[1] See Neil Weinstock-Netanel, 'Asserting Copyright's Democratic Principles in the Global Arena' (1998) 51 Vand. L. Rev. 217, 220. "[C]opyright's constitutive, democratic purpose is both a primary rationale for according authors proprietary rights in original expression and the proper standard for delimiting those rights."
[2] The World Wide Web expanded from 50 servers in 1993 to over 100,000 in 1997. See Ari Staiman, 'Shielding Internet Users from Undesirable Content: The Advantages of a PICS based Rating System' (1997) 20 Fordham Int'l LJ 866, 874. As of March 2002, the Internet had expanded to over 560 million users (a number expected to grow beyond 762 million by 2003). See Global Internet Statistics, Global Research, located at http://www.glreach.com/globstats (last visited 27 August 2002).
[3] The music industry, worth over $US40 billion annually, has suffered considerably from the Internet boom, with the Recording Industry Association of America ("RIAA") estimating that over $US4.5 billion annually is lost to worldwide music piracy. See The World Sound Recording Market, RIAA Publication, located at http://www.riaa.com/MD-World.cfm (last visited 15 May 2002).
[4] For purposes of this article, a "service provider" is defined as a provider of online services or network access, or the operator of facilities therefore, including an entity offering the transmission, routing, or provision of connections for digital online communications, between or among points specified by a user. See 17 U.S.C. 512(k)(1)(A)-(B).
[5] In 1996, The World Intellectual Property Organization ("WIPO") concluded negotiations to introduce new rules and clarify existing rules in order to "provide adequate solutions to the questions raised by new economic, social, cultural and technological developments." See WIPO Copyright Treaty, 20 December 1996, Preamble, located at http://www.wipo.org/eng/diplconf/distrib/94dc.htm (last visited 15 August 2002). Subsequent to the negotiations, a variety of nations (including Australia, United States, Singapore and India) introduced legislation purporting to provide solutions to the modern problems associated with enforcing copyright. See Copyright Amendment (Digital Agenda) Act, 1999 (Austl.); Digital Millennium Copyright Act of 1998 (DMCA) Pub.L.No. 105-304, 112 State 28, 60 (1998); Singapore Copyright (Amendment) Act 1999, amending Copyright Act 1987 (Cap. 63, Rev. Ed. 1999); Information Technology Act 2000 S.79 (India Code 2000).
[6] Although debated around the globe, the United States was selected in comparison to Australia for its legal history in the area and comprehensive approach to combating the problem. Comparatively, the United Kingdom, Canada and other common law jurisdictions have disappointingly little case precedent or legislation on the issue.
[7] Exclusive owner rights, contained in U.S. s106 (as codified and amended at 17 USC s 101-1010 (1988)) are as follows: (1) copying the copyright work; (2) preparing derivative works; (3) distributing copies of the work; (4) performing the work publicly; and (5) displaying the work publicly.
[8] For detailed analysis of arguments for and against each form of liability, See L Trotter Hardy, 'The Proper Legal Regime for "Cyberspace"' (1994) 55 U. Pitt. L Rev 993.
[9] See A & M Records, Inc. v. Napster, Inc, 239 F.3d 1004, 1013 (9th Cir. 2001); Ellison v. Robertson, et al, 189 F.Supp. 2d 1051, 1056 (C.D. Cal. 2002).
[10] 839 F.Supp. 1552 (M.D. Fla. 1993).
[11] The BBS was a very popular online medium before the creation of the World Wide Web.
[12] 839 F.Supp. 1552, 1559. The court referred to the Copyright Act's strict liability standard in finding the operator liable for direct infringement because it "supplied a product containing unauthorized copies of copyrighted work. It does not matter that (the defendant) claims it did not make infringing copies itself." Ibid 1556.
[13] See Religious Technology Center v. Netcom, 907 F.Supp 1361 (N.D. Cal. 1995); Marobie-FL, Inc. v. National Association of Fire Equipment Distributors, 983 F.Supp. 1167, 1178 (N.D. Ill. 1997); Sega Enterprises v. Maphia, 948 F.Supp. 923, 931-32 n.5 (N.D. Cal. 1996).
[14] 907 F.Supp 1361 (N.D. Cal. 1995)
[15] Ibid 1370.
