Fordham International Intellectual Property Conference, Copyright Panel: Information Society Directive, DRM, Private Copying Levies, Secondary Liability, and Copyright Territoriality
— Not a verbatim transcription —
[Moderator: Tilman Luder]
[Speakers: Sarah Faulder, Scott M. Martin, Prof. Willem Grosheide, Trevor Callaghan, Timo Ruikka, Ted Shapiro]
[Panelists: David Carson, Sebastien J. Evrard]
[Luder] The overarching question: How to best remunerate, how best to incentivize creation on the internet?
[Faulder] Question for us is: Can IP be traded on the Internet? What is the market for content online?
Assumption that copyright will underpin anything, any model.
The music industry has tended to move away from DRMs.
Change from a world where IP regulated on a national basis, to one where it is global. Also, issue of “competing with free” — the only models that maybe will work is those that “feel like free”
Research suggests in the UK consumers still willing to pay. Showed that 80% would be willing to pay, and some will continue to buy CDs.
Need a way to satisfy users’ expectations — business models that give people what they want, in an easy way. Easier than illegal services…
Plus, creators need to be paid.
Consumers want to use music in a different way — in a community — be able to copy it to multiple formats.
A global license or levy is not approprate at this stage.
Money from online is very marginal. But growing…
Need a way to encourage the new business models. See Spotify, an interesting new model.
Must have incentive to develop newer and more compelling services. Like Nokia [see last panel, “Comes With Music” model] wants to have room to be creative.
Right now there is the Digital Britain Report. It is proposing a uniquely UK-focused solution: (1) Digital Rights Agency; (2) mechanism for dealing with disputes; (3) forum for creating standards; (4) encourage eveyone to work together — to educate.
It also supports rightsholders when people want to sue. Obliges ISPs to inform customers when they are misbehaving, and aslo to save data so it is available for rightsholders when they try to sue.
[Martin] When talking about these topics, we are talking about biz models. Doing do in the abstract …
Three business myths:
(Myth 1) that feature films are immune from the piracy that ravaged the music business. Used to be that quality and convenience saved the movie industry. But this is changing. Now, you can get a high quality handheld video recorder into theare. With ease of viewing, now streaming sites, high speed internet, very easy.
(Myth 2) One size fits all solution is available. It is a myth.
Key distinction from music. Several reasons:
(a) pre-release material getting out has a huge impact. (b) staggered release dates. With film, having multiple openings in different locations is key — different holidays in different countries; (c) distribution windows; (d) pricing. Competing with free is tough. Even tougher for films than music.
(Myth 3) That DRMs are consumer-unfriendly solutions.
Must think of difference between DRM and TPMs (technological protection mechanisms). DRM give consumers different choice of pricing and timing. Gives flexibility with windowing. DRMs are effective.
Without technological measures: site blocking, graduated response, DRMs, making these movies would not be possible.
[Luder] How can you think a staggered release on the Internet work? Isn’t it available everywhere at the same time on the internet?
[Audience Question] People are accustomed to paying for full length movie. But most people are used to hearing music for free …
Movies are much bigger productions, and people may attribute more value to them for this reason.
Music is in the background, whicle movies we pay attention to them. Are these unimportant differences?
[Martin] Yes. Movies are different than music. Some movies will still do well at the theatre even if pirated. ex. Wolverine, because it is theatrical event movie.
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[Grosheide] In earlier panel most of this was said before…
If we take E-commerce Directive, this gives immunity to ISPs.
Reasons why we should adjust system, or new biz models:
Technology has given ability to get ISPs interact with the rightsholders.
(1) Do nothing. probably not helpful.
(2) Looking at code of conduct / agreements between parties. Do without legislature involvement.
(3) Liability for ISPs. They are in the best position to detect and filter out infringement, at low cost. But it could be counterproductive to free and unrestricted access to the internet…
(4) Notice & takedown procedure. This should be instigated by a claimant. …
In France, it is suggested that there would be disconnect of service.
Human rights problem (ex. Art. 10 in Eurpoean Convention for the Protetion of Human Rights). Disconnect may violate this.
What is better is a reporting system. Black-listing system of those who have been infringing before.
[Luder] Another option: Internet re-admission fee (IRF). Not cut off forever, but you have to pay to get service back again.
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[Callaghan] Balance in copyright seems to be a goal. That should be the leading consideration when thinking of ISP solution.
Having safeharbors is important. DMCA sec.512 or Art. 12-14 of E-commerce Directive.
Takedown procedures. Practical aspects are difficult.
Parties on both sides tend to abuse process.
Filtering and monitoring make the process more complicated. As an intermediary, you may want to invent a better way, but because of negligence-based liability, it could raise the standard of the duty of care!
Justifications for safeharbor. A deal struck when DMCA was formed. do we need to revisit that deal? Circumstances are different. The larger investment has already been made, now ISPs can carry the burden of liability.
If we dispense with it, it would not be a good thing.
[Evrard] What do you mean by Internet Readmission Fee? A global license?
[Luder] No, to stifle argument of human rights violation, you can buy your way back in. Not a global license — a hybrid solution.
