Abmahnkanzlei: Shock Troops of the Enforcement Machinery?
In Germany there exists a form of legal practice known as as an “Abmahnkanzlei“, which would literally be a legal practice which makes orders to cease, desist and compensate (Abmahnung). These have been employed by copyright owners as agents to pursue filesharers. The procedure is familiar: internet protocol addresses are collected through online monitoring; rightsholders or their agents seek a court order directing the identification of the subscriber names behind the IP address. At this point the abmahnkanzlei sends a letter to the subscriber demanding compensation and a written commitment to stop the infringing activity. The sum demanded varies according to the copyright owner involved. Apparently porn producers insist on more money than the music companies, which figures, given the potential to implicitly blackmail subscribers by revealing their identities and alleged sexual proclivities in court.

The online news portal Heise has now reported that in the last days one of the large abmahnkanzlei, Urmann + Collegen in Regensburg, has announced that it is auctioning off the right to pursue 70,000 subscribers who have already been mailed two demands and have refused to pay up. Within their system a first demand was for a sum of 650 euros. If no settlement was forthcoming, a second letter was sent demanding 1286 euros. These 70,000 letters thus have a notional value of 90 million euros. Presumably whatever amount is coerced through this sum is to be split between the issuers of the ‘warnings’ and the owners of the copyright.

An additional, and perverse, twist to this process is that there are firms specialising in contesting these claims, who offer to handle pending and future cases for a fee which ranges between 500 and 650 euros – and thousands of people have signed up. The whole setup has become a racket whose only beneficiaries apparently are lawyers.

In a hearing hosted by the European Commission last June, the Association of the German Internet Industry, ECO, reported that German Courts are now directing the release of up to 5000 subscriber identities in one hearing. They also said, and I will try and verify these figures, that ISPs are being required to identify 300,000 people per month. Obviously these are huge numbers, and one wonders why this is not a bigger issue in public discussion.

Whither Privacy?
One also wonders where the German Data Protection Authorities are in all this; in 2010 the Swiss Supreme Court ordered a company, Logistep, which does network monitoring for copyright owners with a view to instigating enforcement proceedings, was ordered to cease (see also analysis from a Swiss legal practice and Ars Technica). The case was taken by the Swiss Federal Data Protection agency. Switzerland of course is not in the EU, and the law is different, but there have been cases refusing to release subscriber information in other EU jurisdictions such as Austria and Spain.

In any case, the gigantic scale of this campaign perhaps provides another element of the explanation for the sharp increase in support for the Pirate Party. Despite it not having been a widely discussed topic during the election campaign, there are undoubtedly a lot of people who are furious about all this.

This case began in 2004 with the Belgian copyright and collective rights organisation taking a legal action against the ISP Scarlet to implement measures to stop their users from violating copyright through use of p2p software. To this end they sought to oblige the ISP to institute a filtering system which would have intervened to terminate data transfers involving works identified as copyrighted.

Decisions in the Belgian courts went in SABAM’s favour, but no-one could come up with a feasible technical scheme capable of meeting the plaintiffs requirements. Eventually the national authority referred the matter to the ECJ.

The Legal Calculus
Argument at the ECJ centred around the following issues:
(1) Both Copyright directive and the Intellectual Property Enforcement Directive established that copyright owners should have access to injunctions as a means to halt ongoing infringements, the question was – and to some extent remains – to what extent and with what consequences.

(2) The eCommerce directive set out clear limitations to the liability of ISPs, including cases where they act as ‘mere conduit’ for data transactions in which they are not direct protagonists but merely instruments of their users. In addition to sveral enumerated safe harbours, the eCommerce directive also limits the legislative discretion of individual states as regards the obligations of ISPs in Article 15:

Member States shall not impose a general obligation on providers, when providing the services covered by Articles 12, 13 and 14, to monitor the information which they transmit or store, nor a general obligation actively to seek facts or circumstances indicating unlawful activity.

(3) Monitoring users’ data traffic involves the processing of personal data as protected by European Data Protection directives, which consequently must be taken into consideration in assessing the validity of any proposed filtering scheme.

(4) Multiple rights and freedoms protected under the European Convention on Human rights and the Charter of Fundamental Rights of the European Union (which became part of EU law in 2009) are implicated in the adjudication. On one side the property rights of the copyright owners, on the other the rights of privacy and freedom of expression of internet users, and the freedom to conduct business of the ISP.

Round 1: The Advocate General’s opinion
Cases sent to the ECJ are first analysed by the office of the Advocate General, who produce an advisory opinion for the Court, which is not however bound by either its mode of analysis or conclusions. The examiner in this case was the spaniard Pedro Cruz Villalón. His attention focused on the question of the consistency of such injunctive relief with the Charter, and his conclusion was that it was noncompliant and in breach of the principle of legality on several counts. At the core of his opinion (in french) was a criticism of the general nature of the surveillance system sought by SABAM, its lack of proportionality and indefinite duration. Having resolved the question by reference to the Charter, he did not delve into the conflicting provisions of the different directives.