[16] Ibid 1372-73.
[17] See Napster, 239 F.3d 1004, 1022; Netcom, 907 F.Supp 1361, 1375; Shipiro, Bernstein & Co. v. H.L. Green Co., 316 F.2d 304, 307 (2d Cir. 1964); Fonovisa v. Cherry Auction, Inc., 76 F.3d 259, 261-63 (9th Cir. 1996); Gershwin Publishing Corp. v Columbia Artists Management, Inc., 443 F.2d 1159, 1162 (2nd Cir. 1971).
[18] See Netcom, 907 F.Supp 1361, 1375-77 (finding the ISP not liable for vicariously liability, even if monitoring was possible, as the requisite financial interest could not be shown); Roy Export Co. v. Trustees of Columbia University, 344 F.Supp. 1350, 1353 (S.D.N.Y. 1972) (finding the University was not vicariously liable for the screening of bootlegged films as it did not receive any financial benefit); Fonovisa, 76 F.3d 259, 1496 (holding that swap meet operators did not financially benefit from a fixed fee arrangement); Marobie, 983 F.Supp. 1167 (holding that the payment of a flat-fee made a finding of direct financial interest impossible).
[19] Bruce A. Lehman & Ronald H. Brown, 'Intellectual Property and the National Information Infrastructure: The Report of the Working Group on Intellectual Property Rights' (1995), at 114-124, located at http://www.uspto.gov/web/offices/com/doc/ipnii/ (last viewed 7 May 2002) ("White Paper").
[20] Enterprise liability is closely related to vicarious liability. In enterprise liability, the enterprise should internalise losses caused by doing business (the risk is a by-product of the service that can be internalised).
[21] The White Paper recognised that ISPs could not feasibly monitor subscriber usage, but relied on Playboy and Sega when recommending the strict liability standard imposed elsewhere in the law. White Paper, above n 19, 120-121. The paper also acknowledged Internet access costs would rise and usage may decline as a result. Ibid.
[22] 17 U.S.C.A. s 106.
[23] White Paper, above n 19, 109.
[24] See Sony Corp. v. Universal Studios, Inc., 464 U.S. 417, 435, 78 L. Ed. 2d 574, 104 S. Ct. 774 (1984). "The absence of such language in the copyright statute does not preclude the imposition of liability of copyright infringement on certain parties who have not themselves engaged in the infringing activity." Ibid.
[25] Gershwin, 443 F.2d 1159, 1162 (held defendant liable even when unaware of copyright infringement, as knowledge is not an element of copyright infringement); Sega, 948 F.Supp. 923 (re-affirmed Gershwin); Netcom, 907 F.Supp 1361, 1372 (holding the provision of the ability to copy was sufficient to prove material contribution to the infringement). Both Sega and Netcom held the provision of the ability to copy was sufficient to prove material contribution to the infringement. In both Sega and Netcom, the extent to which the defendant knew of the infringement was a determining factor in deciding whether contributory liability attached. In Netcom, the operator maintained a supervisory control over the system, even if it did not monitor every transmission, and refused to remove allegedly infringing material since it could not determine whether the material was copyrighted. Netcom, 907 F.Supp 1361, 1375. In Sega, the operator encouraged subscribers to upload and download material and also profited by selling hardware that was used to make the copied material useable. Sega, 948 F.Supp. 923, 932-933.
[26] See Sony, 464 U.S. 417; Kalem Co. v Harper Brothers, 22 U.S. 55 (1911).
[27] Netcom, 907 F.Supp 1361, 1382. See also Sega, 948 F.Supp. 923, 929.
[28] Netcom, 907 F.Supp 1361, 1373-76.
[29] See Screen Gems-Columbia Music, Inc. v. Mark-Fi Records, Inc., 256 FD.Supp. 399, 403 (S.D.N.Y. 1966); Sega v. Sabella, 1996 WL 780560 (N.D. Cal. 1996); Fonovisa, 76 F.3d 259, 261-63.
[30] If the ISP receives revenue from the subscriber infringement, then vicarious liability becomes more likely, especially if the subscriber is monitored for unrelated reasons.
