UNFINISHED BUSINESS

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Enforcement of copyright in the digital age

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Ben Challis

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BLACA March 10

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2010

WIPO Director General Francis Gurry

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History shows that it is an impossible task to reverse technological advantage and the change that it produces. Rather than resist it, we need to accept the inevitability of technological change and to seek an intelligent engagement with it. There is, in any case, no other choice – either the copyright system adapts to the natural advantage that has evolved or it will perish. Adaptation in this instance requires, in my view, activism.

I am firmly of the view that a passive and reactive approach to copyright and the digital revolution entails the major risk that policy outcomes will be determined by a Darwinian process of the survival of the fittest business model. The fittest business model may turn out to be the one that achieves or respects the right social balances in cultural policy. It may also, however, turn out not to respect those balances. The balances should not, in other words, be left to the chances of technological possibility and business evolution. They should, rather, be established through a conscious policy response

Neelie Kroes, EU Digital Commissioner

• • • Called on content owners of Europe to construct a "simple, consumer-friendly legal framework" for making digital content available across the Union Traditional content industries had not developed their licensing models fast enough to cope with the new demands of internet services "Digitisation has fundamentally changed content industries,

but licensing models simply have not kept up with this. National licensing can create a series of Berlin cultural walls. The price, both in pounds and frustration, is all too real, as creators are stifled and consumers are left empty handed. It is time for this dysfunction to end. We need a simple, consumer-friendly legal framework for making digital content available across borders in the EU".

What’s in those pipes?

• • • • A new survey in the US commissioned by NBC Universal shows that 23.8% of global Internet traffic involves "digital theft," with the BitTorrent file sharing protocol accounting for 11.4% of this figure (2011) 99.24% of non-pornographic material being traded was copyrighted material. It also found that "infringing cyberlocker sites" accounted for 5.1% of global Internet traffic IFPI 2009 – 19 out of 20 (95%) of music downloads illegal

The world is MY oyster ....

• • • • 76% of music obtained online in the UK in 2010 was unlicensed Nearly one in four active internet users in Europe visit unlicensed sites monthly This is in spite of wide availability of legal music sites (400+ services licensing more than 13 million tracks) 2004–2010: recorded music revenues declined by 31% • IFPI Digital Music Report 2011

Enforcement

• • • • Clearly a large percentage of internet users use the web for illegal things And clearly there are those who directly benefit And clearly there are those who indirectly benefit And where legal services are not present, illegal services flourish

Apple by the $

• • • 1992 7 billion 1998 6 billion 2004 8 billion • iPlayer launched 2001. The iTunes Music Store was launched in 2003 in US / 2004 Europe • • • • • • 2005 14 billion 2006 19 billion 2007 24 billion 2008 35 billion 2009 42 billion 2010 65 billion

YOUTUBE

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Google brought video-sharing website YouTube for $1.65bn (£883m) 2006

YouTube, launched in February 2005, has grown quickly into one of the most popular websites on the internet. It has 100 million videos viewed every day and an estimated 72 million individual visitors each month.

Facebook $60 BN, Groupon $15BN, Twitter $10BN, Zynga $9BN, Linkedin $3BN, Spotify $1BN

Enforcement ... But against whom?

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The recent iiNet decision once again puts ‘dumb pipes’ , ‘mere conduit’ and ‘safe harbour’ back in focus But are ISPs and search engines really dumb pipes ?

Some are dumb, some are wiser

• • • • Olympic tickets will be kept off eBay - Organisers of the 2012 London Olympics have said that they have been speaking with eBay to prevent re-sale of tickets on the internet Google moves to combat online piracy - Google has announced a number of new initiatives it says will help combat copyright infringement online, including a new promise of 24-hour turnaround on takedown requests, and preventing terms associated with piracy from appearing in its "autocomplete" search results. “ Google and ISP Verizon and agree that in a new deal, Verizon will prioritise Google’s internet traffic – removing so called “Net Neutrality” where all data is considered equal, and allowing Google’s information to move faster and more efficiently around the globe Its NOT right to compare to the ‘Royal Mail’ delivering a letter or BT providing lines for telephone calls

Google

• • • • • Business continues as usual at YouTube ... “What business is that? The no need to pay for the commercial use of others' content business model of Google and YouTube, the DMCA, fair-use fuelled multi billion dollar GOOGLE business” BUT – now a change ?

