exclusive rights in a particular territory.

 

In defence of setting higher prices in Australia, some industry groups and IT companies also submitted that their Australian prices are the result of a range of factors, including exchange rates, the local cost of doing business, relative market size, tariffs, parallel importing, regulations (including green schemes and warranties), wages and the supply chain. Some also pointed to the national warranty regime and Australian Consumer Law, which are more extensive and provide more protections to consumers than corresponding regimes in other countries. On the flipside, the report also notes that when Australian consumers do purchase IT products from overseas websites at cheaper prices, a question arises as to whether the Australian Consumer Law (or any equivalent regime of consumer protection) applies.

 

Some industry groups, including Adobe, also argued that IT prices are inflated due to the margin set by channel partners - the conduits through which goods and services are delivered to consumers in Australia - which they argued often deliver value added services to their customers, such as desktop support, which can increase prices.

 

These arguments are, of course, contrary to the issues highlighted by many consumer submissions. Consumers raised a particular concern about the price differentials for products that are digitally delivered (such as software purchased online), with many of them noting that in this case there appears to be less justification for charging Australians higher prices, as the cost of doing business is no higher. In justifying its price differentials for digitally delivered products, however, Microsoft pointed to the local cost of providing services including maintenance, support and advertising, associated with those products. Apple also pointed out that it has to pay rights holders, including record labels, movie studies and TV networks, and that these entities often set a higher wholesale price in Australia. ARIA similarly stated that record labels incur their own costs in producing music, such as talent sourcing and marketing, and that it is not correct to assume that digitally delivered products are cost-free; while MacMillian Publishers Australia stated that e-books involve many of the usual costs associated with publishing (such as paying the author, commissioning writers and content, editing, designing and marketing) and that there are additional costs associated with digitisation and combating piracy.

 

Not all IT vendors relied on the above arguments to justify their Australian pricing. In contrast to Microsoft and Adobe, for example, the Vice-President of Apple Australia stated that Apple has an overall model of offering equivalent pricing around the world, and that in the case of many of its recently released hardware and software products, US and Australian prices differed by only one to five percent. Even where there was a price difference, Apple pointed out that published prices in Australia include a GST component, whereas in the US the sales tax is added at a later stage.

 

The report separately discusses the issue of IT pricing and copyright infringement, recognising that Australia has some of the highest rates of online piracy around the world. The Committee also, however, acknowledged the opposing views that despite piracy, the entertainment industry experienced significant growth in the last decade, and that infringement sometimes stems from lack of availability of affordable online content. The Committee also noted the view of many consumers that copyright law provisions and techniques like geoblocking have unduly restricted their rights to access copyright material, and accepted that technological protection measures, designed to prevent unauthorised access to copyright material, can restrict competition in copyright markets by preventing consumers from accessing legally acquired content. Balancing the opposing perspectives, the Committee recommended certain amendments to the Copyright Act, which are set out below. These recommendations have been among the most controversial of the Report's results.

 

Finally, the Report analyses ways to increase competition and protect consumer rights, noting that existing competition problems in copyright markets could perhaps be even worse in a case where content is only available in digital form. The report also notes the view of some observers that the balance copyright seeks to strike between the interest of rights holders and promoting the creative industries, and the public interest in accessing copyright material, has swung too far in favour of rights holders.

 

Recommendations

 

As is clear from the above summary, consumer dissatisfaction with the 'Australia tax' was found to be high, despite the justifications offered by some IT industry players. Following the inquiry, the Committee made the following ten recommendations in its report (which perhaps indicate that the Committee, overall, was more persuaded by the consumers' arguments):