[31] ISPs pressed for legislation clarifying the situation and argued that the failure to protect them from liability would slow down networks, impair communications, increase prices and ultimately drive them out of business. On the other hand, copyright owners argued that ISPs should be liable for subscriber infringements for providing the facilities and audience for the infringement and financially benefiting from the infringement. A minority of interested parties, including the American Intellectual Property Law Association, argued that taking action before seeing how the law plays out in the courts was fundamentally the wrong approach. See Heidi Pearlman Salow, 'Liability Immunity for Internet Service Providers - How is it Working?' (2001) 6.1 J. Tech. L. & Pol'y 1, 9.
[32] For information on various aspects of the DMCA, See Digital Millennium Copyright Act: Status and Analysis, Association of Research Libraries, located at http://www.arl.org/info/frn/copy/dmca.html (last visited 21 August 2002).
[33] 17 U.S.C. 512. The EU adopted a similar stance with the adoption of Directive 2000/31/EC, See EC, Council Directive 00/31 of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the International Market (Directive on electronic commerce), [2000] O.J.L. 178/1. Article 12 exempts ISP's of liability where they merely act as a conduit to the transmission of information. The Directive also eliminates liability for the necessary function of temporary storage and only imposes liability on ISPs where the ISP has actual knowledge of illegal activity and does not act expeditiously to remove or disable the information. Art. 12(2) & 14(1)(b).
[34] The exemptions created by the DMCA are in addition to any defence ISPs may have under copyright or any other law. 17 U.S.C. 512(1).
[35] 17 U.S.C. 512(a)
[36] 17 U.S.C. 512(b)
[37] 17 U.S.C. 512(c)
[38] 17 U.S.C. 512(d)
[39] 17 USC 512(a)(1)-(5).
[40] 17 USC 512(i)(2). In reality, ISP's may be infringing copyright but can escape monetary liability by cooperating with content providers who complain about alleged infringements. See 17 U.S.C. 512(g).
[41] See 17 U.S.C. 512(i)(1)(A), and 17 U.S.C. 512 (i)(1)(B)-512(i)(2).
[42] 17 U.S.C. 512(c)(2).
[43] 17 U.S.C. 512(c)(3)
[44] 17 U.S.C. 512(d)(1)(A)
[45] 17 U.S.C. 512(d)(1)(B)
[46] 17 U.S.C. 512(d)(1)(C)
[47] 17 U.S.C. 512(d)(2)
[48] 17 U.S.C. 512(d)(3). The content provider must inform an ISP about an alleged infringement on their system via the formal complaint process. If the complaint does not conform to the statutory requirements, then "knowledge or awareness" is not created, however, the provision applies even if the complaint, while meeting the statutory requirements, does not clearly establish an infringement.
[49] The Act only requires "substantial" compliance with the prescriptive notification procedure. See ALS Scan v Remarq Communities, 239 F.3d 619 (Fed. Cir. 2001) (holding that substantial compliance with the notice provision is sufficient to impart "knowledge") In ALS, the plaintiff supplied the service provider with web addresses and information regarding the copyrighted material. Ibid 625.
[50] 17 U.S.C. 512 (g).
[51] 17 U.S.C. 512(g). The subscriber can file a formal counter notice with the agent and submit the matter to the District Court. ISPs must then restore the material within 10 business days and can file an action seeking a court order to restrain the subscriber from "infringing" copyright, which serves to keep the material off the server until further notice. If instead, the provider does not respond to the counter notice, then the ISP must restore the material within 10-14 days of receipt of the notice. 17 U.S.C. 512(g)(2), 512(g)(3).
[52] The Napster software did not actually host MP3 files that users downloaded, instead using "peer-to-peer" technology that allowed users to link and download music directly from other users, with Napster's central server only coordinating user profiles. (Motion Picture Experts Group Audio Layer 3, commonly referred to as MP3, is a digital file compression method which allows large files to be condensed to only use minimal space. For example, a file which takes two hours to download in normal form will take five minutes or less in the MP3 version.) See Alex Colangelo, 'Copyright Infringement in the Internet Era: The Challenge of MP3s' (2001) 39 Alberta L. Rev 891, 894 (citing J Selby, "The Legal and Economic Implications of the Digital Distribution of Music:Part 1," (2000) 11:1 Ent. L. Rev. 4, 6). At its height of popularity, approximately 10,000 files were shared per second, with 100 Napster users logging on every second. See A & M Records v Napster, Inc, 114 F.Supp 2d 896, 901 (N.D. Cal. 2000). Napster was expected to reach 75 million users by 2001. Ibid.
