By Kim Heitman, EFA Secretary

The battle over proposed anti-piracy bills in the US is not just about Hollywood versus the internet, it is a fight between the past and the future. It also throws up a real danger that the laws could become an easy way to silence critics.

Internet sites such as Wikipedia, the user-built online encyclopaedia, yesterday "blacked-out" in protest against the two bills going through the US Congress.

The websites hope to draw public attention to the draconian provisions of the Stop Online Piracy Act (SOPA) and the Protect Intellectual Property Act (PIPA).

Internet experts say the laws would allow owners of copyrights or trademarks to shut down US websites; block foreign websites or freeze online banking accounts without judicial order. Infringers would be liable to massive new penalties and criminalisation of harmless activities such as uploading video clips of members of a family singing copyrighted songs.

See the whole article at The Age.

The Australian Digital Alliance's policy forum, Righting the Copyright Imbalance, brought together activists, policymakers, researchers, and other stakeholders interested in copyright reform. There was an excellent range of speakers, and I highly recommend that you check out the podcasts of the forum available on the ADA website.

The most striking theme that came up during the forum was the role that international agreements have played in shaping Australia's copyright law. Dr. Nicholas Gruen argued that while our international obligations under agreements like the Agreement on Trade-Related Aspects of International Property Rights (TRIPS) do limit reforms, Australian policymakers have been too cautious; treaty obligations do not pose legal risks, although they may lead to legislation being contested and require policy backdowns.

The current risk-averse attitude to copyright policy, Gruen argues, is leading to an overcompliance with international agreements, and contributing to a intellectual property framework that constrains innovation. Several of the other speakers at the forum picked up on and extended Gruen's point. As one participant put it, what we need is to be "a little bit more bolshie" about pushing for an intellectual property regime that meets Australians' needs. This is particularly worth bearing in mind as negotations around the Trans Pacific Partnership Agreement go ahead - with further worrying intellectual property provisions (for more, see EFF and TPPAWatch).

The issue of safe harbours also ran through discussion at the forum. As the forum's background information puts it,

The safe harbour limitations to intermediary liability are in urgent need of reform because they are
too narrow and only protect ISPs. The concept of safe harbours is to protect people who merely
provide a service from being liable for the copyright infringement of people who use their service, if
the service provider expeditiously blocks access to infringing content once notified. Safe harbours
protect ISPs from unnecessary legal risk which enables them to provide services to the public.

As well as more general discussion of problems with current safe harbour provisions, Tom Joyce of the University of Queensland and Paula Bray of the Powerhouse Museum talked about some of the practical challenges involved in working within the current system.

Kim Weatherall provided an excellent summary to round off the forum. She mapped out the key challenge for those interested in pushing for copyright reform as being developing reform proposals that:

• are persuasive, targeted, and relevant;
• will persuade government that our concerns matter and require government action;
• are relevant, and make sense within the constraints of international treaties.

More broadly, Weatherall also emphasised the need for coordinated action, and for solutions that don't require legislative change.

Did you attend the forum? What were the issues that seemed most vital to you? Even if you didn't attend, we'd love to hear your ideas on copyright reform - what's needed, and how can we achieve it?

There's little sign that the global copyright war will let up any time soon. Wherever you go, the content industries are working hard to secure stronger "protections" for intellectual property and tougher penalties against those who infringe against these protections. Given the forces they can bring to bear - an army of lobbyists and an ocean of cash - it's not surprising that industry has won many of these battles.

Australia is one front in this war, and several notable skirmishes have occurred in recent times. The most significant has been a case in which the movie studios, represented by AFACT (the "Australian Federation Against Copyright Theft") sued Australia's third-largest ISP, iiNet, for authorising copyright infringement by allowing its users to download movies using BitTorrent.

Under Australian copyright law, a third party can be held accountable for a breach of copyright if they are found to have authorised the breach by "countenancing" it and providing the means to do so. This was tested in the courts in 1975 when a university was found liable for breaches of copyright because it provided a photocopier which students could use to make copies of books.

Bringing this suit against iiNet was a clear attempt to make ISPs liable for the content traversing their networks and is a probable first step on the road to introducing a graduated response mechanism to Australia. The ultimate outcome of the case will have enormous repercussions for the future of the industry and copyright law in Australia.

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The decision handed down today by the Full Court of the Federal Court of Australia in the “iiNet Appeal” ( Roadshow Films Pty Limited v iiNet Limited [2011] FCAFC 23 (24 February 2011) – online here) is very important in securing the rights of internet users to due process in relation to allegations of copyright infringement and also in protecting Internet Service Providers (including Government departments, Schools, Universities and coffee shops) from liability for any copyright infringements by users of the service.

While the case may still be appealed to the High Court, the majority decision of the Full Court to reject the copyright owners’ assertion that ISPs “authorise” copyright infringement by not blocking peer-to-peer traffic is a landmark for Australian law and a valuable precedent for other countries’ ISPs faced with the same question.