1. that the ABS develop a comprehensive program to monitor and report expenditure on IT products, hardware and software, both domestically and overseas, as well as the size and volume of the online retail market;
2. that, considering the importance of IT products to education, and in the interests of greater transparency in this area, the Australian Government, in consultation with Universities Australia and CAUDIT, conduct a comprehensive study of the future IT needs of and costs faced by Australian universities in order to provide clearer financial parameters for negotiations;
3. that the Australian Government consider a whole-of-government accessible IT procurement policy, to be developed by relevant agencies including AGIMO, and in consultation with relevant stakeholder groups including ACCAN;
4. that the parallel importation restrictions still found in the Copyright Act 1968 (Cth) (Copyright Act ) be lifted, and that the parallel importation defence in the Trade Marks Act 1995 (Cth) be reviewed and broadened to ensure it is effective in allowing the importation of genuine goods;
5. that the Australian Government amend the anti-circumvention provisions found in section 10(1) of the Copyright Act to clarify and secure consumers' rights to circumvent technological protection measures that control geographic market segmentation;
6. that the Australian Government investigate options to educate Australian consumers and businesses as to the extent to which they may circumvent geoblocking mechanisms in order to access cheaper legitimate goods; the tools and techniques they may use to do so; and the way in which their rights under the Australian Consumer Law may be affected should they choose to do so;
7. that the Australian Government, in conjunction with the relevant agencies, consider the creation of a 'right of resale' in relation to digitally distributed content, and clarification of 'fair use' rights for consumers, businesses, and educational institutions, including restrictions on vendors' ability to 'lock' digital content into a particular ecosystem;
8. that section 51(3) of the Competition and Consumer Act 2010 (Cth) (CC Act) be repealed;
9. that the Australian Government consider enacting a ban on geoblocking as an option of last resort, should persistent market failure exist in spite of the changes to the CC Act and the Copyright Act recommended in the Committee's report; and
10. that the Australian Government investigate the feasibility of amending the CC Act so that contracts or terms of service which seek to enforce geoblocking are considered void.

Response to recommendations

 

Unsurprisingly, some of the Committee's recommendations have been met with controversy, foremost among them the recommendations in relation to amending the Copyright Act. In particular, the recommended introduction of a right of resale for digital content has been criticised by industry figures on the basis that resellers can sell a product that is for practical purposes brand-new, for second-hand prices, and illegally make and resell multiple copies of a digital product that was purchased once.

 

It will indeed be interesting to see which, if any, of the Committee's recommendations are adopted (particularly by the new Federal Government) and what effect this may have on IT pricing for Australian consumers and businesses.

Greens Senator proposes fair use amendment to the Copyright Act

Posted by Ella Biggs and Paul Kallenbach

Image courtesy of renjith krishnan

On Thursday 27 June 2013, Greens Senator, Scott Ludlam delivered the Second Reading Speech for the Copyright Legislation Amendment (Fair Go For Fair Use) Bill 2013.  The proposed amendments address four aspects of the Copyright Act 1968 (Cth) (the Act). They are:

• removing digital locks and technical protection measures that restrict the ability of the visually impaired and the disabled to access copyright protected content (for example, allowing the reproduction of a text work as an audio work or the conversion of text to Braille);
• extending the scope of the current safe harbour provisions.  This change is aimed at ensuring that service providers, including internet service providers, search engines and public or not for profit institutions are not liable for the copyright infringement of their users (in certain circumstances);
• removing the ability for geocode mechanisms to affect the price of copyright protected content in Australia; and
• introducing a broad and technology neutral fair use provision into the Act.  This would change the approach to determining whether the use of a copyright protected work constitutes copyright infringement.

Of these proposed changes, the introduction of a broad fair use defence in the Act is the most far reaching, with the potential to significantly reshape the copyright law landscape in Australia. The fair use provision proposed by the Bill directly mirrors the equivalent provision in the United States,[1] where fair use plays a significant part in the analysis of copyright infringement.  It is unclear from the proposed Bill whether the current fair dealing defences would be repealed or how these would interact with the proposed fair use defence.

Given the potential significance of the introduction of a fair use defence, the Australian Law Reform Commission (ALRC) was commissioned to look into the issue in its report on 'Copyright and the Digital Economy'.  In its Discussion Paper, released in June 2013, the ALRC proposed a broad and flexible fair use standard that is informed by the current fair dealing defences (and some additional illustrative purposes) as well as general 'fairness' factors.[2]  The ALRC's final report is due in November 2013.