Round 2: The ECJ decision
The ECJ however elected to approach the matter the other way around, dealing first with the question of Article 15 of the eCommerce directive. An indication of the result is already provided by the framing given by the Judges to the proposed filtering system, which abounds with red flags:

29. … a system for filtering
– all electronic communications passing via its services, in particular those involving the use of peer-to-peer software;

– which applies indiscriminately to all its customers;

– as a preventive measure;

– exclusively at its expense; and

– for an unlimited period,

Indeed it only takes another six paragraphs for the scheme to be definitively struck out:

36. In that regard, the Court has already ruled that that prohibition applies in particular to national measures which would require an intermediary provider, such as an ISP, to actively monitor all the data of each of its customers in order to prevent any future infringement of intellectual-property rights. Furthermore, such a general monitoring obligation would be incompatible with Article 3 of Directive 2004/48, which states that the measures referred to by the directive must be fair and proportionate and must not be excessively costly (see L’Oréal and Others, paragraph 139).

The Judges then proceeded to deal with the vying rights and freedoms under the Charter.

43. The protection of the right to intellectual property is indeed enshrined in Article 17(2) of the Charter of Fundamental Rights of the European Union (‘the Charter’). There is, however, nothing whatsoever in the wording of that provision or in the Court’s case-law to suggest that that right is inviolable and must for that reason be absolutely protected.

44 As paragraphs 62 to 68 of the judgment in Case C‑275/06 Promusicae [2008] ECR I‑271 make clear, the protection of the fundamental right to property, which includes the rights linked to intellectual property, must be balanced against the protection of other fundamental rights.

45 More specifically, it follows from paragraph 68 of that judgment that, in the context of measures adopted to protect copyright holders, national authorities and courts must strike a fair balance between the protection of copyright and the protection of the fundamental rights of individuals who are affected by such measures.

46 Accordingly, in circumstances such as those in the main proceedings, national authorities and courts must, in particular, strike a fair balance between the protection of the intellectual property right enjoyed by copyright holders and that of the freedom to conduct a business enjoyed by operators such as ISPs pursuant to Article 16 of the Charter.

Reference to Article 16 caught my attention as it was not mentioned at all in the Advocate General’s opinion. In addition it is raised as the first countervailing factor weighing against any absolute vindication of the copyright owners’ rights. Next up are the rights of individual users:

50 Moreover, the effects of that injunction would not be limited to the ISP concerned, as the contested filtering system may also infringe the fundamental rights of that ISP’s customers, namely their right to protection of their personal data and their freedom to receive or impart information, which are rights safeguarded by Articles 8 and 11 of the Charter respectively.

51 It is common ground, first, that the injunction requiring installation of the contested filtering system would involve a systematic analysis of all content and the collection and identification of users’ IP addresses from which unlawful content on the network is sent. Those addresses are protected personal data because they allow those users to be precisely identified.

52 Secondly, that injunction could potentially undermine freedom of information since that system might not distinguish adequately between unlawful content and lawful content, with the result that its introduction could lead to the blocking of lawful communications. Indeed, it is not contested that the reply to the question whether a transmission is lawful also depends on the application of statutory exceptions to copyright which vary from one Member State to another. Moreover, in some Member States certain works fall within the public domain or can be posted online free of charge by the authors concerned.

Ringside Reaction
SABAM have issued a press release with the somewhat misleadinbg title ‘Authors worried about the decision by the Court of Justice of the European Union’ (which authors exactly?), wherein they announced that they are going to lick their wounds in private and reflect on the options left open to them by the decision.

Meanwhile the IFPI took the opportunity to emphasise that the decision reiterated the sanctity of copyrights online and that the problem here was merely in the overbroad nature of the injunction sought by SABAM, and would not undermine either their three strikes schemes or pursuit of so-called rogue sites.

La Quadrature du Net hailed the decision:

At a time of all-out offensive in the war against culture sharing online, this decision suggests that censorship measures requested by the entertainment industry are disproportionate means to enforce an outdated copyright regime.

They also point to the more general landscape in which the decision occurs, specifically the current passage of the Anti Counterfeiting Trade Agreement and the upcoming consent vote regarding the Treaty at the European Parliament.

Naturally Belgacom, the current owners of Scarlet also expressed satisfaction with the result, which comes more generally at a time when rightsholders have been trying to corner ISPs into more intense policing of their users, an operation to which the European Commission has also been party.

It’s a Knock Out
In sum this is a rare occasion to celebrate as regards legal developments concerning online freedom. This decision will have an important impact on national jurisprudence throughout the Union, and will put pressure on legislators to tailor any further copyright enforcement measures with at least some regard to proportionality and fundamental rights. Of course there are other fronts to this battle, notably the current hysteria about so-called rogue sites. At a later point I will provide an EU-wide survey of the situation in that regard, and of course there is legislation pending on the same theme in the US.

For other coverage see Glyn Moody’s report, IP Kat, and the reaction of the European Digital Rights Initiative.

The 2009 campaign marked the first time that online public sphere began to be taken seriously as a factor in the vote, and through a combination of their intense social media presence, popularity amongst young voters as expressed in online polls and the general emphasis on network politics the PP became positioned as the ‘party of the internet’. Germany has a distinct engineering culture due to the scale and centrality of its technology-driven industries, and the PP drew heavily from this pool both in terms of activists and policy relevance, but this narrow techno-fetischism also constituted an inbuilt limitation to their appeal.

