Hargreaves IP Review : first impressions

The Hargreaves review, or as we should call it, Digital Opportunity: A Review of Intellectual Property and Growth, is finally out, and the blogosphere is awash with comment. Like many people, Pangloss has only had a chance to glance at it and note that the key recommendations are described thus [my italics added]:

• an efficient digital copyright licensing system, where nothing is unusable because the rightsowner cannot be found;
• an approach to exceptions in copyright which encourages successful new digital technology businesses both within and beyond the creative industries;
• a patent system capable of preventing heavy demand for patents causing serious barriers to market entry in critical technologies;
• reliable and affordable advice for smaller companies, to enable them to thrive in the IP intensive parts of the UK economy;
• refreshed institutional governance of the UK’s IP system which enables it to adapt organically to change in technology and markets.
  

Most of this seems at first sight to be very good news. The emphasis throughout on an empirical evidence base for IP policy is quite staggeringly refreshing in a field which is known to be the most lobbied by partisan stakeholders of any economic policy area. Much of this, one hopes, comes from the fact that serious academic economists , not paid by any industry or rightsholder sector, have contributed in depth to the Report. There is a formidable list of supporting evidence and documents which will be a great resource for those working in the field. In particular the restraint in paragraphs like this is to be treasured:

"No one doubts that a great deal of copyright piracy is taking place, but reliable data about scale and trends is surprisingly scarce. Estimates of the scale of illegal digital downloads in the UK ranges between 13 per cent and 65 per cent in two studies published last year. A detailed survey of UK and international data finds that very little of it is supported by transparent research criteria. Meanwhile sales and profitability levels in most creative business sectors appear to be holding up reasonably well. We conclude that many creative businesses are experiencing turbulence from digital copyright infringement, but that at the level of the whole economy, measurable impacts are not as stark as is sometimes suggested."

Rightsholders have claimed it as a victory that no US style general exception for "fair use" (or even "transformative use" as Gowers put it) has been proposed: this is rubbish, as all sides know that would require rewriting the EU Infosoc Directive, which would take countless and possibly fruitless years of negotiation. Instead the report suggests the UK uses to the full the exceptions that are available within the EU framework, including parody, archiving, data mining and format shifting exceptions, which would finally allow the long suffering public to legally rip their own CDs to their own iPods. This is all good stuff, as the British Library have already said - but it has to be remembered the Gowers report recommended almost exactly the same things several years back, and precisely nothing happened. Let's hope Hargreaves won't go the same way.

The most unexpected outcome was probably the attention paid to the way that "patent thickets" increasingly commonly stifle innovation and hinder new intrants with new technological ideas. My colleague Technollama, a long time open source and open science advocate has written approvingly of the plans announced , which is good enough for me.

My own interest is most piqued by the recommendation that the Government bring together rights holders and other business interests to create the world’s first Digital Copyright Exchange. The idea behind this proposal is that it will make it easier for users to obtain licences of rights holders' works for digital exploitation, in the hope that this will help drive digital innovation - for example, perhaps finally allowing ISPs like Virgin to offer legal P2P for a flat fee, something which major music rightsholders have stymied for several years by refusing to issue blanket licenses for unlimited sharing. The history of Spotify is also instructive here - though they have had huge success in parts of Europe, their launch in the US has been endessly delayed by the music rightsholders refusing to play ball. Every new online service suffers from barriers to offering comprehensive current and back catalogue. It is extremely heartening to see a UK government review say upfront that the future for the content industries lies not with ever more draconian IP enforcement strategies, but with creating a market where attractive licensed content is available in ways that rival and compete with the illegal market; and where the main aim is not to alienate the potential consumer but to offer him/her a great product.

Not coincidentally , Pangloss has just come to exactly the same conclusion in her own report for WIPO on the Role and Responsibilities of Online Intermediaries in Copyright which will be launched very shortly in Geneva. Some parts of the EU policymaking machine also believes better cross licensing and collecting society arrangements are the longterm answer, not anti consumer measures like restricting services in some markets, and promoting graduated response. Hopefully the UK will now make these points during the upcoming renegotiations of the IPRED Directive.

To quote again:

"Such research as exists indicates that we should be wary of expecting tougher enforcement alone to solve the problem of copyright infringement. Instead, Government should respond in four ways: by modernising copyright law; through education; through enforcement and by doing all it can to encourage open and competitive markets in licensed digital content, which will result in more legitimate digital content at prices which appeal to consumers."

However, as one blogger has already noted ,the proposal is likely to be resisted to the teeth by some large creative industry rightsholders . Taylor Wessing note:

"Issues that arise include:

• Who will police whether rights are being accurately recorded within the Exchange? The opportunity for abuse is immediately apparent, with many disputes over ownership being flushed out at the outset of the Exchange.
• How will limitations on licences (e.g. territorial restrictions or particular restricted uses) be recorded? Some licences will have a string of limitations attached to them, making the Exchange quite complicated to navigate for a lay person.
• Who will fund it? It is unlikely to be the Government given these times of austerity. Therefore, funding is likely to come from within the creative industries. Is this a cost that the industry can stomach or will this be seen as yet another cost to the creative industries, along with those of tackling digital piracy?