[53] Napster, 114 F.Supp 2d 896. For detailed analysis of the early stages of the Napster litigation, See Ariel Bershadsky, 'RIAA v Napster: a window onto the future of copyright law in the internet age' (2000) 18(3) The John Marshall Journall of Computer & Information Law 755.
[54] Napster, 114 F.Supp 2d 896, 908.
[55] Ibid.
[56] Ibid 919.
[57] "Preliminary injunctive relief is available to a party who demonstrates either: (1) a combination of probable success on the merits and the possibility of irreparable harm; or (2) that series questions are raised and the balance of hardships tips in its favor." See Napster, 239 F.3d 1004.
[58] Napster, 114 F.Supp 2d 896, 927. Two days later, the U.S. Court of Appeals stayed the injunction pending trial. See A & M Records v Napster, Inc., 2000 U.S. App. LEXIS 18688, *1 (9th Cir. 2000).
[59] The court expressed serious reservation on whether Napster was a "service provider" under s 512(k)(1)(A). See A & M Records v Napster, Inc, 54 U.S. P.Q. 2d 1746, 1749 (2000) (Napster's motion for summary judgment).
[60] Ibid 1752.
[61] Ibid.
[62] 17 U.S.C. 512(a).
[63] Napster, 54 U.S. P.Q. 2d 1746, 1752 (referring to 17 U.S.C. 512(i)(1)(a)).
[64] Napster, 239 F.3d 1004. As opposed to the District Court decision, which ordered Napster to remove all copyrighted material, the Appeals Court ordered Napster to police its system for infringing works, but also required record labels to provide the names of their copyrighted works being transmitted on the Napster system before Napster was required to remove the material. Ibid The RIAA responded by sending Napster a list of 135,000 copyright songs to be blocked.
[65] Ibid 1015-1018. The court cited a memorandum, drafted by Napster co-founder Sean Parker, in which Parker stressed the need to remain ignorant about the "real names" of users because "they are exchanging pirated music," as evidence that Napster had knowledge of its users breaching copyright. Ibid The Court also expressed reservations on whether Napster was a "service provider" within the definition of Section 512(k)(1)(d) and whether Napster complies with the DMCA's takedown provisions. Ibid 1029.
[66] On remand, the District Court revised the initial preliminary injunction and mandated Napster to block access to copyrighted files within three business days of receiving notice that the work is copyrighted. A & M Records v Napster, Inc., 2001 U.S. Dist. LEXIS 2186 (N.D. Cal. March, 5 2001). Users quickly solved this problem, however, by changing the names of the files to avoid the detection device. On 11 July 2001, the District Court issued a shutdown order after finding that copyright was still being infringed and ordered Napster to block the copyrighted files or stay offline indefinitely. The Appeals Court reversed this decision in a two-sentence order, however, Napster remained offline pending negotiations with the record companies for a fee-per-use service. Those negotiations never materialised and Napster never re-introduced its service.
[67] Despite being offline since July 2001, Napster continued litigating against the injunction with little success. See A & M Records v Napster, Inc., 2002 U.S. Dist. LEXIS 4270 (January 28, 2002) (denying Napster's motion to dismiss the complaints); A & M Records v Napster, Inc., 284 F.3d 1091 (9th Cir. March 25, 2002) (affirming the modified preliminary injunction and shut down order). Napster filed for bankruptcy on 2 June 2002 with assets of less than $US10 million and debts of more than $US100 million. A sale to Bertelsmann, a German-based media company, was blocked due to a conflict of interest, leaving Napster in a state of limbo. Ron Harris, Judge Blocks Napster Sale, 4 September 2002, located at http://www.australianit.com.au (last visited 12 September 2002).
[68] While the DMCA appears to simply codify existing judge-made law, it does provide certainty to the ISPs, who can adhere to the law and longer have to concern themselves with inconsistent decisions.