2011 was different. What was immediately striking about the PP’s poster campaign was its playful tone, self-irony and lack of focus-group sleekness. So much so, that the whole thing looked initially as if it might be a prank. Notable also was the expansion of the issues addressed: this was not an agenda of pure technophilia: posters laid out their support for a guaranteed basic income, decriminalisation of drugs, secularisation and increased transparency in political administration. In addition they proposed the introduction of city-wide free public transport, and set out alternative ideas about education in a country witnessing declining graduation at third level in comparison with the preceding generation.

“Why am I hanging here? You’re not going to vote anyway!”

How the Right Came Unstuck
I think it’s difficult to grasp what happened in Berlin without an understanding of the wider national political climate as well as local factors in the city itself. Since their election in 2009 the CDU/FDP coalition has met a series of defeats on a regional level. Two issues in particular have occupied public attention with devastating consequences for the government.

The first is the fight over the construction of a new central train station, Stuttgart 21, in the regional capital of Baden Wurttemberg. Opposition by a broad alliance of environmentalist groups culminated in the occupation of a green area, subsequently evicted amidst massive police violence. Clashes on demonstrations are not unusual in Germany, but on this occasion the victims were not principally anticapitalist youth, but middle class ‘civilians’ – with disastrous consequences for the local junta. As a result the CDU lost control for the region for the first time in more than half a century.

Then came the nuclear accident in Fukushima, which intensified an already stormy and longstanding political debate on nuclear energy, leading to the reversal of the government’s policy postponing reactor closures. The most immediate beneficiaries of this events were the Green Party which saw instant growth both at the polling booth and in opinion polls. Combined with an array of smaller controversies the governments popularity sank, with the SPD also putting a floor on their recent decline in support.

Wir Sind ein Volk: Ihr Seid ein Anderes!

courtesy of http://www.flickr.com/photos/bopuc/

A reminder is in order here that the German economy has significantly outperformed the rest of Europe in the last couple of years. 1998-2003 was a period of recession, after which growth improved until 2009 where there was a sharp contraction in GNP of 5%, directly linked to the fall in global demand for Germany’s exports. Since then however, exports have recovered both to other EU states and emerging markets. Low levels of home ownership and the difficulty of accessing mortgage finance sheltered Germany from the financial events which have unfolded since 2007, although German banks and investment funds have been damaged due to investments made overseas, notably in the US sub-prime market.

What is poorly understood overseas however is the regional nature of the German economy, and the degree to which it continues to be centered on key nodes in former West Germany: a Munich-Nuremberg axis in Bavaria, Baden Wurttemberg, Frankfurt (finance), Koln, Hamburg and the Ruhrgebiet. Berlin is cut off both in terms of human capital and infrastructure from these areas, and struggles as a result. The local economy is heavily reliant on public sector employment in government and administration, tourism, and construction. While there is some software, pharmaceuticals and media production, they are in relative terms discrete employers. The biggest new employer is the German intelligence agency, the BND! Consequently local unemployment remains stubbornly high, over 13% according to official figures, and wages are low.

A corollary of the weak economic situation has been the relatively low cost of living, especially in terms of rental rates. Notoriously this has attracted a lot of under-remunerated cultural producers to make the city their home. But in the last four years rents have increased precipitously, between 15-20% annually in some centrally located areas, and when combined with weakened tenant protections and reduced investment in social housing; the result has been significant levels of displacement. New construction is occurring but is confined to apartments marketed to investors from other areas of the country and abroad. In fact this process has been underway since the 1990s, but had abated during the 1998-2003 slump – now it is back with renewed vigor. Local conflicts over urban development and planning have intensified and drawn in wider tranches of the population. The failure of the local administration – a coalition of the Social Democrats and die Linke – to respond to the resultant insecurity, combined with the poor economic opportunities available have opened the door to other forces. Previously the Greens would have been expected to clean up in this scenario, but they are perceived increasingly as the party of a lifestyle-defined middle class which has jettisoned its radical DNA, and in Berlin this doesn’t play as well compared to prosperous regions in the west.

In sum the conditions for a new protest party were ripe, and the Pirate Party were there to capitalise. They took more votes off die Linke proportionally than from anyone else, especially in the constituencies in the east. In areas characterised by a high level of conflict over housing such as Friedrichshain, they scored their highest results in absolute terms, hitting up to 17%. This area had been the scene of a massive campaign in defense of a squatted ‘house project’ (where people live collectively and conduct cultural and social activism), Liebig 14, which was evicted in February of this year. One element of the PP’s programme is to enable access to loans for tenants who want to buy their houses out from their owners rather than there being released on the open market. Meanwhile, on the border of Prenzlauer Berg and Wedding one of the city’s most popular parks is slated to be partially developed as condominiums, provoking anger and regular demonstrations in which the PP have been active. Along the site of the former wall, what was once social housing (built during the massive architectural project of the 1980s, the IBA) is in the process of reverting to private ownership, with increases in rents of up to 200%. This does not mean that the PP is a new Tenants Rights Party, but simply that the failure of the historical ‘alternative’ and ‘left’ parties has alienated many and opened the door for others.

