In particular, the CJEU was asked to balance several fundamental rights in actions against online intermediaries for copyright infringements committed by third parties. In SABAM v. Scarlet (case C-70/10; see also SABAM v. Netlog, case C-360/10), the CJEU defined the outer limits for “injunctions against intermediaries whose services are used by a third party to infringe a copyright or related right” (Art. 8(3) of the 2001/29 Copyright Directive). On 27 March 2014, the Court of Justice in UPC Telekabel (case C- 314/12) went further in delineating the requirements for copyright injunctions against online access providers and the implementation of filtering measures.

In the last years, the ECtHR ruled three times on the proportionality of some interferences with the freedom of expression online resulting from the protection and enforcement of copyright. One case (Fredrik Neij and Peter Sunde Kolmisoppi v. Sweden, 18 Febr. 2013) involves the operators of the infringing website The Pirate Bay. In Ashby Donald v. France (10 Jan. 2013), the question was whether the sanctions imposed by the French courts on the managers of a website containing photographs of fashion shows were passing the test of proportionality for restricting freedom of expression. In a March 11, 2014 decision (Yaman Akdeniz v. Turkey), the ECtHR considers as inadmissible the request made by the user of musical websites to which access has been blocked.

Here are a list of questions for you to consider at the light of (at least) the two decisions UPC Telekabel and Fredrik Neij and Peter Sunde Kolmisoppi v. Sweden:

• What are the fundamental rights that are most often referred to by the Court in Luxembourg and by the Court in Strasbourg?
• Is Article 10 of the ECHR applicable to the Internet in the same way as it is applicable to other means of communication?
• Does the protection of property as a fundamental right play a role in the balancing made by the CJEU and the ECtHR?
• Is it possible to rely on other fundamental rights to support the view that copyright is a fundamental/human right?
• Do you see a difference in the way the balancing is done by the CJEU and the ECtHR?
• What are the implications of a reasoning based on the balancing of fundamental right?
• As a result of those decisions, does copyright move from the sphere of private law to the realm of public law?

You do not necessarily have to respond to all those questions, you can select a few of them. What is important: your text should be concise, well-structured and to the point. Also it should flow well.

You do not have to be too … balanced in your response!

(You might as well take into account this additional question: Do you think the decision Akdeniz is completely in line with the previous case law of the ECtHR?).

Source: bgr.com

You probably know “Game of Thrones”, the most popular TV series of the moment. The first two seasons were a huge hit and the third season premiered on March 31, 2013 on HBO (the American premium cable network that produces the series). There are about 4.5 million subscribers who follow the series. But overall, the audience is much broader as one should also count several million (the exact figure is difficult to estimate) of “illegitimate” viewers. For example, the first episode of season 3 was downloaded over one million times in the space of 24 hours.

Contrary to what one might think, these record numbers of illegal downloading have not panicked HBO officials. Quite the opposite! HBO programming president (Michael Lombardo) told Entertainment Weekly that he viewed this rather positively:

I probably should not say this, but this is a kind of compliment. The demand is there. And it clearly did not have a negative effect on DVD sales.

One of the directors of the series (David Petrarca) went even one step further by stating that in fact, the series benefits from piracy because it feeds the “cultural buzz” that allows this kind of program to “survive”.

Beyond the specific case of this series, what do economists think of all this? From a theoretical perspective, numerous studies have demonstrated the positive effects that piracy may have on the profits of content producers. I sketch here three mechanisms (for a thorough description, see Belleflamme and Peitz, 2010).

• First, illegal copies of a content good can play a sampling role by attracting consumers and driving them to purchase a legitimate copy later.
• Second, many content goods generate network effects; that is, the attraction of the good increases with the number of consumers of that good, regardless of the consumed copies being legitimate or not.
• Finally, in the same vein, piracy can increase demand for goods that are complementary to the pirated content; the producer is then able to capture indirectly the value that consumers attach to the pirated good.