Google will launch its anticipated music service as part of a coming upgrade to its Android operating system software for mobile devices Joined US action (EMI v MP3tunes) on legality of ‘cloud’ lockers

Those dumb pipes

• • • EC : the currently available legislative and non-legislative instruments are not powerful enough to combat online infringements of intellectual property rights effectively.

Given intermediaries’ favourable position to contribute to the prevention and termination of online infringements, the Commission could explore how to involve them more closely.’ BUT, what solutions ARE available? ??? …….

USA - DMCA

• Nearly 100,000 North Americans have been sued for suspected copyright infringement on file sharing networks over the past twelve months according to details of a study published by TorrentFreak. Again the majority are alleged to have utilised BitTorrent, although some users of eDonkey were also targeted • Napster Case – labels “won” • MGM v Grokster

USA

• • the U.S. government has seized 18 Internet domains believed to be associated with counterfeiting or piracy. The Immigration and Customs Enforcement's (ICE) "Operation Broken Hearted" on Valentine's Day targeted websites selling counterfeit bracelets, earrings, handbags, necklaces, rings, sunglasses, wallets and watches, bearing fake brands including Breitling, Burberry, Chanel, Gucci, Nike and Timberland Image: FreeFoto.com

FRANCE

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HADOPI Graduated response State funded – ISPs must provide data Fine + suspension – up to one year Injunctive relief available to those who could contribute to prevent / terminate infringement

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A January 23rd poll in France indicated that 49% of French Internet users continue to illegally download music and video

SPAIN

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The Spanish Parliament has passed the reintroduced legislative proposals known as the SINDE law makes it easier for content owners to target copyright infringing websites attempts to introduce new regulations that reduce levels of illegal file-sharing and would offer a fast-track system through which content owners can force commercial websites that exist primarily to assist others in their illegal file-sharing offline

China

• • Chinese officials say they have arrested 4,000 people in relation to 2,000 separate cases of intellectual property infringement since last November. Gao Feng, Deputy Director of China's Ministry Of Public Security's Economic Crimes Investigation Bureau confirmed that the Chinese government had stepped up its efforts to fight commercial piracy operations. The USA estimates that US IP industries alone lose $3.5 billion a year to Chinese piracy.

Russia

• • • • Russian prosecutors have filed criminal online copyright infringement charges against a 26 year-old accused of posting 18 tracks on Russian social network Vkontakte, the tracks in question were downloaded over 200,000 times. the accused uploader faces up to six years in prison, and copyright infringement damages in the amount of $3,600. Further cases planned.

Earlier this year, a Russian court found that Vkontakte was not responsible for copyrighted materials uploaded by users of its service.

Too little, too late?

• • • Limewire, the biggest source of infringing downloads in the US, has been declared illegal and Mininova, a major BitTorrent site, shut down its illegal activities.

The Pirate Bay was blocked by a court in Italy and its operators’ criminal convictions were upheld by the Court of Appeal in Sweden Although eg Pearson – FT and Penguin Books – record profits of £670 million in 2010 – helped by a 29% digital share – eBooks up 182%

GOWERS 2006

• • • • • • • • • • The Report argued that in the modern world, the UK's economic competitiveness is increasingly driven by knowledge-based industries, innovation and creativity, and said IP - protecting and promoting innovation - had never been more important. new powers and duties for Trading Standards to take action against infringement of copyright law; IP crime recognised as an area for police action in the National Community Safety Plan; Review proposed that the penalty for online commercial infringement should be increased to 10 years imprisonment, in order to bring parity with commercially dealing in pirated works; Introducing an exceptional statutory maxima of £50, 000 for copyright offences; lowering the costs of litigation - by using mediation and consulting on the fast-track limit. The Review acknowledges that prohibitive legal costs affect the ability of many to defend and challenge IP; And consulting on the use of civil damages and ensuring an effective and dissuasive system of damages exists for civil IP infringement.