While the Bill is indicative of a movement within copyright circles to revise copyright law in Australia to make it more flexible in digital environment, it is unlikely that the Bill's proposed amendments to the Act will be passed by Parliament.  However, given the potentially wide reaching significance of the introduction of a fair use defence to Australia's copyright law, it is most unlikely that the Bill will receive any attention before the ALRC's final report on this issue is released.

[1] 17 USC § 107.
[2] Australian Law Reform Commission, 'Copyright and the Digital Economy' Discussion Paper 79 (May 2013) 90–8.

Corby family in the copyright spotlight

Posted by Cara Friedman, Nicole Reid and Paul Kallenbach

Image courtesy of renjith krishnan

The Federal Court of Australia has found in favour of Schapelle Corby's sister, brother and mother in relation to five photographs published in the book, 'Sins of the Father'.  The book – published by Allen & Unwin Pty Ltd (which was the respondent in the action) and written by journalist Eamonn Duff – attempts to portray Schapelle as a knowing participant involved in her father's drug trafficking.  Neither the publisher nor the writer of the book sought permission from the owners of the photographs to use the photographs in the book.

The law

Generally, the owner of copyright in a photograph is the person who took it (although there are exceptions that may apply where the photograph was commissioned for a private or domestic purpose or created under the terms of an employment agreement with the proprietor of a newspaper or magazine).   As a photograph is an artistic work in which copyright subsists, its owner has the exclusive right (amongst others) to reproduce it, or permit its reproduction, unless the owner grants a licence to another to do so or another person can exercise that right under one of the statutory licences or exceptions set out in the Copyright Act 1968 (Cth) (Copyright Act).

The person who took the photograph also has moral rights in the photograph, including the right to have his or her authorship attributed, unless a defence applies.

The issue

The Court held that the publisher did not have express permission from any of the copyright owners to reproduce the photographs in the book.  The relevant question for the Court was whether Allen & Unwin could reproduce the photographs without this express permission, given that express or implied permission had been given to others to reproduce the photographs for an earlier purpose.

Allen & Unwin withdrew its 'innocent infringement' defence (under section 115(3) of the Copyright Act) during closing submissions.  Nor did it try to argue that it had engaged in fair dealing for the purpose of reporting news.

The photographs

The relevant photographs were of Schapelle Corby and/or her mother, sometimes with others.   Two of them were taken by Rosleigh Rose, Schapelle's mother, who also owned a 25% share in the third photograph, as it had been taken by her late partner, of whose estate she was a 25% beneficiary.   The other two photographs were taken by Michael and Mercedes Corby, Schapelle's brother and sister, respectively.

The evidence was that three of the photographs were initially supplied for use in an article that Mr Duff was writing in 2005 for Fairfax media.  Buchanan J held that no licence existed for reproduction of these three photographs in the book.  Any lawful supply of the photographs (if at all) was limited to the context in which they were initially supplied (ie for use in the article).  His Honour held that the current use had no connection with the previously authorised purpose.

Nor did the Court find that any licence existed in relation to the fourth photograph, which was originally given to Schapelle's friend, who in 2005 had provided it to Mr Holland, a Fairfax photographer, in order to assist Schapelle's case.

In relation to the final photograph, the court found that even if it had been provided as a gift to Mr McHugh or Mr McCauley (the two men in the photo with Rosleigh Rose, who were both later convicted of drug dealing), this would be insufficient, without more, to constitute a licence for its reproduction in the book.

Buchanan J observed that 'the defence mounted was weak to say the least.'  Consent was sought neither by the author of the book, nor the publisher, for copyright clearance.  The Court noted that in these circumstances it was the responsibility of the publisher, not the author, to decide which photographs were reproduced in the book.

Moral rights

The court found that the applicant family members' moral right of attribution had been infringed in relation to four of the photographs, as Allen & Unwin had failed to attribute authorship to them.  There was no evidence to establish the defence (to moral rights infringement) that it was 'reasonable in all the circumstances' not to identify the author on the basis of industry practice (this was especially so given that authorship of some photographs in the book was attributed) or any other of the defences available in the Copyright Act.