Aftermath
What I want to get across is the complexity of trying to analyse the Pirate Party’s extraordinary result. While no enthusiast for electoral politics, I have been involved in the fight against intellectual property expansionism and have thus paid attention to the progress of the various PP’s since the start. But the copyright question which instigated the organisation’s creation was a footnote in the election. Nonetheless there has been enough happening in the copyright and surveillance realms to steel activists attracted by this issue. Germany, in fact, has had one of the most frantic enforcement campaigns in Europe in recent years, with the development of what is widely referred to as an enforcement industry where IT companies are contracted to trace those sharing files online so that lawyers can then make demands of ‘compensation’, an approach exemplified by companies such as Constantin GMBH, rights owners responsible for the famous sweep of Downfall videos from youtube. In October CDU politician Siegfried Krauder floated a proposal for a three strikes style law also in Germany, even though this would go against the coalition agreement made with the FDP (which contains a determined civil libertarian faction). Elsewhere, the campaign against intrusive surveillance was enlivened by revelations that police in Dresden engaged in generalised interception and parsing of mobile traffic and SMS during popular demonstrations against a neo-fascist rally in Dresden last winter.

The Pirates took 8.9% in the Berlin election. So unexpected was this that they cannot in fact fill all their seats. Every candidate for the City was elected, but several of them were also elected to the local councils in their areas, and due to the prohibition on dual-mandates some will go unfilled. Opinion polls have put them on 8% nationally, but it will be difficult to sustain this if they do not transform novelty into meaningful intervention. The crucial question is what would a meaningful form be. Events elsewhere such as the Occupy movement reflect a general distrust of the political system and its modes, a humor which arguably is analogous to the motivation driving the Pirate Party’s success. If this is so, then there is a case that the PP would be best served not by playing the Parliamentary game with too much earnestness, but rather should expose it and demonstrate the castrated notion of participation which it represents.

Following the election a debate kicked off in the TAZ newspaper regarding the left-wing credentials of the party, or lack thereof. Opinions vary, as do the self-descriptions of prominent party members. Current leader Sebastian Nerz is a former member of the conservative CDU, and the party also includes many former liberals; he prefers to charcterize it as a socially liberal progressive party. From the other side of the spectrum the Pirates have picked up members from all over the left, including a former chairperson and MEP of the Green Party, Angelika Beer, and former MP Herbert Rusche.

Parallels have been drawn between the struggle between ‘vollis‘ and ‘kernis‘ in the PP and the earlier fight in the Green Party between ‘realos‘ and ‘fundis‘. In the PP context this refers to a tension between those favouring a minimal program based on technological issues and those who want the party to develop a full programme, including the thorny issues around the social state. A congress in Bingen in 2010 grappled with these issues unsuccessfully, but the question was resolved at another meeting later that year in Chemnitz. On that occasion the membership endorsed a proposal to support a guaranteed income and to back the introduction of a statutory minimum wage in the interim. This move was actually opposed by the then leader Jens Seipenbusch. The result in Berlin clearly favours the more expansionist current in the organization.

On the back of their gains, however, the PP has now also made itself a target for more calculated attacks. The Greens and die Linke will be ruminating on how to deal with the threat they pose, with Renate Kunast (the local Green leader) quipping to a business audience before the election that they could be ‘rehabilitated’, and presumably co-opted. This is unsurprising, seeing as in absolute terms the PP took more voters from the Greens than any other party.

Subsequent attempts to smear them mediatically may not be unrelated. One instance of this has been the attempts to link their activists with the far-right NPD, on the ground that a couple of their members had a previous involvement in that organisation. Having seen Pirate Party members in Berlin on grassroots antifascist demonstrations in the city, inches from braying boneheads, I would give this no credence. In every political organization there are those with flawed pasts – it’s no grounds to censure them forever. But the circulation of this story speaks to the new seriousness with which the Pirate Party are being treated, and they can afford to be sanguine about it. As disreputable friends in Italy would say: molti nemici, molto onore – many enemies, much honour.

July has been a busy month.

Arrived in Berlin only to discover that two copyright consultations are taking place in Ireland – what excitement!: a proposition to introduce a ‘fair use’ clause to local legislation (rerunning the Hargreaves inquiry), and regarding an amendment designed to enable rightsholders to obtain injunctions against internet service providers where their infrastructure is allegedly being by users for infringing purposes.

Although sceptical about such processes, I had worked on a submission to the EU Commission about the Enforcement Directive earlier this year, so I did throw in a rushed contribution. But the technical nature of these mechanisms largely elides the really crucial questions. What sectors are truly dependent on copyright, rather than just happy to take advantage of it? How extensive and significant economically are these sectors? What are the costs imposed on cultural users and consumers as a result? What way do these rules shape what type of culture is produced and the organisation of the industries that produce them?

On a narrower level of economic development the issue is basic: how can it be that in a country like Ireland, where Google employ more than 2000 people, there is no explicit protection of search engines, nor for the innumerable ways of aggregating and reusing information – the basic operating space for technological invention, innovation and diffusion – from copyright liability.

‘Fair use’ in the US functions as an affirmative defense for exactly these type of cases where works produced produced for one purpose or market,are transformed into something entirely different. Fair use is a statutory, general, defense to copyright infringement, applied on a case by case basis which renders it flexible and adaptable to unforeseen circumstances.

