Naked Law

Im-Perfect infringement in the US

I see that Perfect 10 are now suing Microsoft in California for copyright infringement by virtue of including in its search results unauthorised images of Perfect 10's content which link to the full-sized images for free (presumably therefore by-passing Perfect 10's payment mechanisms).  This follows similar cases against Google and Amazon earlier this year which Perfect 10 lost (but which are being appealed). 

In principle, creating unauthorised copies of images is clearly an infringement of copyright.  However, Perfect 10 lost the earlier cases on the basis of the US copyright defence of "fair use".  This is a statutory defence, said to be based on the US constitutional principles of freedom of expression.  It permits the unauthorised use of copyright works where such use is "fair" in the circumstances taking into account factors such as "the purpose and character of the use" and "the effect of the use upon the potential market for or value of the copyrighted work". 

The US exemption for fair use is much broader (and gives the judge much more discretion) that the UK equivalent defence to copyright infringement of "fair dealing".  This permits unauthorised use for a specific and narrowly defined list of reasons such as non-commercial research, criticism and private study.  Leaving aside any potential jurisdictional issues in bringing proceedings in the UK, surely Perfect 10 would have stood a better chance of obtaining their injunction over here as it is difficult to see how Google or the other search engines could have fitted their thumbnails within the fair dealing defence.  On this point at least our copyright laws are more pro-author than those in the US.

Lawyers shown the door in Seagate decision

Lawyers will be weeping. For 24 years patent attorneys in the US have had a lucrative business in writing "non-infringement" opinions with the object of defeating claims for punitive triple damages for willful patent infringement. Each opinion had to involve substantial work or it could be attacked as superficial. However, in In re Seagate the Federal Circuits Court of Appeal has just overturned those happy years. The CAFC decided that the test for such punitive damages is a much higher threshold: the infringement must be reprehensible. This requires that: (1) there was "an objectively high likelihood that [the infringer's] actions constituted infringement of a valid patent", and (ii) this was known or so obvious that it should have been known to the infringer. And incidentally there is no requirement to obtain counsel's opinion to this effect to avoid liability for punitive damages. (For the full text see http://www.patentlyo.com/patent/2007/08/in-re-seagate-t.html).

This could have a major benefit. For years in the electronics and software sectors, where doubtful patents abound (as well as other areas) businesses have steered clear of carrying out patent searches or looking at published patent resources, for fear that, if they find something relevant, they run the risk of triple damages, or the cost of an infringement opinion -- running at US$10,000 and upwards -- or worse still both if the opinion is not unequivocal. Now, with a second chip out of the US pro-patentee stance -- in May 2007, the Supreme Court ruled in the KSR v Teleflex decision that that there is some level of inventive threshold for US patents (http://www.supremecourtus.gov/opinions/06pdf/04-1350.pdf)-- businesses can take a peek at competitor patents, and rely on their own common sense views (with guidance from patent specialists) on whether they are likely to be valid and whether they are likely to be infringed.

Of course it is unlikely that the lawyers will really be impoverished.

allofmp3.com copyright decision

In another twist to the allofmp3.com tale (see previous NakedLaw posts), Denis Kvasov, the former head of the site was last week found not guilty of copyright infringement by a Russian court. The site had been paying royalties to a copyright collection agency in Russia (ROMS), but this was not recognised by the international music labels as being a legitimate licence to distribute tracks online.

The Russian court however, noted the payments to the agency, and confirmed that insufficient evidence of copyright breach had therefore been demonstrated by the prosecution team. The International Federation for the Phonographic Industry is reported to be planning to appeal.

Meanwhile, the MP3sparks.com site launched by Kvasov's company, Media Services, is still offering tracks for download. The blue touchpaper has been lit. Stand well back...

Not a cloudless Skype

The widely reported outage of Skype brings into focus the issue of service level agreements. Skype subscribers wondering whether they will be entitled to compensation for the outage, might want to look at the following passage from the Skype service agreement:

"Skype will really try to provide the Skype products with minimum disruptions. However please understand that Skype can not guarantee that the Skype products will always function without disruptions, delay or other imperfections."

"Skype will really try" is similar to a "use reasonable endeavours to" provision which is often seen in this type of contract. It falls short of a contractual obligation to deliver an uninterrupted service.

Service level agreements, or SLAs, set the levels of service that users can expect in contracts for services such as web hosting, software support and telecoms. Fixed line telephony provides will typically offer an SLA, and compensation (often a relatively nominal amount) for any failure to meet the SLA. However, a key difference between fixed line telephony providers, and providers of telephony where the call is transmitted via the internet, is that the former own (or control) the end to end infrastructure over which the call is transmitted, so are in a position to make commitments about the level of service that the infrastructure will deliver. Internet call companies would argue that they cannot give the same guarantees as there are too many issues wholly outside their control.