Orders

The Court granted an injunction prohibiting Allen & Unwin from further reproduction of any of the five photographs, and ordered destruction of any copies of the book in its possession.

The Court did not assess compensatory damages on the basis of what the copyright owners may have accepted as a licence fee, as the evidence was that they would not have given permission to use the photographs in the book.  Instead, damages of $9,250 were awarded, based on the commercial significance of each photograph and its relevance to the central themes of the book.  For example, damages of $5,000 were awarded for infringement of the copyright in one of the photographs, due to its prominence on the back cover of the book and its focus on the relationship between Schapelle and her father, a central theme of the book.

Acknowledging the need for deterrence (both general and specific) and marking its disapproval of such 'flagrant disregard' for the applicants' rights, the Court awarded the applicants additional damages of $45,000.   It would appear that the Court's perception of the copyright infringement as a 'conscious, calculated business decision' by the publisher provided the necessary impetus for this additional damages award.

In relation to the four relevant photographs, the Court made only a declaration of moral rights infringement.   Neither damages nor an apology was ordered, as no loss – neither commercial nor personal – was considered to have resulted from the lack of attribution.   Schapelle's family members wanted no association with the book at all, including by being attributed as authors of the photographs.   Accordingly, Buchanan J labelled the moral rights infringement as 'more a question of form than substance'.

This case does not establish any new law.  It does, however, remind publishers that it is their responsibility to seek copyright clearance prior to publishing photographs, and not to rely on unwritten permissions granted to others, the scope of which is unclear and may not cover later uses.   It is also a rare case that considers moral rights issues (although the infringement issues were not considered in great detail), though it seems the conclusion here is that a finding of moral rights infringement may not help applicants obtain a larger award of damages.

NZ infringer ordered to pay up

Posted by Genevieve Watt and Paul Kallenbach

Image courtesy of renjith krishnan

In late January, in Association of New Zealand Inc v Enforcement Number: Telecom NZ 2592 [2013] NZCOP 1, the New Zealand Copyright Tribunal issued orders against a copyright infringer under New Zealand's "three strikes" anti-piracy legislation for the first time. The respondent had uploaded musical works via peer-to-peer file sharing protocol BitTorrent, in breach of the copyright holder's exclusive right to communicate the works to the public.

Facts

The respondent in this case was an individual owner of an IP address from which the uploading of music had been detected on three occasions. The applicant was the Recording Industry Association of New Zealand (RIANZ), who filed the application to the Tribunal as representative of the two copyright owners, Island Def Jam Music Group (Universal Music Group New Zealand Limited) and RCA Records (Sony Music Entertainment New Zealand Limited).

The respondent first received a Detection Notice in November 2011, alleging that she had infringed copyright in the Rihanna song Man Down by uploading it via BitTorrent, thereby communicating it to the public in breach of section 16(1)(f) of the Copyright Act 1994 (NZ) (Copyright Act), which grants the copyright owner the exclusive right to communicate copyrighted work to the public. A Warning Notice was subsequently issued to the respondent in June 2012 in respect of a further alleged upload of the same song and finally an Enforcement Notice was sent on 30 July 2012 alleging that the respondent had uploaded the song Tonight Tonight.

The legislation

Section 122 of the Copyright Act creates a graduated response regime for taking enforcement action against people who infringe copyright through file sharing. Under the system, infringers receive a series of three infringement notices of increasing seriousness (Detection, Warning and Enforcement notices) if copyright infringement by file sharing is detected, before a Copyright Tribunal hearing can be held. The first two notices are designed as warnings, and the next notice in the series will be issued if a later, separate infringement occurs after the previous notice has been issued.

Notices are issued by an internet protocol address provider (IPAP) at the request of, and at a cost of $25 per notice to, the copyright owner.