The Hargreaves report in the UK ultimately opted against advising the creation of this defense – why? Their argument was that it would create so much uncertainty, that the greatest beneficiaries would be lawyers paid to decipher the ambiguity for the interests involved. Further, due to the restrictions of European laws, agreed to by member states in blissful ignorance of their repercussions, the latitude to create exceptions and exemptions to copyright is limited to a list of about fifteen enumerated cases. Thus the introduction of such defense would require action at the level of the EU: an obviously unenviable prospect. Puzzlingly Hargreaves proposed the creation instead of another new European exception which would encounter exactly the same type of political obstacles:

“We therefore recommend below that the Government should press at EU level for the introduction of an exception allowing uses of a work enabled by technology which do not directly trade on the underlying creative and expressive purpose of the work…”
Digital Opportunity, p.47

Apart from the bureaucratic barriers to to its creation, it is also, well, vague, so maybe the lawyers still have something to look forward to. Go figure.

Google is so naturalised, through incessant everyday use ,that it may appear absurd to suggest that it could be under legal threat. Yet a review of case law in both the US and the EU shows the extent of the legally-manufactured obstacles faced by the company; various aspects of their services (image search, youtube, google news) been condemned in Belgium, France, Germany and Italy, amongst others. The search giant, of course, has more than adequate legal and policy resources to protect itself. My concern is for the next generation technologies threatened by copyright regimes: without either deep pockets or the anthropological dividend of mass adoption, they will always be under threat from those who hold economic power now.

Meanwhile the media companies are desperate to ease their access to injunctions against anyone deemed to be a ‘contributor’ to copyright infringement. Friday last, Hollywood had a victory in the high court in London, securing an injunction against British Telecom, forcing them to deny their subscribers access to a site called Newzbin. Having already already lost a copyright action Newzbin was an easy target, but the precedent it sets is diabolical: innumerable online spaces contain activity that may be deemed infringing – should they all be shut down? Youtube and Vimeo too, as well as any site with the temerity to index torrents? And how will the Star Chamber necessary to determines a site’s bona fides be selected?

Securing a space for the experimentation in both engineering and culture, acknowledging that the changed nature of cultural production and the basic alphabet for technological innovation have the same root, should be the object of any changes made to copyright law. This means liberation from copyright, both for computer users with a new capacity to produce and distribute meaning, and for the innovation necessary to economic change.

EMI’s application failed. But ten days ago the Department of Enterprise and Innovation (the Irish ministry with legislative initiative in the sector), published a draft amendment to the Copyright Act of 2000, in an apparent attempt to provide the legislative basis for such judicial orders. A consultation period regarding the proposed amendment will continue until the end of July

Subsequent to his decsion in EMI v UPC, I had the chance to listen to the judge, Peter Charleston, give his impressions about the issues. He was thoughtful, but was also obviously somewhat at sea in a culture whose nuances he did not quite grasp. He recounted how the Irish police had visited him after the judgement, to warn him that his decision had displeased people on the internet in places like Kazakhstan and Uzbekhistan, and that they might seek revenge by stealing his credit card numbers or planting child pornography on his computer.

As he told this story I couldn’t judge whether he was being earnest or sarcastic. Perhaps Anonymous has managed to psych out the Irish police, as well as fooling them with a bit of proxying. More on this tomorrow, for now here is the text of the proposed amendment.

Draft Regulations
S.I. No. of 2011
European Communities (Copyright and Related Rights) Regulations 2011.
I, Richard Bruton, Minister for Jobs, Enterprise and Innovation, in exercise of the powers conferred on me by section 3 of the European Communities Act 1972 (No. 27 of 1972) and for the purpose of giving further effect to Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society [1], as amended by Corrigendum[2], hereby make the following Regulations:
1. These Regulations may be cited as the European Communities (Copyright and Related Rights) Regulations 2011.
2. In these Regulations -
“Act of 2000” means the Copyright and Related Rights Act 2000 (No. 28 of 2000);
“Directive” means Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society as amended by Corrigendum
3. The Act of 2000 is hereby amended by the insertion of the following subsection after subsection (5) of section 40:
(5A)(a) without prejudice to subsections (3) and (4), the owner of the copyright in the work concerned may apply to the High Court for an injunction against a person who provides facilities referred to in subsection (3) where those facilities are being used by one or more third parties to infringe the copyright in that work.
(b) In considering an application for an injunction under this subsection, the court shall have due regard to the rights of any third party likely to be affected and the court shall make such directions (including, where appropriate, a direction requiring a third party to be put on notice of the application) as the court may deem necessary or appropriate in all the circumstances.
4.The Act of 2000 is hereby amended by the insertion of the following subsection after subsection (9) of section 205:
(9A)(a) without prejudice to subsections (7) and (8), the rightsowner may apply to the High Court for an injunction against a person who provides facilities referred to in subsection (7) where those facilities are used by one or more third parties to infringe any of the rights referred to in Parts III and IV.
(b) In considering an application for an injunction under this subsection, the court shall have due regard to the rights of any third party likely to be affected and the court shall make such directions (including, where appropriate, a direction requiring a third party to be put on notice of the application) as the court may deem necessary or appropriate in all the circumstances.
GIVEN under my Official Seal,
This day of 2011
Minister for Jobs, Enterprise and Innovation
[1] OJ No. L167, 22.6.2001, p. 10

[2] OJ No. L 006 10.1.2002 p.70

Bergevin is an economist by background and was one of the main designers of the ECommerce Directive, and most recently head of unit E2, focused on services and including areas such as gambling and gaming.