There is - of course - nothing to stop internet call companies taking the view that in order to be competitive in the marketplace they must match the SLA commitments, and any corresponding compensation for failures, offered by fixed line telcos, even if that means paying out for a failure which is not their fault.

However, at the moment, the cost differential between fixed line and internet calls seems to be sufficiently high that SLAs are not a key concern. Whether this will change as more businesses use internet telephony, and users begin to treat it as their main voice communication tool, remains to be seen.

Fair Dealing with Passenger Data?

Further to my October and November posts about negotiations between the US and the EU over the transfer of passengers' data, a new deal was reached at the end of July under which data transferred to US authorities may be stored for up to 15 years.  Data can be retained in an active database for up to 7 years and for a further 8 years in a "non-operational" status.  This is far longer than the 3 and a half year limit under the previous agreement.

Under the new deal there is a reduction in the number of pieces of passenger data allowed to be taken by the US authorities, from 34 data items under the last agreement to 19 now.  However, there is concern that data fields may just have been merged and renamed so that effectively there has been no big change.

There has also been concern that US authorities can use the data for any purpose they deem necessary and that the data collected may include sensitive data such as the racial or ethnic origin of a passenger.  There are no data protection measures in the US equivalent to those in the EU.  Under the deal US authorities are supposed to filter and delete sensitive data, however there are exceptional circumstances in which it can be used.

This new arrangement is to last for 7 years, and the EU believes it will ensure "an adequate level of protection of passengers' personal data in line with European standards on fundamental rights and privacy".  However it will be interesting to see what privacy campaigners make of this latest deal.

Websurfing USA

Following on from my previous post on a not entirely dissimilar topic, this US case was recently brought to my attention. A Court in California has made a quite interesting and potentially expansive ruling which could affect net users' privacy.

Columbia Pictures would like to know the identities of those users who are logging into Torrentspy and downloading copyright protected materials. In line with many websites, Torrentspy have a privacy policy (which is highly advisable), summarising what happens to user data when users visit the website. This serves to re-assure visitors to a website that the website operator takes their privacy when visiting the website seriously, and does not store personal user data except as completely necessary. Torrentspy's policy is to not keep any temporary information which arises as a result of a visitor accessing the website. Anything cached or stored in RAM would therefore be deleted as soon as the user finished accessing the website.

Without wanting to go into too detailed a legal analysis, the California Court in this instance determined that the material which was temporarily stored was capable of being useful in future Court proceedings. Torrentspy were therefore positively obliged to keep a record of this information to support any future request for information pursuant to any pending or future legal proceedings.

I am particularly concerned by the Court's attitude to individual privacy, as illustrated by this quote that companies, 'cannot insulate themselves from complying with their legal obligations to preserve and produce relevant information within their possession, custody or control .... by reliance on a privacy policy'.

Generally speaking, web users' privacy is afforded a good level of protection in the European Union, which is generally regarded as more protective of privacy than the US. As my earlier post points out, there is a body of legislation in the EU which protects the privacy concerns of individuals. For a broad analysis of the differences between the EU and the US, I refer you here.

This is potentially a ruling which could give rise to some not insignificant privacy law concerns. For an excellent detailed analysis of this story, please see Mark Rasch at Security Focus, and this report in the Register.

Piracy stopped by Belgium?

According to third party reports, a Belgian ISP called Scarlet Extended has been compelled to screen file sharing traffic to stop copyright infringement by users in relation to copyright protected material regulated by the Belgian Society of Authors, Composers and Publishers. The decision is reported as requiring that Scarlet must block or filter internet traffic which contains copyright infringing material using suitable means. These measures must be implemented within the next 6 months or a penalty will be imposed on a daily basis against the ISP. The Court also appears to have ruled that filtering content to prevent copyright infringement is not the same as monitoring content, since monitoring is prohibited by the Privacy Directive (see below).

Observers familiar with the law in this area will no doubt be taken aback at this decision, given the raft of legislation in this area. Article 5 of the Privacy Directive (97/66/EC) guarantees the confidentiality of electronic communications. The preamble of the E-commerce directive (00/31/EC) at section 15 provides that European Member states must prohibit the interception or surveillance of communications, in accordance with the provisions of the Privacy Directive. Also, under the E-commerce Directive, ISPs and similar bodies are exempt from liability where they are a 'mere conduit' for illegal activity.

However, the Belgian decision appears not have considered this legal framework and effectively provides that copyright law takes precedence over both confidentiality concerns and the ISP exemption from liability as a mere conduit, at least in Belgium.

Various copyright authorities are, understandably, ecstatic, and hope that the ruling will be replicated across Europe. Whether all European countries will decide that these provisions should be interpreted in this manner remains to be seen.