If an infringement is found to have occurred, the Tribunal can require the respondent to pay various sums to the applicant under heads of relief including compensatory damages for infringement, a contribution towards the fees paid by the rights owner to the relevant IPAP, reimbursement of the Tribunal application fee paid by the applicant, and a deterrent sum. The total amount the respondent is ordered to pay cannot exceed NZ$15,000.

The decision

While the respondent claimed she had only downloaded, and not uploaded, the music, she had downloaded the file sharing software to her computer and the Copyright Tribunal accepted that uploading and downloading can occur simultaneously. In this case, the Copyright Tribunal accepted that uploading did occur regardless of the respondent's intentions.

In any case, under the legislation it is also possible to issue infringement notices in respect of downloading, although this has yet to occur.

The respondent was ordered to pay a total of NZ$616.57, based on:

• the cost of purchasing the songs (a total of $6.57);
• a contribution of $50 towards the $75 cost of issuing the three notices (calculated as the whole cost of the Enforcement notice, two-thirds of the cost of the Warning Notice, and one-third of the cost of the Detection Notice);
• $200 for the cost of applying to the Copyright Tribunal; and
• $120 for each of the three infringements as a deterrent sum.

The deterrent sum was in this case relatively low as the Copyright Tribunal accepted that the respondent had not intended to break the law and found that the infringing acts were not in this instance flagrant.

Is it logical to pursue individuals who download a small amount of music?

While it may seem somewhat inequitable that this particular individual (who the Tribunal noted had not 'flagrantly' broken the law) was pursued when countless others get away with engaging in copyright infringement by file sharing on a daily basis, the 2012 Australian High Court iiNet decision shows that the idea of pursuing the infringers themselves may be the logical (though perhaps not the most practicable) option.

The iiNet decision, in which the applicant copyright holders unsuccessfully argued that internet service provider (ISP) iiNet was liable for the actions of its customers in unlawfully downloading copyrighted content (on the basis that the ISP had authorised their downloads) highlights the difficulty in seeking to address the issue of piracy by pursuing intermediary entities other than individual infringers (see our summary of this decision here). 

Would this approach work in Australia?

Similar 'three strikes' or graduated response systems are in place in other jurisdictions including France and the USA. While there is currently no graduated response system in Australia, there was some discussion about introducing one following the iiNet decision. At this stage, however, the terms of reference for this year's Australian Law Reform Commission (ALRC) copyright inquiry do not address the issue of piracy and enforcement, although the ALRC states that it is watching for any developments in these areas.

Graduated response systems are of course not without their drawbacks.  Critics point to the high cost involved in pursuing individual infringers, a criticism which may be given some weight by the low deterrent amount levied in the RIANZ case.  In the area of unlawful downloading of copyrighted content, it seems that no enforcement option has yet adequately addressed the problem.

An alternative solution may, of course, lie in giving consumers more options to access and download copyrighted content legally.  In an interesting development (given the continued prevalence of unlawful downloading), the International Federation of the Phonographic Industry (IFPI) announced last month that the music industry experienced growth in 2012 for the first time since 1999, thanks in no small part to digital sales. While the overall industry growth was a modest 0.3%, digital sales recorded stronger growth of 9%.  Some industry commentators have suggested that subscription-based services such as Spotify and Pandora (which allow users to legally stream and listen to music) have contributed to this result.

If the 2012 industry growth can be taken as an indication that the tide is to some degree turning against infringing downloads, it may be that creating new ways for users to quickly and legally access copyrighted content will do more to combat piracy than a program of enforcement action.  Watch this space.

The Pirate Bay claims copyright infringed by anti-piracy group

Posted by Tarryn Ryan and Paul Kallenbach

Yes, you read it right.   In a move that has raised more than a few eyebrows, the operators of The Pirate Bay, a website that facilitates the downloading of copyright material, have lodged a complaint with Finnish police and are threatening legal proceedings against a Helsinki-based anti-piracy group for allegedly infringing their copyright in The Pirate Bay's website.