Finally as expected the report makes no new recommendations concerning the Digital Economy Act: it was known this would be off limits given the uncertainty around the judicial review. Given that there is still a very interesting Chapter 8 on enforcement (covering counterfeit goods and a possible small patent court claim for patent owners, as well as copyright), which concludes by recommending that

"When the enforcement regime set out in the DEA becomes operational next year its impact should be carefully monitored and compared with experience in other countries, in order to provide the insight needed to adjust enforcement mechanisms as market conditions evolve. This is urgent and Ofcom should not wait until then to establish its benchmarks and begin building data on trends."

Interesting times. In the meantime Hargreaves and his team are to be given every support in the hope these difficulties can be overcome - and that these proposals will not fester like Gowers.

Judicial Review of Digital Economy Act fails: interim note

Just a quick note for those seeking basic info, as I haven't had time to read it properly yet - am about to! (or try @copyrightgirl's tweets, or the Guardian . )

The expected, though still bad, news is that most the arguments put forward by BT and TalkTalk were rejected ie on incompatibility with the Technical Standards Directive, the Data Protection laws, the E-Commerce Directive and proportionality generally. The Act therefore stands.

However BT etc were partially successful in relation to sharing the costs of the filesharing system to be established - the cost sharing SI made under the Act proposed a 75:25 split between the copyright holders and the ISPs; it now seems ISPs wil not be required to pay 25% of the cosst of establishing the appeals body but will still have to pay in relation to "internal costs" ie sending letters and identifying filesharers.

A key point will be appeals. BT and Talk Talk are considering their positions on this. I would have strongly expected a reference to the European Court of Justice for clarification, but the judge has indicated he found the issues of law clear and therefore would not support such. My feeling is this point at least might well be appealed successfully - especially following the Advocate General's opinion in Scarlet v SABAM only a few days ago, where the reasoning is strongly against the legality of blanket filtering and monitoring to protect copyright, since invasion of personal data privacy is inevitable. Although this does not necessarily directly affect provisions of the DEA itself other than s 17 on web blocking orders (which may itself be heading for non-implementation hell if Ed Vaizey manages to convince ISPs, IWF-style, to block sites on a voluntary basis, without need for court orders, behind closed doors) the balance struck here between rights of privacy and rights of property will surely cast a doubt that the interpretation of EC law, especially the DPD and PECD , is quite as untroublingly easy as Mr Justice Parker has suggested.

If there are no such appeals, the Guardian suggests the first letters to filesharers could go out in the first half of 2012. Pangloss is not quite sure if this means letters warning alleged filesharers or letters indicating sanctions like suspension, traffic slowing, etc (technical measures) - but probably the former. Certainly it has already been announced that the final version of the Initial Obligations Code has been put back to at least summer 2011 from the original deadline of Xmas 2010. Given that the Initial Obligations stage has to run for at least a year before stage 2, Technical Measures can even be introduced - and that still needs the assent of both Houses of Parliment - we are still a very long way from the first potential disconnections.

In the meantime, streaming has already overtaken downloading, Spotify has managed to educate millions of Europeans, even without much assistance from US record labels, that legal streaming is a great idea, and hardened down and up-loaders have already become far too clever to ever be caught by the DEA's IP address collection methods, while the innocent may find themselves falsely accused (see Richard Clayton's excellent witness statement to the court) .

By that long away time (2013?) when the first disconnections might be justified, the DEA may be too antiquated for even the music industry to press for its continuation. In the meantime however a huge amount of money - £500m estimated - will have been spent to safeguard an industry worth £200m (also an estimate, of course) - and of course also to make it universally hated by its target customers.

The takeaway message on this also is that the judicial review court has only found that the DEA has not technically violated any EC laws. Only these arguments could be made because an Act that is otherwise passed under doctrines of parliamentary sovereignty, however bad it is , in principle, policy or execution, stands till repealed, because that is how we do law in this country. Nothing that happened today proves the DEA makes sense or is right - merely that one judge thinks it does not violate any supranational laws.

ps is there really no English translation of SABAM yet other than a Google translation? Pangloss cannot seem to locate..

Veni Vidi Wikileaks

Since every other blogger in the universe has discussed how the US is going to stop Wikileaks, perhaps it's time for Pangloss to enter the fray, with the not terribly unexpected news that Amazon (in its cloud hosting services capacity) have indeed decided to stop acting as new temporary host to Wikileaks which moved there following the devastating DDOS attacks on its own server (thanks to Simon Bradshaw for pointing me at this news).

This is interesting in all kinds of ways.

First, the initial move to Amazon was a clever one. In the old days, a concerted and continuing DDOS attack on a small site might have seen them off - nowadays there are plenty of commercial reasonably priced or free cloud hosts. So cloud computing can be seen as a bulwark for freedom of speech - vive les nuages!