[69] The 1st Amendment issue has thus far arisen in two cases. In Universal Studios, Inc. v. Corly, 273 F.3d 429 (2d Cir. 2001), the Federal Court affirmed the District Court of Southern New York's decision holding the Act is content-neutral, does not restrict ideas and does not violate any 1st Amendment issues. In Felton v Recording Industry of America, Inc, Case no. CV-01-26
[69] (GEB) (D.N.J. 2001), scientists argued the DMCA violated the 1st Amendment by impermissibly prohibiting them from publishing their findings, however, the court dismissed the case as not ripe without ruling on the 1st Amendment issue. The plaintiffs have appealed to the Third Circuit Federal Court. See 'Intellectual Property: Additional Developments - Copyright' (2002) 17 Berkeley Tech. L.J. 91-93.
[70] Telstra Corporation Limited v Australasian Performing Right Association Limited, (1997) 38 IPR 294.
[71] The `diffusion right'; Copyright Act 1968 (Cth), s 31(1)(a)(v). Conversely, when the used a mobile phone, the High Court unanimously held that Telstra had infringed APRA's right to broadcast the works. The `broadcast right'; Copyright Act 1968 (Cth), s 31(1)(a)(iv). See Telstra, 38 IPR 294, 304, 316, 340.
[72] Copyright Act 1968 (Cth), S 31 (1)(a)(v).
[73] S26(1) deems irrelevant the fact that Telstra did not always control the music. Telstra, 38 IPR 294, 299, 304, 328.
[74] Ibid 299-300, 333.
[75] Ibid 300, 333-4.
[76] See Attorney-General's Discussion Paper, Copyright and the Digital Agenda, July 1997, at 71; National Music Publishers Association (NMPA), News & Views: APRA Brings Internet Court Action in Australia, located at http://www.nmpa.org/nmpa/nv-sf97/apra.html (last visited 20 August 2002).
[77] NMPA, above n 76, 78.
[78] Ibid.
[79] Australian Copyright Council Newsletter, Recent Developments: APRA v Ozemail Case Settled, (June 1998).
[80] S Gilchrist, 'Telstra v APRA: Implications for the Internet' (1997) 16 Communications Law Bulletin 10, 11.
[81] See Telstra, 38 IPR 294, 299, 304.
[82] See Attorney-General's Discussion Paper, above n 76, 29-32; YF Lim, 'Internet Service Providers and Liability for Copyright Infringement through Authorisation,' (1997) 8 Australian Intellectual Property Law Journal 192; S Loughnan, 'Service Provider Liability for User Copyright Infringement on the Internet' (1997) 8 Australian Intellectual Property Law Journal 18, 28-30.
[83] University of New South Wales v Moorehouse (1975) 133 CLR 1, 12, 20-1.
[84] Ibid 12-13.
[85] Moorehouse, 133 CLR 1, 12.
[86] See Ibid. Contrast BCS Songs v Amstrad Consumer Electronics Plc [1988] AC 1013 (where the manufacturer of twin-tape recording decks did not infringe copyright simply by the manufacture of the device, as they did not encourage infringement).
[87] Assertions from the Australian Copyright Council that violations were commonplace at universities was deemed "enough information to raise the suspicion that some infringing copies were likely to be made." Gilchrist, above n 80, 14.
[88] APRA warned the ISPs that their awareness of infringement was immaterial, that a lack of financial gain resulting from the infringement was irrelevant and that including misuse prohibitions on a service contract may not combat an authorisation claim. See "Current Issues in Copyright and Computer Related Problems," (2000) 18(2) Copyright Reporter 79.
[89] Telecommunications (Interception) Act 1979 (Cth). See Lim, above n 82, 201-11.
[90] ISPs may avoid liability by taking reasonable steps to prevent infringement, Moorehouse, 133 CLR 1, 12, 23, which referred to qualifying an invitation to infringe, such as posting warning on what users can and cannot legally do or monitoring people's use of machines as best as feasibly possible.
[91] Copyright Convergence Group Report, Highways to Change: Copyright in the New Communications Environment, August 1994 at 20, 24, 28. These recommendations were summarised in an Exposure Draft Copyright Amendment Bill 1996, which was not introduced into Parliament. See Attorney-General's Discussion paper, above n 76, 59.