[Q] So only poor people lose their human rights?
[Q] Is an ISP that disconnects a user for not paying bill a violation of their human rights?
[Grosheide] Yes. It could be a human rights violation, if it was not for any good reason. Like access to water…
[Q (Ficsor)] Is it a human right also to be able to use a car to commute to working place? Because if you drink & drive, you first get warning, then maybe next time you lose license. So in the case of the Internet, you go to an internet cafe, but you just can’t get your own? It is more serious that you get your license suspended than lose your own Internet?
[Grosheide] Maybe in the Netherlands it is more lenient…
[Q] Can it be extended to “cloud” services? Can you go after them the same way you can go after ISP to get at the real pirate?
[Grosheide] We should take into account what they really do. Then, the certain cacheing activities fall within the infringement.
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[Ruikka] Levies. Copyright Directive provides that if a member state allows a Private Copy exception, then it must aslo provide “fair compensation”
Examples: (1) Buy legit content from Internet source. It doesn’t end there, it gets transferred to portable devices, or other hard drive. The first download is licensed. But there is a big controversy over the second stage! Is it licensed?
(2) Download from unauthorized source. then it gets copied into portable device. Is the second copy illegal? Or a private copy?
Are all secondary copies legitimate private copies under the exception? Huge impact on value of digital services.
For licensed downloads, does exception trump contract? Is this a monopoly for societies?
Is music funded through consumers or through societies? Impact on pricing…
Many copies per user. It is the same stuff for the user in different places, and not at the same time. Effect on valuation of the individual copies?
Should levy collection rise in proportion to gross count of copies? Economic theory of marginal value of goods …
Directive talks about economic relevance to rights holders …
Impact: Consumer behavior? Music monetization — transactiosn or societies? Single market?
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[Shapiro] Premiere League decision [Football Association Premier League & others v QC Leisure & others  EWHC 1411 (Ch)] stems from a TPM device card, and against pub owners buying the card. English football sells well abroad, and they are sold on a territorial basis, with exclusive rights. The pubs would get the cards at a much lower rate than the exclusive licensees in the UK. The exclusive licensees brought a case.
Conditional Access Directive [98/84/EC]. Judge thought the cards were legal in Greece, then when imported did they become illegal? Posited questions to the ECJ.
This case would affect the movie industry — they also license on a territorial basis. These companies joined into the case.
Copyright law operates differently for film. Rights centralized in the producer. Independednt film-makers often finance their films by selling off territorial exclusive rights!
The judge thought the directive applied (which it didn’t) — he asked if temporary copies were within the scope of the reproduction right.
then, does Art. 5(1) apply (temporary copies)?
Here, it didn’t. Plus, not made pursuant to a lawful use.
The directive didn’t apply because it was a transmission to the bars. …
Still a public performance under the Berne Convention.
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[David Carson] There is an easy means to put the speech back up if it was taken down in a DMCA takedown. so the violation of the freedom of speech is only a violation for a few days, if anything.
The regime in the US is not a bad one. Not to say there is no abuses of the system — many over-claims of the process.
[Callaghan] No disagreements with that. In any effort to make safeharbor, must be cautious.
[Evrard] The French law (Three-strikes) is a monster. Politically driven. Does not take into account tech reasons:
(1) ability to falsify IP addresses.
(2) not always possible to cut out somebody — especially in areas where local loop has been unbundled.
(3) Filtering technologies are not what the rightsholders want to have. Tech moves fast. Hard to fix by decree the systems ISP must use.
This is based on administrative authority, so you need to have room for defense, appeal.
The solution must be based on sound technology, and not based on creation of a administrative authority.
[Shapiro] No specific tech chosen in French law…
In Sabam case, filtering was not mandatory either…
[Evrard] Right that there is nothing in the law, but you may mandate it by decree to set out list of what good filtering technologies would be.
[Luder] Who thinks three-strikes laws are a good idea? (*about 10% of people in audience raise hands*)
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Surfthechannel, rapidshare, piratebay … there is all these sites that skirt the law. Hiding in safeharbors.
That is why it is so hard to draw the safeharbor when drafting.
[Martin] There is also a proposal to have a model where “extreme throttling” instead of cut-off after warnings. Where the speed of the connection would be capped at one slower than dial-up. Maybe this way we can avoid the human rights issue. However, this would not be a solution for music, because the files are so small.
[Luder] Who is in favor of this model? (*about 20% of audience raises hands*) So, we may be on to something…
[Q] There is a proposal floating to have a fee connected to devices that copy. Levies…
[Luder] What will that do to transaction-based business models? Would this be the end of copyright?
[Q (Ficsor)] It would just be another tax.
[Martin] It would be a good model for collecting societies, but not for content creators.
[Faulder] Collecting society in UK functions just fine without a levy system. It would be better to keep the transactional model.
[Shapiro] Even if there was a reduction in levies, there are other ways to fund. State budget, for example.
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[Luder] Should we compensate all copies that are made? Only legal copies? Or should we make a sophiticated distinction that Timo argued for — whitewash theory that illegal copies can become legal private copies?
(*most agree with option 2*)