Recently the Copyright Information and Anti-Piracy Centre (CIAPC) launched a lookalike website which, instead of connecting users to links that would enable them to download illegally, directs them to information on how to legitimately download entertainment content.   CIAPC's 'Piraattilahti' website, meaning 'Pirate Bay' in Finnish, looks almost identical to The Pirate Bay website except that CIAPC has replaced the logo with the image of a sinking ship (just to make sure they really get their point across).

The Pirate Bay's website

 

The website launched by CIAPC

 

What is The Pirate Bay?

The Pirate Bay is a website that allows users to search for magnet links which, when opened in a BitTorrent program, start downloading the relevant content (such as a movie or TV show) via peer-to-peer networks.  Since being set up in Sweden in 2003, The Pirate Bay has been engaged in an ongoing game of cat-and-mouse with law enforcement agencies and copyright owners.[1]   In 2009 four men connected with the website faced trial for 'promoting other people's infringement of copyright laws'.  Each was convicted and sentenced to one year in prison in addition to being ordered to pay fines and damages.  Since then, The Pirate Bay has continued to operate but those who now run it have managed to remain anonymous.

Who is CIAPC?

CIAPC is a Finnish anti-piracy organisation that represents members including the Finnish Film Distributors Association and the Finnish division of the International Federation of the Phonographic Industry.

In recent years CIAPC has been active in fighting unauthorised downloads in Finland.  Since May 2011 the organisation has succeeded in obtaining court orders requiring the three largest ISPs in Finland to block The Pirate Bay.  All three ISPs have sought to fight these orders, arguing that making legal downloads more widely available is a preferable way to combat copyright infringement than to resort to censorship.  However the ISPs have been unsuccessful, and following the refusal of Finland's highest court to grant leave to the first ISP to appeal the order, it looks as though CIAPC has come out the winner.

Interestingly CIAPC is no stranger to employing controversial tactics.  In November last year it was widely reported that it had initiated a police raid on a nine year old Finnish girl who it said had illegally downloaded music via The Pirate Bay, resulting in the seizure of the girl's Winnie-the-Pooh laptop.   The father of the girl, who had received a notice from CIAPC informing him that it had traced illegal downloading activity to his account, had previously refused to pay a €600 fine and sign a non-disclosure agreement to settle the matter.

The Pirate Bay's allegations

In a statement issued by The Pirate Bay on its blog, those behind the website seemed to at least acknowledge the irony of their complaint, stating 'while The Pirate Bay may have a positive view on copying, it will not stand by and watch copyright enforcing organisations disrespect copyright'.

The Pirate Bay claims that CIAPC has copied the CSS file that underpins its website in order to set up the copycat site, without first obtaining permission as required by the website's terms of use.  A CSS file contains the coding information that determines the layout and formatting of a website and (at least under Australian copyright law) may be protected by copyright as an original literary work.

In some other countries, CIAPC's use of the copyright material may arguably fall within an exception to copyright infringement (such as the 'fair use' exception in the US, or perhaps the narrower parody and satire exception in Australia).  The Finnish Copyright Act, however, does not contain a parody or satire exception, despite an EU Directive that permits Member States to limit the rights of copyright owners in this manner if they so choose.[2]   This has been the subject of much debate in Finland, which has relatively strict copyright laws.

However, The Pirate Bay may still have a problem with its terms of use, which it claims prevents organisations from using material from its website without permission.  The terms state:

Organisations (for instance, but not limited to, non-profit or companies) may use the system if they clear this with the system operators first. Permission for organisations/ companies is not needed for obvious "well meaning" usage, i.e. distributing works of cultural benefit for the end user. [emphasis added]

No doubt if CIAPC did find itself in court it would simply say that it was entitled to use the CSS file without first seeking permission because its use was 'well meaning'.   It may well be challenging for The Pirate Bay to argue that linking users to information on legal downloading was not a 'well meaning' use.

CIAPC has in fact welcomed The Pirate Bay's threat of legal action, as it would require the website's operators to step out from behind their current veil of anonymity.  This would, in turn, enable CIAPC (and possibly law enforcement agencies as well as other copyright enforcement bodies) to commence legal proceedings against these individuals.

