Out-Law Legal Update
High Court guidance will reassure banks acting to freeze accounts suspected of holding proceeds of crime
Out-Law Guide | 30 Mar 2005 | 1:31 am | 9 min. read
This article was written by John Mackenzie, a Partner with Pinsent Masons, and it first appeared in 2001 in E-commerce Law and Policy. It was last updated in August 2008.
There are a number of well known myths about the law on the internet, and in particular the law of copyright. These include:
While courts in many countries have been willing to intervene where there has been an infringement of copyright, the real difficulty for the owners of copyright is the sheer scale of the internet, and the speed at which reproduction of material can be achieved.
The simplicity of copying material found on the internet has fuelled the myth that there is nothing wrong with doing so.
Copyright law first developed at a time when it was relatively difficult to make copies of written work. Large scale copyright infringement could only be achieved if the infringer had substantial industrial backing in the form of a printing press, and time.
The advent of the photocopier posed the first real test of modern copyright law. Then came home audio recording, video recording, and the computer, which needs to copy material in the form of computer files and code just to operate.
With the internet, where many computers are linked together, there is no need for an infringer to have serious financial backing. This is especially so where the 'original', whether text, picture, video or sound, is in digital form. There is no longer a physical original that could be the ultimate point of reference. It may now be almost impossible for the courts to identify 'the' original work. Infringers can also take advantage of the internet as a communication and publication network using the likes of P2P file sharing systems, user generated content sites, social networking sites and blogs. The challenge for copyright holders has never been greater.
The legal remedies available to copyright owners are reasonably straightforward. Copyright gives the owner the right to prevent others from copying the product. It protects the form of reproduction, not the ideas themselves, and so will only arise in relation to original works involving some degree of skill, effort and judgement.
The law of copyright is contained in the Copyright Designs and Patents Act 1988.
Copyright covers a very wide range of subject matter including books, films, videos, plays, music and drawings, all of which can make it onto the internet in some form or another. Computer software is protected as a literary work, and the databases which form the backbone of many sites are now protected following the Copyright and Rights in Databases Regulations 1997. Unlike the US , Europe has no registration process for copyright works. Once the work is created, copyright exists. Copyright prevents the reproduction of the copyright work in any material form, the making of any adaptation of the work, the making of a translation of the work or the publishing of the work without the consent of the copyright owner. The Copyright and Related Rights Regulations extended the scope of protection originally provided by the Act (partly in response to the internet phenomenon and the increase in content which is in digital form), by introducing a new right for authors and performers to control any communication to the public of their work and the making available of their work, covering, for example, actions such as enabling internet access to works. One of the objectives of these regulations was to encourage rightholders such as music and film industries in their attempts to pursue unauthorised use of their works in digital form.
In the event of an infringement, the copyright owner can apply to the court for an order to prevent the act that is taking place – known as an interdict in Scotland and as an injunction elsewhere. The Act also allows for an order to be granted for the infringer to "deliver up" the offending articles and, in certain circumstances, payment of damages. In the event that the act is identified and the infringer located, in Scotland certainly there are effective remedies. Again in recognition of many of the new difficulties which the internet poses to rights holders, the Regulations also provide the court with the power to grant injunctions against service providers (for example, ISPs) who have actual knowledge of use of their services to infringe copyright.
However, the power of the internet should not be underestimated. It has been described as a 'running rhizome'. For those who are not botanists, a rhizome is a plant that spreads through underground roots. The most invasive example is the running bamboo. There are many different species of bamboo. In general, however, one can divide bamboos into 'runners' and 'clumpers'. The clumpers don't invade. To remove a clumper, you need to just dig it out. Runners can, in the right conditions, become a serious problem. To prevent a running bamboo from spreading, a 'rhizome barrier' is essential. A barrier two or three feet deep is effective. This is because the plant feeds off the other parts of the root system. Cutting off stems will not prevent further growth, and only isolation will effectively kill off the plant.
There are two main attributes which make the internet like bamboo. Firstly, the principle of connection, which means that any point in the system can be connected with another. It is anti-hierarchical, because no part is stronger or more powerful than another. Secondly, there is no centre, no 'heart' in the rhizome. Each way into the structure is an equal way in.
The analogy can be taken further. The rhizome will not flourish where conditions are not right. Similarly the internet. In 'hot-spots' like commerce, the internet will be encouraged. If a demand is identified then the internet will flourish. So it was with pornography and travel. Equally, if particular factors combine, this will produce extraordinary growth. This happened when music files were created in MP3 format, and then Napster was born, a prime example of a 'running rhizome'. In months, over 50 million people were using a service which on the face of it appeared to promote copyright infringement. The users were making the infringing MP3 files available from their own computers at no charge. The company behind Napster argued it was only an intermediary. However the US courts disagreed with Napster, finding that Napster did not qualify for the safe harbour provisions available to intermediaries because it was a provider of software. The US courts found that as a software provider it had taken a much more active role in facilitating copyright infringement. Napster was ordered to monitor the activities of its network and block access to infringing material when notified of this material's location. It was unable to comply with this order and so eventually shut down its services.