His appointment suggests two things to me. Firstly it is perhaps welcome to have someone with the tools to think, if inclined, about intellectual property in a wider economic context as opposed to treating it as a good in itself (a problem especially with the lawyers). Secondly, as someone with significant experience in the design and management of directives, and specifically the ECommerce directive, his arrival may mean that they are going to get serious about IPRED 2, not least as it will have a an interface with the provisions limiting liability for ‘Information Society Service Providers’ set out in the aforementioned directive. You can read his take on intermediary liability here.

On June 7th in Brussels there will be a public hearing on “Directive 2004/48/EC on the enforcement of intellectual property rights: Challenges posed by the digital environment”, where there is scheduled to be a presentation by Unit D3, so we will soon get an idea of the flavour which Bergevin will bring to the debate.

His former unit also handled the 2010 consultation on the E-Commerce Directive which was criticised for its resistance to incorporating the views of NGO and user groups around the broader questions at stake in filtering and monitoring of online services.

Now for something more positive. In November, Toryboy David Cameron announced the launch of an inquiry into ‘intellectual property and growth’, premised on the concern that the current copyright regime might be impeding the UK from developing innovative companies like Google. Thus one of the directions to be investigated was the possibility of developing a broad fair use defense which would protect transformative uses, like that which exists in the US and which the big G has been able to take useful recourse to on any number of occasions. Of course ungenerous individuals like the record industry’s Alan Batt ascribe all this to the fact that one of his senior advisers, Steve Hilton is married to Google’s European head of communications, Rachel Whetstone. Obviously an unfounded suggestion of no merit, politics couldn’t possibly function like that, could it?

Former journalist and erstwhile professor of Digital Economy Ian Hargreaves was appointed to head up the Commission. Amongst his colleagues on the Commission is Jamie Boyle, an emigre Scot who has been at the forefront of IP criticism for twenty years, and author of one of the classic texts in the area: Shamans, Software and Spleens. Jamie also writes a column for the Financial Times on these subjects, and has turned it into a useful platform for demanding that changes in IP law be based on an evidence-based argument rather than on hysterical rhetoric or the power of lobbying. Of course he’s a bit mad, because important political decisions couldn’t really be made like that could they?

Five months thus was spent collecting submissions and ‘evidence’, and it makes for interesting reading if you have the patience – there were over four hundred submissions, and that from the Open Rights Group alone is 84 pages long. The various copyright industry trade associations pitched in with a lot of documentation as well. Google commissioned a report on the impact of copyright law on digital SME’s as well as a position paper of their own. On the other hand Getty images made a submission that wasn’t so enthusiastic about reform, but then they think that IP is the oil of the 21st century…

The report is due at the end of April, and should be pretty interesting. I have been arguing for some time that pushing on the fair use/dealing question could be fertile for copyright critics as it’s one of the areas where cost to innovation can be illustrated most clearly. Furthermore there are precedents for these type of propositions receiving support from other quarters. In recent years both the IVIR study on the EU Copyright Acquis and the UK’s Gower Commission floated/recommended the creation of such a defense, and as the nasty rumours about Google demonstrate there are signals that it has support in some powerful business circles. A sample of the debate engendered can be gleaned from a podcast produced by the RSA on the occasion of a public discussion organised on the topic of the review,

As i mentioned in my post about Ireland a few weeks ago, a similar proposal is afloat there as well. What remains to be seen is whether this would require an EU Directive. The problem derives from Directive of 2001/29 on Copyright which contained an exhaustive list of all exceptions and amongst them there is no mention of ‘transformative use’. In the Uk ‘fair dealing’ has traditionally covered the use of materials and commentary, thereby often effectively protecting a sub-section of cultural uses, but commercial uses can’t be shoehorned into that. In any case, it would be healthy to see the European debate on copyright shift its axis towards such questions. Needless to say the content industries will fight such a move tooth and nail.

People are understandably outraged at the appointment. While there is no question as regards her suitability to work for the Commission in general, it is grotesque that she should be put in charge of a policy unit in an area where she was previously a paid lobbyist. She is currently head of Directorate Unit E1, concerned with the Services Directive.

Whilst web commentary presents her as ringmaster for the new Enforcement Directive (IPRED2), I’m not so sure. As I wrote in February, there is now a unit dedicated specifically to Enforcement, headed by Alvydas Stancikas. His unit ran the legal sub-committee formed to report on the first IPRED and suggest modifications. Head of Directorate Margot Fröhlinger has also been prominent in the enforcement field.

Tilman Lueder was a pretty entertaining guy, rather wry, who also expressed some scepticism about the direction of copyright policy in recent years, pointing out the impossibility, for example, of the Google Books initiative in the EU due to the lack of a general fair use defense. Apparently he’s off to China.

A study to assess the scope, scale and impact of counterfeiting and piracy in the internal market, through a defined methodology for collecting, analysing and comparing data.