Business representatives sit on a new independent Strategic Advisory Board on IP Policy, advising the Government; ‘Taking Forward The Gowers Review of Intellectual Property: Report on the Outcome of the Consultation on Penalties for Copyright Infringement’

SABIP - Intellectual Property Enforcement in Smaller UK Firms

• The IP system’s incentive to innovate (if any) will be undermined if IP rights cannot be defended. In the extreme, a system with high costs and no valid protection would arguably lead to less innovation and to a slower diffusion of new ideas.

SABIP

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UK LITIGATION IS VERY EXPENSIVE - Overseas enforcement is unaffordable

UK infringement could be just the tip of the iceberg. Several interviewees stated that using IPRs to prevent infringement overseas was even more costly than UK litigation and often beyond their resources SABIP Oct 2010

Now Hargreaves - 2011

• • • • • • The internet is truly global But MORE not less works are protected [Meltwater, Infopaq] but there are tensions eg transformative works, sampling, parody Copying is rampant, some legal, some not legal Modern consumers are a ‘must have’ and ‘must have now’ generation - behavioural shifts CAN pay, wont pay A UK review is SURELY seriously limited

Enforcement

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Against individuals

RIAA actions, Three strikes (France, South Korea, Taiwan, New Zealand, UK)

Against websites

L’Oreal v Ebay, Sinde, MGN

v Grokster, Newzbin,

Against ISPs

SABAM v Scarlet

Revisit ‘safe harbour’ • Image: FreeFoto.com

Neelie Kroes

• • Too many barriers still block the free flow of online services and entertainment across national borders. The Digital Agenda will update EU Single Market rules for the digital era. The aims are to boost the music download business, establish a single area for online payments, and further protect EU consumers in cyberspace

Francis Gurry

• • • • three guiding principles: neutrality to technology simplifying copyright a coherent policy response - including a key role for internet intermediaries, global licensing and inviting ‘pirates’ to share responsibility for the threat to the financial viability of culture.

Solutions

• • • • • • • • • The World Wide Web is a GLOBAL MARKET and we need GLOBAL SOLUTIONS COMPETITION LAW eg MPS v Murphy and Competition regulation (eg collection societies) and PRIVACY laws will continue to be in tension with copyright Change is needed AT LEAST at a PAN-EUROPEAN LEVEL Look at history and what hasn’t worked: Was recorded music on the radio the death of record labels? Were photocopiers the death of books? Was DRM a total failure?

‘SUICIDE’ business models will die – CREATIVE DESTRUCTION LEVIES, MICROPAYMENTS, SPONSORSHIP, ADVERTISING, IMAGE RIGHTS MAY BE NEW SOURCES OF REVENUE (AND NOT ALL ARE COPYRIGHT BASED ) COLLECTION SOCIETIES WILL BE COME CRITICAL – BUT THERE ARE TOO MANY If customers no longer pay directly then that business model is doomed and CREATORS NEED TO FIND OTHER WAYS TO MONETISE THEIR CREATIVITY and their copyrights and they need to target successful business models that use copyrights (without paying ???) on a GLOBAL basis with one stop licensing / sales

In the Can Pay, Won’t Pay age …

• • • • LEGISLATIVE TOOLS will be needed to support legitimate new business models to allow content owners and creators to monetise both ‘old’ and new revenues AND allow content owners and creators to benefit from OTHER businesses who benefit from (currently illegal) content , replacing ‘safe harbour’ or ‘mere conduit’ with more appropriate models where appropriate Along with practical solutions to eg collecting micropayments, levies and the role of collection societies / effective global licensing regimes

Copyright’s last stand?

• • ... in proper doses copyright is essential for certain classes of works, especially commercial movies, commercial sound recordings, and commercial books, the core copyright industries. I accept that the level of proper doses will vary from person to person and that my recommended dose may be lower (or higher) than others. But in my view...we are well past the healthy dose stage and into the serious illness stage. Much like the U.S. economy, things are getting worse, not better. Copyright law has abandoned its reason for being: to encourage learning and the creation of new works. Instead, its principal functions now are to preserve existing failed business models, to suppress new business models and technologies, and to obtain, if possible, enormous windfall profits from activity that not only causes no harm, but which is beneficial to copyright owners. Like Humpty-Dumpty, the copyright law we used to know can never be put back together again Peter Suber 2008