However, even new laws and the closing down of Napster were not sufficient to kill off this type of copyright infringement. In Gnutella a new form of copying was developed. It differed from Napster in two important ways. First, it allowed users to swap any type of file, while Napster only let users swap MP3 music files. This raised the concern of the Motion Picture Association of America ( MPAA ) because movies can be exchanged as files – albeit very large files. Second, Gnutella was decentralised, meaning there is no central server that users access to find what files they can download from other users. This means that there is no server to shut down and nobody to sue but the users themselves – or possibly ISPs.
The MPAA is said to have sent hundreds of letters to major ISPs and universities, warning them that people on their networks are breaching the US Digital Millennium Copyright Act ( DMCA ) by trading movies through Gnutella.
Under the DMCA , an ISP must take action when it has 'actual knowledge' of an infringement (by facts brought to its attention or by notice from the copyright owner), but it does not impose a burden on the ISP to monitor or discover infringing behaviour.
However, while monitoring of file transmissions is possible with the Gnutella system, a bigger threat to copyright owners lay in Freenet. Freenet is free software similar to Gnutella, but the identity of Freenet users and the files they transfer are said to be impossible to identify. Accordingly, it may be impossible for bodies like the MPAA to present any evidence to ISPs that their users are in breach of copyright laws. If the infringer cannot be found, then the publication of infringing material will continue.
And it doesn't end there: the latest way in which data rather than files is shared, is by way of streaming over P2P networks. There is no server involved in the system and files are not transferred between users, only data is. The data is not stored on the user's computer but rather is confined to an internet connection and a host page. YouTube is an example of a data sharing site.
There have been a number of attempts to counter the threat through use of new technology. DVDs were encoded to try and prevent copying, although the code was broken and the method revealed on the internet.
RealNetworks, best known for its RealPlayer software, developed new technology intended to promote the legal use of copyright material over the internet. The company aimed the software in its RealSystem Media Commerce Suite at media companies and retailers looking to deliver music, movies and other copyright material securely over the internet . Included in systems such as this are applications that help prepare content for streaming and download delivery, authenticate and secure licenses, and provide a recovery tool for lost licenses. The RealNetworks system is said to be compatible with other digital rights management systems, enabling support for an array of business plans, including subscription-based delivery, video-on-demand and rental. Microsoft has also developed systems which seek to track the registration of their new 'XP' operating system, although this has not been without controversy.
At the same time the law has been evolving in an attempt to keep up with the issues, and recent decisions indicate that the courts do appear to be suggesting that a change in approach may be necessary, with many countries now moving towards increased responsibility for ISPs as a way of addressing some of the difficulties faced by rightsholders. For example, in June 2007, the Brussels Court of First Instance ruled that a Belgian ISP called Scarlet was under an obligation to both block the accounts of offending users, and implement a mechanism to filter out infringing content (although the case is now under appeal). Similarly in Germany a regional court held that the website Rapidshare was under an obligation to monitor the copyright status of all musical works made available on its site. In France, in November 2007 President Sarkozy announced a pioneering entente between French ISPs and content owners, based on a system of warnings leading to disconnection of persistently infringing users. In the UK the Government has recently outlined its intention to consult on legislation requiring ISPs and rights holders to co-operate in taking action against illegal file sharing. It has signalled its intent to legislate if a commercial solution cannot be reached between them. Copyright owners are also signalling that they are more prepared to take matters into their own hands by taking exemplary action against file sharers, as demonstrated by recent action by computer game companies Atari, Topware Interactive, Reality Pump, Techland and Codemasters who are writing to file sharers demanding payment from those who have downloaded recent games releases without paying.
These initiatives demonstrate both the pace at which technology is developing and the attempts by lawyers to keep up. However despite some of the proposed changes, the essential aspects of the law remain the same, although there remains the persistent problem of territorial limitations. To return to the bamboo analogy, the internet is invasive, and crosses all boundaries. A legal jurisdiction is limited to that particular territory. A court in one jurisdiction cannot effectively stamp out infringement in another. Until a way is found of allowing the law to follow the infringement, the internet will remain as a living organism to be encouraged or contained as technology permits.
Contact: John Mackenzie / 0131 225 0019
Out-Law Legal Update
High Court guidance will reassure banks acting to freeze accounts suspected of holding proceeds of crime