This study will be the flagship publication of the European Piracy and Counterfeiting Observatory. The tender process concluded in December and the winner was announced in January: the RAND Corporation (UK), and they will be paid half a million euros for their labours.

RAND has a certain fame as the birthplace of much of modern game theory under John Nash, and the doctrine of nuclear deterrence through mutually assured destruction (MAD). Launched an part of the cold-war security apparatus, RAND is now a massive organization heavily focussed on statistics and modeling for the devleopment of policy recommendations, often in ‘public safety’ fields.

Their selection warrants unease because although they would not be regarded as IP specialists, they do have form: in 2009, their US organization produced a lengthy report ‘Film Piracy, Organized Crime, and Terrorism’. This study was financed by the Motion Picture Association, and much of the documentation compiled was assembled by a consultant on ‘organized crime’ employed by the MPA. RAND did at least disclose the relationship with a vested interest.

Notably the report included little statistical analysis at all and relied upon industry sources to estimate economic losses. Much of the information relied upon was old (and sometimes just wrong) but more importantly they seemed so fixated on digging up connections to the world’s villains that they at no point analyse the economics of the sector itself. The falling price of DVD burners and the availability of films over the net mean that commercial piracy is continually being eroded by the challenge of free alternatives and local production. The Scoial Sceinec Council’s recent publication Media Piracy in Emerging Economies provides a compelling refutation to the allegations of ‘organized crime’ and ‘terrorist control’ (see pages 37-40 in relation to the RAND report in particular).

A reading of the document leaves one in no doubt that it’s primary objective is to convince the public that ‘piracy and counterfeiting is not a victimless crime.’ As a result the frame through which the subject is analysed is one where these activities are basically just the work of gangs, which need to be deterred, requiring more enforcement resources and tougher sentences -. it’s sort of the square-jawed GI Joe school of IP policy, in a comic book universe of make-believe economics.

But maybe I’m being really unfair, and these guys are going to do an excellent job.

1. The most noteworthy element of the Commission’s Report on the IP Enforcement Directive is what is absent. The Directive itself mandated the review, under Article 18, titled ‘Assessment’:

Three years after the date laid down in Article 20(1), each Member State shall submit to the Commission a report on the
implementation of this Directive.

On the basis of those reports, the Commission shall draw up a report on the application of this Directive, including an assessment of the effectiveness of the measures taken, as well as an evaluation of its impact on innovation and the development of the information society (my emphasis).

Those interested in reading about ‘impact on innovation and the development of the information society’ will be disappointed, as such a section does not exist. Late transposition by several member states is offered as explanation for its absence. Yet this tardiness was no obstacle to a commentary on the efficacy of the Directive’s enforcement measures. A strange anomaly, but easily explained:

“… in the context of the European Observatory on Counterfeiting and Piracy, DG Internal Market and Services works with experts from the private sector to assess the application of the Directive and to complete the information received from the Member States.”
Commission Staff Working Document, p.5 (hereinafter CSWD)

So we’re in good hands. Elsewhere the Report relies on work commissioned by copyright industry players in support of its assertions, such as that produced by Tera consultants, whose methodology was questioned by the Social Sciences Research Network (SSRN).

2. Questioning the innovation impact is not mere pedantry on my part, in fact the basis for EU innovation policy has been in a sort of quiet turmoil in the ten years since the launch of the Lisbon Agenda in 2000. This plan had a heavy emphasis on the importance of innovation, and in its initial period treated statistics such as total spend on R&D and the number of patent applications as yardsticks to achieving the innovation targets. Failure to make significant progress towards its objectives provoked a rethink in 2005, and more recently this whole approach to measuring innovation has been challenged by the very organization contracted by the Commission, the Center for European Reform, to benchmark member states performance on the Lisbon index.

Patents at most tell a story about a subset of innovative activity. They do not, for example, capture almost any information about new models in the service sector, which in countries like the UK is the dominant part of the economy. Even in product manufacturing, design and user-friendliness has formed the spine of recent success stories from Apple to Moleskine. These companies are reliant on IPRs, especially trademarks, but not in the same manner as the ‘knowledge oligopolies’ crowding the patent and copyright sectors. Then there are the fields where user innovation is key, and that’S without even starting on peer production of information goods, free software etc.

Substance
3. Sections 3.1 and 3.3 address the obligations of online intermediaries’:

“3.1 …
Many online sites are either hosting or facilitating the online distribution of protected works without the consent of the right holders. In this context, the limitations of the existing legal framework may need to be clearly assessed.”

and

“3.3 …
The Directive leaves it to Member States to determine when and how an injunction can be issued against an intermediary. For this to work efficiently, it could be useful to clarify that injunctions should not depend on the liability of the intermediary. Furthermore, the findings reported in the Staff Working Paper that accompanies this Report indicate that 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.”

Three separate querstions are at issue here.

The first is whether ISPs have an obligation to cut off access to websites identified as infringing, and whether those infringement must have been already been the result of a court decision. A combined reading of the Directives suggests that this is possible under EU provisions, and this reading has been at the base of decisions such as the regarding blocking of the Pirate Bay in Denmark. whether it can be done in a specific case however depends also on the nature of national implementation, so that for example in Ireland the court found that there was no basis to shut down access to TPB.