So here are three mechanisms that could calm the fears of content producers regarding piracy. But naysayers might say that these are nothing but vague theoretical possibilities. To answer this criticism, theories must be submitted to the test of facts. Fortunately enough, the empirical literature on piracy (mainly in the music industry) has grown considerably in recent years (for a recent survey, see Waldfogel, 2012). Numerous studies have converged on the conclusion, now widely accepted, that piracy has had a negative impact on physical music sales (that is to say, CDs). In the jargon of this literature, it is said that illegal downloading has “displaced” physical sales. However, the estimated “displacement rate” is slightly above zero and nowhere near unity, reflecting the observation that the vast majority of goods that were illegally consumed would not have been purchased in the absence of piracy (contrary to what the recording industry would like the general public to believe by counting any download as a lost sale).

Does this conclusion also apply to the online legal sales of digital music (through online stores such as iTunes or via “streaming” services such as Spotify)? This is what Aguiar and Martens (2013) try to establish by analyzing the behavior of digital music consumers on the Internet. The authors use direct observations of the online behavior of more than 16.000 Europeans, whose socio-economic characteristics (age, gender, education, occupation, household size and income, number of children, region of residence) are also known. The data comes from Nielsen, a company that specializes in audience measurement (on television or on the Internet).

What are the results of this analysis? Essentially that illegal downloading has no effect on legal consumption of digital music. At best, this effect is positive: a 10% increase in clicks on illegal download websites leads to an increase of 0.2% in clicks on legal purchase websites. Piracy does not induce any “displacement” of the legal music purchase in digital format; it might even slightly boost sales.

Of course, we must not forget that the households in the sample have willingly accepted to be observed by Nielsen. This introduces two potential biases: on the one hand, it is quite likely that the “heavy downloaders” have refused to be part of the sample; on the other hand, individuals in the sample may have changed their behavior knowing that they were observed. We must also remember that online music sales still account for a small fraction of the overall revenues of the music industry and that physical sales have been shown to suffer from piracy. This being said, the share of online music is increasing (5% in 2010 and 8% in 2011 according to IFPI).

The results of this study can therefore, at least, be interpreted as a sign that the legal purchase of music in digital format is becoming a serious competitor for illegal downloading. Piracy could even become an ally of copyright holders.

So, would the absence of piracy become even worse than piracy itself? I’d be happy to hear your views about that.

(This is a shortened version of a post that was originally published in French on this blog and republished later on Regards Economiques.)

The request for a preliminary reference was made in the context of proceedings between Mr Pinckney, a French resident, and Mediatech, a company established in Austria, concerning a claim for damages resulting from the infringement of Pinckney’s copyright in twelve songs.

1.      Is Article 5(3) of … [the Regulation] to be interpreted as meaning that, in the event of an alleged infringement of copyright committed by means of content placed online on a website,

–      the person who considers that his rights have been infringed has the option of bringing an action to establish liability before the courts of each Member State in the territory of which content placed online is or has been accessible, in order to obtain compensation solely in respect of the damage suffered on the territory of the Member State before which the action is brought,

or

–      does that content also have to be, or to have been, directed at the public located in the territory of that Member State, or must some other clear connecting factor be present?

2.      Is the answer to Question 1 the same if the alleged infringement of copyright results, not from the placing of dematerialised content online, but, as in the present case, from the online sale of a material carrier medium which reproduces that content?

whether Article 5(3) of the Brussels I Regulation must be interpreted as meaning that where is an alleged infringement of a copyright which is protected by the Member State of the court seised, that court has jurisdiction to hear an action to establish liability brought by the author of a work against a company established in another Member State, which has in the latter State reproduced that work on a material support which is subsequently marketed by companies established in a third Member State through an internet site which is also accessible in the Member State of the court seised.

the answer to the questions referred is that Article 5(3) of the Regulation must be interpreted as meaning that, in the event of alleged infringement of copyrights protected by the Member State of the court seised, the latter has jurisdiction to hear an action to establish liability brought by the author of a work against a company established in another Member State and which has, in the latter State, reproduced that work on a material support which is subsequently sold by companies established in a third Member State through an internet site also accessible with the jurisdiction of the court seised. That court has jurisdiction only to determine the damage caused in the Member State within which it is situated.