[92] See Raani Costelloe, 'The New Digital Copyright Law in the Media, Entertainment and Communications Industry' (2001) 12(1) AIPJ 19.
[93] Attorney-General's Discussion Paper, above n 76, 30.
[94] The Hon Daryl Williams, Second Reading Speech- Copyright Amendment (Digital Agenda) Bill 1999. House of Representatives. Hansard (2 September 1999) at 9748; The Hon Daryl Williams and Senator Richard Alston, "Copyright Reform and the Information Economy", Joint Media Release, 30 April 1998. See http://www.dcita.gov.au/Article/0,,0_1-2_15-4_12223,00.html.
[95] Copyright Amendment (Digital Agenda) Act, 2000. The Act received Royal Assent on 4 September 2000 and came into force on 4 March 2001.
[96] See s.10(1), sched. 1. See also, Commonwealth Fact Sheet, Copyright Reform: Copyright Amendment (Digital Agenda) Act 2000, located at http://www.ag.gov.au/agd/Department/Publications/publications/copyfactsheet/copyfactsheet.html (last visited 20 August 2002). For a general overview of the Digital Agenda, see the Australian Copyright Council, Digital Agenda amendments: an overview, Information Sheet G65, June 2001, located at http://www.copyright.org.au/PDF/InfoSheets/G065.pdf (last visited on 21 August 2002).
[97] Sections 43(A) and 111(A). Of course, if the making of the communication itself is an infringement of copyright the defence does not apply. Rosemary Bell, Andrew Grimm, & Mark Tapley, Copyright Amendment (Digital Agenda) Bill 1999, (2 September 1999) 102 Bills Digest Service 31.
[98] To allow such temporary reproductions, sections 45 and 94 make an exception to the copyright owner's exclusive right to reproduce material.
[99] Numerous submissions insisted temporary reproductions should not be regarded as an infringement. See Campbell, Sen Ian, Copyright Amendment (Digital Agenda) Bill 2000, Second Reading, 14 August 2000, Senate Hansard, Page: 16245.
[100] Mia Garlick & Simon Gilchrist, 'The Digital Age: Will Oz Ever Get There' (1999) 3 TeleMedia 6, 79.
[101] 38 IPR 294.
[102] See s39B and 112E.
[104] See 36(1A) and 101(1A).
[105] Section 22(6) of the Copyright Act, as modified by the Digital Agenda Act, provides that a communication, other than a broadcast, is deemed to have been made by the person responsible for determining the content of the communication. Copyright owners have remedies against the person who determines the content of the material made available online.
[106] See Section 36(1A)(c).
[107] See Costelloe, above n 92, 27.
[108] See Internet Industry Association of Australia user guide, located at http://www.iia.net.au/guideuser.html (last visited 5 May 2002).
[109] The trend in copyright seems to be harmonisation in international copyright. See Ysolde Gendreau, 'Copyright Harmonization in the European Union and in North America,' (1995) Colum.-VLA J.L. & Arts 37; David Nimmer, 'Nation, Duration, Violation, Harmonization: An International Copyright Proposal for the United States,' (1992) 55 Law & Contemp. Probs. 2.
[110] Exposure Draft and Commentary - Copyright Amendment (Digital Agenda) Bill 1999, Proposed provisions implementing the Government's decision on the digital agenda reforms, at para. 130, located at http://www.dca.gov.au/nsapi-graphics/?MIval=dca_dispdoc&ID=3562 (last visited 30 September 2002).
[111] Likewise, precisely what is meant by the term "determining the content" is subject to differing opinion and controversy.
[112] The Broadcasting Services Amendment (Online Services) Act No 90 of 1999, sets up a regime whereby Australian ISPs are required to take reasonable steps to prohibit access to/remove X rated/Refused Classification material and limit access to R-rated material to people over 18 years old.
[113] The Act also covers R-rated material which is not subject to an age verification system.
[114] The technological impediments are already minimal in comparison to the hurdles of privacy and telecommunications interception regulation.
[115] On the other hand, the provision could mean that in the future, larger ISPs are treated differently than smaller ISPs, in that larger ISPs may acquire the technology and have the resources to monitor subscriber activity whilst smaller ISPs with less resources cannot monitor their subscribers. In that scenario, smaller ISPs will be burdened by the Act's provision regarding future developments.