The judgment is not a free pass for ISPs. The Court said that the actual infringing acts of the users of the Internet service could be closely examined to establish whether an authorisation existed on the facts – in this case, not established but theoretically possible. Justice Nicholas was especially critical of iiNet’s “repeat infringer” policy, noting that the ISP hadn’t really tried to stop alleged infringers. Justice Jagot noted that the ISPs hadn’t achieved an industry code to trigger “safe harbour” protections and in the event that an authorisation of infringement was proved then ISPs would not have the benefit of those protections in the Copyright Act. Justice Jagot would have allowed the appeal on the facts and asserted that there was no factual difference between iiNet's role and other infringement cases.

However, the other two judges were satisfied that the “means” of copyright infringement by the users of an ISP service was BitTorrent, not “the Internet” - in the words of the original judgement,

For the abovementioned reasons, the court finds that it is not the respondent, but rather it is the use of the BitTorrent system as a whole which is the “means” by which the applicants’ copyright has been infringed. The respondent’s internet service, by itself, did not result in copyright infringement. It is correct that, absent such service, the infringements could not have taken place. But it is equally true that more was required to effect the infringements, being the BitTorrent system over which the respondent had no control.

EFA congratulates iiNet on an important win, and compliments the company for putting up a strong defence against copyright owners in a context where – worldwide – Internet companies and legislators have buckled under industry pressure.

The Australian Federation Against Copyright Theft (AFACT) yesterday released a report entitled "Economic consequences of movie piracy", which purports to show that illegal downloading is costing the Australian economy $1.37 billion every year. That is an alarming sum - or rather it would be, if we could take it at face value. The copyright industry is well known for offering up gargantuan figures that don't hold up under real scrutiny.

We encourage a skeptical reading of this report, and in particular, we note:

1. The assumption that 45% of downloads equal lost sales is unproven and insufficient evidence is provided to support it. The survey method cited is better than assuming 100% of downloads are lost sales, but there is better analysis in other studies - for example this piece by Lawrence Lessig. If the study was correct, sales of DVDs and attendance at cinemas would be much more reduced than the reported industry figures. In fact, the movie industry is making record profits.

2. It can't be ignored that downloads have an advertising effect both on the product downloaded and future releases. To the extent sales may be lost, these must be offset against other gains from advertising.

3. Gross revenue is not the relevant metric, due to variables such as investment in capital, distribution and costs of sales. Many of the movies downloaded may not have been available to view or buy in Australia. Profit is the metric of importance, but this is never studied.

4. Flow-on effects to other industries are wholly speculative, and lost tax on profits assumes the entities pay Australian company tax on sales pro-rata to revenue, which is not intuitive or evidenced. It also assumes that money not spent on movies is lost to the economy, instead of helping to create jobs in other sectors.

5. Peer to peer file sharing is merely the latest in a sequence of technologies since the 19th century which have been claimed to be the ruin of the creative arts. See chapter 15 "Piracy" by Adrian Johns (University of Chicago Press 2009) - the copyright owners said the same thing about copies of sheet music, tape recorders, every iteration of personal recording system and indeed public radio. However, "home piracy" acts not only as a loss to industry but also as a boon to distribution, bypassing censorship and limitations on sales by official outlets.

6. The report suffers, as have other industry-funded studies, from "GIGO". With an assumption that "downloads = losses" unproven, all conclusions estimating the size of the loss are equally unproven. What if a vibrant sharing culture increases total sales for media respected as quality by consumers, but reduces sales of hyped media? (Research has shown that the biggest downloaders in fact spend more on entertainment than non-downloaders.)

7. The call-to-action of this report is obviously to "crack down on piracy", shifting the cost of file-sharing from the industry to the taxpayer via increased law-enforcement. No industry, let alone the foreign-dominated entertainment industry, deserves a free ride for its business model. If instead, the industry noted that the report says 55% of downloads created a market for sales, much of which is unsatisfied due to current restrictive trade practices, then its future profitability would be in its own hands.

8. Repeated studies have demonstrated that the entertainment industry vies for money and commitment of time with all other forms of entertainment. The Internet, computer games and mobile telecommunication applications take "eyeballs and dollars" away from DVD and CD sales, but also sports arenas, sales of board games and printed works. Magazines are also suffering from a reduced value proposition with the Internet, and some forms of entertainment and some businesses in the industry will no doubt find it difficult to remain vibrant. Change is consumer-driven, and it's futile for the industry to try to hold fast to a business model and methods of content distribution which are dying with or without fierce law enforcement of copyrights.

We presume that the release of this report is a precursor to a renewed campaign for tougher penalties against file-sharing in Australia, such as a mandatory "three strikes" scheme to remove families from the internet completely. If so, Electronic Frontiers Australia will fight for the rights of Australian Internet users threatened by such a legislative over-reaction.

We urge the movie industry to cease waging war on its best customers, and instead focus on providing a more compelling offering to the public. The best way to ensure future profitability is to make quality entertainment available in an easy-to-use form, free from cumbersome rights-restricting controls, and at a reasonable price.