The one provided by the CJEU may look like a sensible interpretation of the Brussels I Regulation. However, it also shows the shortcomings and practical difficulties posed by the principle of territoriality in the context of both dematerialisation of works and their online exploitation and, above all, infringement (see here!).

[This is an edited version of a post originally published on The IPKat on 3 October 2013]

From Wikipedia, the free encyclopedia

A few weeks ago (September 14, 2013), the blog American Thinker published quite a vocal piece, entitled “Copyright Strangulation”, condemning the current scope and length of the US copyright law. According to the author, Mike Konrad,

Copyright law in America gives individuals, and corporations, a paralyzing stranglehold on our culture. Though its proponents claim that it protects creativity, copyright law’s exaggerated length and scope actually chokes off artistic genius and chains our country to whims of few prima donnas who do not represent our culture at all. (…) The stifling effect is enormous. Movies and DVDs are released with altered sound tracks for fear of litigation. More often than realized, creative works are not released at all, because the copyright holder is not even known; and no one dares take the risk.

The following video expresses a similar opinion in a more visual way:

Copyrights have been repeatedly extended

Both pieces are certainly right on one count: copyright protection has been substantially lengthened over the years (see this graph for the US) .

In April 2009, the EU parliament approved an extension of the copyright term for music recordings from 50 years to 70 years (see the official press release). This decision followed a hot debate between the music industry, which campaigned for this extension as it would allow it to extend the flow of revenues derived from music recorded in the 1960s, and a wide array of opponents who were convinced that the measure was likely to damage European creative endeavor and innovation. The opponents’ voice was partly heard by the Parliament as it did not follow the initial proposal from the European Commission to increase the copyright term from 50 to 95 years but settled instead on 70 years.

“[i]t is highly unlikely that the economic benefits from copyright extension under the CTEA outweigh the costs”  (see the full analysis).

To justify this statement, the economists argued that the revenues earned during the additional 20 years of protection are so heavily discounted that they lose almost all value, while the extended protection of existing works generates immediate deadweight losses (which are even larger when taking the increased cost of creating new derivative work into account). Although the previous argumentation relies on very sound theoretical reasoning, it lacks solid empirical grounds. Stan Liebowitz (professor of economics at University of Texas at Dallas) stresses this point in the report that he prepared for the IFPI (International Federation of the Phonographic Industry) in 2007 and that was submitted to the European Commission:

“there are numerous economic grounds that can be adduced to support a request for extending the copyright on sound recordings. There are clear benefits that will arise from an increase in new creations and the proposed increase in copyright are large enough to lead to measurable increases in new production. While it is also true that there are increased costs, in the sense that copyright allows price to stay above the cost of reproduction, no one has measured the size of these costs to determine how large they are. Nor is there evidence that these costs lead to prices being above a competitive “zero profit” level since the costs of production need to be recouped in some manner. Even if there were some monopoly power, the removal of this inefficiency in the sound recording market would entail treating the creators of the sound recordings, whose talent would be the cause of the monopoly power, more harshly than the treatment given to the many owners of other unique assets with similar efficiency characteristics elsewhere in the economy.”

Source: reneskaflestad.com

In a chapter that I wrote in 2008 for the book “Intellectual Property and the Theories of Justice” (edited by A. Gosseries, A. Marciano and A. Strowel), I summarize how economists generally explain that the state has a role in promoting innovation.