The second issue is whether the safe harbours provided in articles 12-14, and the exemption from general system monitoring under A. 15, of the ecommerce directive apply to other services, specifically those offering search and indexes of hyperlinks. Again this depends on the national implementation. but it will also depend on the conduct of the service provider. Rapidshare, for example, have now won a series of cases in Germany, where on the basis of having installed a system that checks md5 hashes against a database of infringing files, and of having been responsive to rightsholder complaints and requests for takedowns, and having significant non-infring use, their site’s legitimacy has been upheld. In some states legislation explicitly does extend the safe harbours to search and hyperlink providers (eg Spain), whilst in Germany there have been contradictory responses from the courts as to the extent of host’s responsibilities. Rapidshare, however, remains at the centre of this uncertainty with conflicting decisions emanating from appellate courts in the Hamburg and Dusseldorf.

The final question relates to ISP obligations more generally, and is condensed in the questions before the ECJ in the Scarlet v Sabem litigation. The Belgian courts initially found in favour of the rightsholders and issued an order requiring the enablement of a genral system of filtering capable of preventing p2p transactions of works belonging to the rightsholders. On its face, the answer seems clear: there is no general obligation to monitor, and the ISPO functions as a ‘mere conduit’ which neither or initiates nor plays any other role in the transaction other than providing the material infrastructure.

4. No mention if made of ‘over-enforcement’: ISPs, often anxious simply to minimise the cost and simplicity of regulatory compliance, are themselves placed in the position of having to adjudicate with regard to complaints from copyright holders as to the use of their works. Studies by the user group Bits of Freedom, following up work by researchers from Oxford Center for Socio-Legal studies, have chronicled how many ISPs took down materials in cases where even a minimum of diligence would have demonstrated that the complaints were unfounded. The Bits of Freedom experiment involved complaints made from a hotmail address, claiming to be the copyright owner of a text by a 19th century Dutch author.

While the legalities of the above cited case are unambiguous, Outside of the general question about the copying of entire works, it is obvious that there is a wide area of contested uses of music, video and text on websites as extracts, elements of collages etc alleged to be infringing by rightsholders but with a solid claim for protection as transformative expression whose purpose is criticism, commentary or parody. The danger here is that even uses which are legally defensible will be prevented due to risk aversion on the part of intermediaries afraid of being sued. Google’s operation of youtube is a case in point, where automated procedures combined with fingerprint look-ups are combined, with the result that works are censored preemptively.

5. Section 3.4 deals with the ‘right of information’or rather the rightsholders right to identify internet users accused of infringements.

Here the is plainly to seek to overrule the Promusica decision at the ECJ, where the decision to require identification or not in civil cases is left to national courts to determine on the basis of proportionality, ie an assessment which balances the seriousness of the alleged infringement with data protection law, a matter which continues to block the online enforcement campaigns in Austria and Spain.

6. 3.5 contains a proposal for greater damages and is pretty vague.

“The main aim of awarding damages is to place the rightholders in the same situation as they would have been in, in the absence of the infringement. Nowadays, however, infringers’ profits (unjust enrichment) often appear to be substantially higher than the actual damage incurred by the rightholder. In such cases, it could be considered whether the courts should have the power to grant damages commensurate with the infringer’s unjust enrichment, even if they exceed the actual damage incurred by the rightholder. Equally, there could be a case for making greater use of the possibility to award damages for other economic consequences and moral damages.”

The Commission should specify whether individuals convicted for uploading or sharing files ought to be subject to greater damages awards. For example, would damages on the scale of the 1.92 million dollars made against p2p user Jamie Thomas in the US be appropriate?

Similar questions arise with regard to actions against generic drug manufacturers who have suffered from nineteen seizures in Germany and the Netherlands since 2008. these are goods seized in transit in the EU, legitimately produced out of patent and shipped to countries where the patent does not apply. These seizures take place under Customs Regulations but are intimately related to the Enforcement mechanism as a whole. These rules, as well as the Enforcement directive itself are now the subject of a complaint to the WTO on the part of India and Brazil. Should shippers and generics manufacturers be subjected to damages awards? The Report makes no comment.

7. 3.7 is concerned with the effects of the ‘commercial scale’ concept:

“The link between the ‘commercial scale’ requirement (i.e. the requirement that the infringing act is carried out for direct or indirect economic or commercial advantage) and the right of information in Member States’ rules could also be explored further.”

‘Commercial scale’ has in fact been devised so as to remove the requirement that an activity be commercial in order for it to be treated as a major infringement, introducing the idea that online infringements are of an equivalent ‘scale’. German Courts, for example, have held that uploading a recently released album qualifies as a ‘commercial scale’ infringement, although recital 14 of the Directive states that it encompasses acts:

… “carried out for direct or indirect economic or commercial advantage and that this would normally exclude acts carried out by end-consumers acting in good faith”.
CSWP p.10

Categorisation of an act as on a ‘commercial scale’ simplifies demands for identification, enables orders for financial information and for the seizure of movable property. to avoid deployment of such disproportionate tools against end-users it is important to be vigilant in ensuring that the definition creep of ‘commercial scale’ is prevented.

8. Provision for criminal sanctions is not mentioned in the Report, only in the accompanying Staff Working Document, and even there only in passing. But it is certain that a directive proposal on this matter is on its way.