A US court has ruled that LimeWire, one of the early popular file-sharing sites, induced copyright infringement (Eric Goldman has an excellent summary here of the “intention” issue). While this outcome was really inevitable, what is more relevant is that the Judge also ruled that the founder and sole director, Mark Gorton, is personally liable. This is a clear warning that peer-to-peer operators potentially face personal liability – which some say could have a chilling effect of P2P services.

In New Zealand, section 92B of the Copyright Act provides a limited safe harbour from copyright infringement (see my Computerworld article here) [Note: this part of the Copyright Act is due to be amended] . Whether this would protect a LimeWire-like operation in New Zealand is debatable – s92B does not protect intended infringement.

The US decision also involved liability under trade practices laws. In New Zealand, personal liability can attach to directors of companies under the Fair Trading Act 1986.

50,000 Hurt Locker downloaders to be sued

It is being reported that upwards of 50,000 people are in the process of being sued for pirating the Hurt Locker movie. The movie was leaked to the internet several months before its release, which potentially cost it dearly in ticket revenue. The lawsuits are aimed at generating settlements. Since the first lawsuits were filed in January 2010, about 40% have already settled.

There are no reports of proceedings outside of the US. Class actions in New Zealand are not facilitated by the legal system, and are very difficult to bring (a failing of our legal system) and it is therefore unlikely that proceedings will be brought against New Zealand users due to the high cost of doing so.

iiNet appeal set down

The legal appeal of iiNet’s total victory over anti-piracy group AFACT ’s claims of copyright infringement liability in Australia has been set down for August this year. As with the first ruling, this appeal will be closely watched – enormous resources are being put into heavyweight IP litigation around the world to determine just where the line should lie for ISP / third-party liability for copyright infringement. Several decisions have recently gone against rights-holders, while others (such as the Newzbins case in the UK and the LimeWire case above) went the other way. The iiNet appeal will be heard in the Federal Court. If iiNet wins again, it is likely that AFACT will seek a further appeal to the High Court of Australia.

Computerworld and Slashdot cover the Select Committee proposal for a ban on software patents in New Zealand.

Meanwhile, the United States Supreme Court is expected to rule soon on the ‘Bilski‘ case on whether software and business methods are patentable in the US.

Novell defeats SCO

A jury has ruled that Novell owns copyright in the Unix operating system, defeating SCO in a long running battle over the ownership of Unix.

Website “authorised” copyright infringment

The English High Court has ruled that Newzbin, a UK-based usenet indexing site, is liable for “authorising” copyright infringement.  The judge said (emphasis added):

I have found that [Newzbin] well knows that it is making available to its premium members infringing copies of films… It operates a site which is designed and intended to make infringing copies of films readily available to its premium members. The site is structured in such a way as to promote such infringement by guiding the premium members to infringing copies of their choice and then providing them with the means to download those infringing copies.

Central to the ruling is the judge’s view that there was active assistance, and even encouragement, of copyright infringement. These findings contrast with the recent iiNet ruling in Australia. Both cases highlight the importance of the ISP /website being very careful not to be seen as authorising or promoting infringing behaviour, and having appropriate policies in place.

Newzbin is considering an appeal.

Computerised medial record privacy concerns

Leading New Zealand software developer Orion Health is pushing for more progress on computerised medical records, as computerisation of medial data is gathering pace around the world, particularly in the US where President Obama campaigned on it. At the same time, serious privacy concerns are being raised. Medical / health information is the key area where privacy law will probably most keep up with developments in technology, and is already reasonably advanced in New Zealand.

Google has not infringed trade mark law by allowing advertisers to purchase keywords corresponding to their competitors’ trade marks. Advertisers themselves, however, cannot, by using such keywords, arrange for Google to display ads which do not allow internet users easily to establish from which undertaking the goods or services covered by the ad in question originate.

The Court said it will still be up to EU member courts to assess, on a case by case basis, whether the particular way in which an advertiser has used its AdWords is confusing or deceptive – if so, standard trade mark infringement remedies will apply. Whether the service provider (i.e. Google in this case) could be found liable would depend on:

“whether the role played by that service provider is neutral, … is merely technical, automatic and passive, pointing to a lack of knowledge of, or control over, the data which it stores. If it proves to be the case that it has not played an active role, that service provider cannot be held liable for the data which it has stored at the request of an advertiser, unless, having obtained knowledge of the unlawful nature of those data or of that advertiser’s activities, it failed to act expeditiously to remove or to disable access to the data concerned”.

Service provider role recognised

The ruling draws a clear distinction between the service provider – which would avoid liability if it played merely a “neutral”, “passive” role – and the user of the service (i.e. the advertiser). There seems to be a growing acceptance of the need to make this distinction with online services. Other recent examples include an earlier UK ruling on defamation (again involving Google) and the iiNet case in Australia (currently under appeal).