What will the outcome be?

It remains to be seen whether The Pirate Bay's threats of legal action will amount to anything. Presumably the operators will not want to relinquish their anonymity, considering the potential consequences for them should their identities become public.  There have been suggestions that they may enlist a third party to bring the action against CIAPC on their behalf, but it seems unlikely that a court would have much patience for such tactics given the circumstances.

For now, all attention is focused on the Finnish police's next move.

[1] Over the years The Pirate Bay has been blocked by ISPs in a number of countries. Just last year the High Court of England and Wales ordered ISPs operating in its jurisdiction to block access to the site as it was held to facilitate copyright infringement.

[2] Directive 2001/29/EC, Article 4(2)(k).

Twitter's terms of service do not allow unlimited use of content by third parties

Posted by Nicole Reid and Paul Kallenbach

Image courtesy of renjith krishnan

Following in the wake of furore concerning proposed changes to Instagram's terms of service that seemingly would have allowed commercial uses of user's photographs without any compensation to them (which we posted about here), a US court has issued a decision about the rights of third parties to use online content under the terms of service of another popular social media site, in this case Twitter. This case provides further comfort to the users of social media sites that they retain at least some control over content that they post online.

The case concerned the use by Agence France Presse (AFP), Getty Images Inc (Getty) and the Washington Post (the Post) of photographs depicting the aftermath of the January 2010 Haiti earthquake. The photographs were taken by a photographer, Daniel Morel, and posted by him to his Twitter account via TwitPic (a companion site to Twitter). They were then published by each of AFP, Getty and the Post, without any express licence to do so having been sought from, or granted by, Mr Morel.

The decision of the US District Court (Southern District of New York) was made at an early stage in proceedings and did not reach conclusions on all of the arguments put forward by the parties. The Court did, however, decide that AFP and the Post were liable for infringing Mr Morel's copyright in the photographs and granted summary judgment in favour of Mr Morel on this issue. (Getty raised additional defences that will be considered in a further hearing, alongside the question of the amount of damages to which Mr Morel is entitled for the copyright infringement.)

The defence put forward by AFP was that its actions did not infringe Mr Morel's copyright in the photographs because it had been granted a licence authorising use of the photographs. AFP argued that the licence arose because:

• in posting the photographs to TwitPic, Mr Morel granted a licence of those photographs under the provisions of Twitter's terms of service (which terms apply to pictures uploaded to Twitter via TwitPic)
• AFP was a third party beneficiary of the contract created between Twitter and Mr Morel on those terms
• therefore, the licence granted by Mr Morel extended to AFP as a licensee.

The Court rejected that argument, finding that:

• under US law, a person will only have the benefit of a contract to which it is not a party if the terms clearly evidence an intent to benefit that person, which may be shown if the contract necessarily requires that the person be benefited
• the Twitter terms of service reflected the parties' intention that a licence to content uploaded by the user be granted to Twitter's partners and sub-licensees, but not to other third parties
• although there was some broad language used in the terms of service that could have suggested that a broad licence was intended (for example, 'This license is you authorizing us to make your Tweets available to the rest of the world and to let others do the same.'), other language was much narrower (for example, 'You retain your rights to any Content you submit, post or display'), so reading the terms as a whole meant that there could be no clear intent, or necessary requirement, to imply the broad licence argued for by AFP
• even if the terms of service did grant persons other than Twitter and its partners some form of licence to use content posted to Twitter (for example, a right to re-tweet others' tweets), this did not mean that the licence was broad enough to allow third parties to use photographs out of the context of a tweet and for commercial gain.

This decision demonstrates that material posted to Twitter cannot necessarily be reproduced and used by third parties for any reason.   The Court did not have to consider the rights of Twitter itself to use content on Twitter or to grant licences to others to do so.   These rights are likely to be broader than those of third parties like AFP who do not have an arrangement with Twitter.   However, any acts by Twitter seeking to exercise these rights in a manner that is perceived as disregarding the rights of its users may spark further legal action in the future about the scope of the licences granted by users under the terms of service.