Second, though of course, what strokes your back can also bite it, and here we have Amazon suddenly coming over shy. This appears to be entirely the sensible legal thing for them to do and anyone accusing them of bad behaviour should be accused right back of utter naivete. Amazon are now on notice from the government of hosting material which breached US national security and so would according to the US Espionage Act as quoted in the Guardian piece, fairly clearly have been at risk of guilt as a person who "knowingly receives and transmits protected national security information" if they had not taken down. (Though see a contrary view here.)

While Assange as an Australian not a US citizen, and a journalist (of sorts) might have had defences against the charges quoted also ( as canvassed in the Grauniad piece) Amazon, interestingly, would, it seems, not. They are American and by definition for other useful purposes (eg CDA s 230 (c) - see below and ye ancient Prodigy case) , not the sort of publisher who gets First Amendment protections. And Amazon has its CEO and its major assets in the US, also unlike Assange. I think that makes take down for Amazon a no-brainer. (And also interestingly, CDA s 230(c) which normally gives hosts complete immunity in matters of liability which might affect press freedom (such as defamation by parties hosted) does not apply to federal criminal liability.)

But as Simon B also pointed out, there are lots of other cloud suppliers , lots in Europe even. What if Wikileaks packs and moves again? Would any non US`host be committing a crime? That would depend on the local laws: but certainly it would be hard to see if the US Espionage Act could apply, or at any rate what effective sanctions could be taken against them if a US court ruled a foreign host service was guilty of a US crime.

Which leaves anyone wanting to stop access to Wikileaks, as Technollama already canvassed, the options of, basically, blocking and (illegal)DDOS (seperating the existence of the Wikileaks site from any action against Assange as an individual). Let's concentrate, as lawyers, on the former.

Could or would the UK block Wikileaks if the US`asked?

Well there is an infrastructure in place for exactly such. It is the IWF blacklist of URLs which almost all UK ISPs are instructed to block, without need for court order or warrant - and which is encrypted as it goes out, so no one in public (or in Parliament?) would need to know. This is one of the reasons I get so worked up about the current IWF when people are asking me if I won't think of the children.

There is also the possibility, as we saw just last week, of pressure being exerted not on ISPs but on the people who run domain name servers and the registrars that keep domain names valid. Andres G suggests that the US might exert pressure on ICANN to take down wikileaks.org for example. Wikileaks doesn't need a UK domain name to make itself known to the world, but interestingly only last week we also saw a suggestion from SOCA (not very well reported) that they should have powers effectively to force Nominet, the UK registry, to close down UK domain names being used for criminal purposes. Note though if you follow the link that that power could only be used if the doman was breaking a UK criminal law.

But there is a really simply non controversial way to allow UK courts the power to block Wikileaks. Or there may be soon.

Section 18 of the Digital Economy Act 2010 - remember that? - allows for regulations to be made for "the granting by a court of a blocking injunction in respect of a location on the internet which the court is satisfied has been, is being or is likely to be used for or in connection with an activity that infringes copyright."

Section 18, at present, needs a review and regulations to be made before it can come into force. This may in the new political climate perhaps never happen - who knows. But what if that had been seen to?

Wikileaks documents are almost all copyright of someone , like the US government, and are being used ie copied (bien sur) without permission. Hence almost certainly, a s18 fully realised could be used to block the Wikileaks site.Of course there is some possibility from the case of Ashcroft v Telegraph Group [2001] EWCA Civ 1142`that a public interest/freedom of expression defense to copyright infringement might be plead - but this is far less developed than it is in libel and even there it is not something people much want to rely on.

So there you go : copyright, the answer to everything, even Julian Assange :-)

Oh and PS - oddly enough the US legislature is currently considering a bill, COICA, which would also allow them to block the domain name of sites accused of encouraging copyright infringement. Handy, eh? (Though on this one point, the UK DEA s 18 is even less restrictive than COICA, which requires the site to be blocked to be "offering goods and services" in violation of copyright law - which is not even to a lawyer a description that sounds very much like Wikileaks.)

EDIT: Commenters have pointed out that official government documents in the US, unlike in the UK do not attract copyright. Howver the principle stands firm: embarrassing UK docs leaked by Wikileaks certainly would be prone to attack on copyright grounds, including DEA s 18, and it is quite possible some of the current Wikileaks documents could quote extensively from material copyright to individuals (and Wikileaks prior to the current batch of cables almost certainly contain copyright material).

Interestingly Amazon did in fact, subsequent to this piece, claim they removed Wikileaks from their service, not because of US pressure, but on grounds of breach of terms of service : see the Guardian 3 December 2010

"for example, our terms of service state that 'you represent and warrant that you own or otherwise control all of the rights to the content… that use of the content you supply does not violate this policy and will not cause injury to any person or entity.' It's clear that WikiLeaks doesn't own or otherwise control all the rights to this classified content. Further, it is not credible that the extraordinary volume of 250,000 classified documents that WikiLeaks is publishing could have been carefully redacted in such a way as to ensure that they weren't putting innocent people in jeopardy. Human rights organisations have in fact written to WikiLeaks asking them to exercise caution and not release the names or identities of human rights defenders who might be persecuted by their governments."

The copyright defense is alive and well :-)