This ruling applies only to Europe. Other trade mark claims have been brought and settled elsewhere, and further challenges will no doubt arise. But this ruling by the EU’s highest court is a strong endorsement of Google’s position. Due to the conforming nature of the internet, and the relatively consistency of trade mark law globally, the decision is likely to influence any challenge against Google in New Zealand.

Where an Internet service provider or content host becomes aware that they are carrying or hosting information that they know is in breach of a suppression order, it should be an offence for them to fail to remove the information or to fail to block access to it as soon as reasonably practicable. [7.16]

With regards to hosts, this is largely the status quo. It is less clear what an ISP that is “carrying” suppressed information is supposed to do. It would be impractical and ineffective, for example, to require ISPs to block access to sites it didn’t host. Of course, once a suppressed name has been communicated beyond our shores, any restrictions imposed by New Zealand law ceases to have any effect. If a major sports star had name suppression in New Zealand, and it was reported by Australian newspapers, would every ISP in New Zealand be expected to block access to those Australian websites?

The report’s findings on internet issues are brief, and don’t quite grasp the essential difficulties that the internet presents to the name suppression regime.  It states:

Where information as to the identity of someone appearing before a court is already in the public domain, it will not generally be appropriate to grant name suppression. The law will not undertake an exercise in futility, which would bring its own authority and processes into disrepute. [3.65]

Yet in many recent cases involving name suppression, that is precisely what has occurred. Twitter, Facebook and other local and international web sites are routinely used to blithely report (or more often, speculate on) the identity of the individual. An invariable side effect is the gross defamation of innocent persons unlucky enough to fit some “non-identifying” criteria not covered by the suppression order. There is every reason to think this phenomenon will become more and more common. In fact, the application of a suppression order, in many cases, simply has the effect of causing more speculation and breaches of the order – a manifestation of the Streisand effect.

The report noted that name suppression is generally more readily available in New Zealand than in Australia or the United Kingdom. One interesting statistic which the report did not appear to have considered, however, is how effective name suppression orders (in high profile cases) have been. Anecdotal evidence as well as personal experience suggests they are increasingly ineffective.

If the law is not to permit exercises in futility, this issue may need to be revisited again before long.

If you operate a website, ISP or other online service in New Zealand, a recent law change provides you with a limited, but useful, protection against some types of copyright liability.

The new section 92B (no, not 92A) of the Copyright Act 1994 came into force last year. While the attention was on its “guilt by accusation” neighbour, section 92B has quietly provided all website operators, ISPs, and businesses who have a LAN with what is known in the US as a “safe harbour” provision.

Section 92B states (allowing some rewording for clarity) that merely because a person uses a website/ISP/online service/LAN to infringe copyright, then that by itself means that the system/ISP operator:

1. Does not infringe the copyright;
2. Must not be taken to have authorised the infringement of copyright; and
3. Unless a Court order is breached, is safe from any criminal or civil action.

[The words in bold are important, discussed below.]

This is a fair recognition of the role of website operators and ISPs – that they provide an online facility, venue or set functions and in reality have very little say over how users actually use their systems.

Importantly, the protection of this benefit does not only apply to ISPs. Due to the very wide definition of Internet Service Provider in the Copyright Act (see my post about this here), section 92B protects all websites and other online services, including bricks-and-mortar businesses with LANs.

For example, section 92B should protect you from any threat of civil or criminal liability in the following cases:

• If you run a business and one of your employees is using your office file server to store copyright-infringing material, without your knowledge.
• If you run a web application, and a user uploads copyright-infringing material, without your knowledge.
• If you run a website, and a user uses it to send emails that infringe copyright, without your knowledge.

There are many other examples where section 92B will provide some comfort to operators – perhaps not so much from actual liability, but at least from the threat of liability (e.g. an intimidating letter from a law firm).

However, the common element of the examples above is that the infringement must be “without your knowledge”. As noted in earlier, if a person uses your system to infringe copyright, then that by itself does not make you liable, but if there is “something more” then section 92B may not protect you. The Act does not define what “more” is required to remove the protection of section 92B, and it is therefore up to Courts to decide this over time. It is possible that this section will become the subject of much judicial interpretation.

It is safe to say, though, that if a website or ISP had actual knowledge of specific, repeated instances of copyright infringement by an identified user which continued over a long period, and took no action despite being requested to, then it is unlikely that the website or ISP could rely on section 92B to avoid civil or criminal action.

In other words, section 92B does not remove all responsibility from websites and ISPs. But it does at least provide a substantial and fairer level of protection, above that of many other countries, that better reflects the realities of providing networked services.