The problem with activities generating information or knowledge is that they suffer from the three generic sources of market failure: indivisibility, uncertainty and externalities. First, indivisibilities are present because the creation of new knowledge and new information involves large, fixed, set-up costs, requires the division of highly specialised labour and is therefore prone to economies of scale. Second, investments in research and development (R&D) involve two types of uncertainty: in addition to technological uncertainty (how to make new things and how to make them work), there is commercial uncertainty (how to make new things that will be adopted by the consumers); moral hazard problems ensue as it is generally impossible to attribute the failure of a project to a lack of effort or simply to bad luck. Finally, because information and knowledge are inherently public goods, their producers generate many externalities. Public goods are characterised by non-rivalness in consumption: the consumption of the good by one person does not prevent (rival) its consumption by another person; there is thus the possibility of collective consumption. (…) Public goods are said to be ‘pure’ when they are also non-excludable, in the sense that one person cannot exclude another person from consuming that good. (…)
The three sources of market failure associated with investments in information production generate the problem of appropriability, which sets them apart from other investments made by firms or individuals. That is, innovators and creators face a serious risk of appropriating only incompletely the returns from their activities. As a result, there is a general presumption that markets provide too few incentives to introduce new innovations and that the production of information may well be insufficient from a social point of view. Economists therefore agree that governments ought to intervene to provide the right incentives to create and innovate.

I also explain on this blog how important is the promotion of innovation to sustain economic growth.

Although economists agree on the necessity of public intervention, they largely disagree about how far this intervention should go. On one extreme of the spectrum, there is the view that public intervention in terms of innovation should be kept to the bare minimum. A good summary of this view can be found in the conclusion of an article published in The Economist about the digitization of manufacturing:

Governments have always been lousy at picking winners, and they are likely to become more so, as legions of entrepreneurs and tinkerers swap designs online, turn them into products at home and market them globally from a garage. As the revolution rages, governments should stick to the basics: better schools for a skilled workforce, clear rules and a level playing field for enterprises of all kinds. Leave the rest to the revolutionaries.

With her recent book, “The Entrepreneurial State”, Mariana Mazzucato stands unwaveringly at the other end of the spectrum. She defends the idea that public intervention goes much further than what is usually admitted. As she explains it in Slate,

the state does more than just fix market failures – the usual way economists justify state spending. The state has shaped and created markets and, in doing so, taken on great risks.

She supports this claim with several case-studies, the most striking being the case of Apple:

Apple is a perfect example. In its early stages, the company received government cash support via a $500,000 small-business investment company grant. And every technology that makes the iPhone a smartphone owes its vision and funding to the state: the Internet, GPS, touch-screen displays, and even the voice-activated smartphone assistant Siri all received state cash. The U.S. Defense Advanced Research Projects Agency bankrolled the Internet, and the CIA and the military funded GPS. So, although the United States is sold to us as the model example of progress through private enterprise, innovation there has benefited from a very interventionist state.

After having supported the view that the state is so important to investments in high-risk innovation, Mariana Mazzucato goes further by advocating that the state should capture a higher direct return on its investments:

Recognizing the state as a lead risk-taker, and enabling it to reap a reward, will not only make the innovation system stronger, it will also spread the profits of growth more fairly. This will ensure that education, health, and transportation can benefit from state investments in innovation, instead of just the small number of people who see themselves as wealth creators, while relying increasingly on the courageous, entrepreneurial state.

Naturally, The Economist begs to differ with this assertion, as clearly expressed in the Schumpeter column of August 31, 2013:

Ms Mazzucato omits to acknowledge how often would-be entrepreneurial states end up pouring money down ratholes. The world is littered with imitation Silicon Valleys that produce nothing but debt. Yes, private-sector ventures also frequently fail, but their investors know when to stop: their own money runs out. Governments can keep on throwing taxpayers’ money away. It was once fashionable to praise Japan as an entrepreneurial state being guided to world-domination by the enlightened thinkers in its mighty industry ministry. Nowadays it is clearer that the ministry has been a dead hand holding back innovation and entrepreneurship.Ms Mazzucato laments that private businesses are too short-termist. But governments also routinely make investments on the basis of short-run political calculations rather than long-term pay-offs. She worries that anti-statist ideology is reducing the state’s ability to make important investments for the future. In fact, the explosion of entitlement spending, which is allocating ever more of the country’s income to the old, is doing more to undermine the entrepreneurial state than the tea party. She is also too hard on business: putting all those different state-funded technologies together into user-friendly iPads and iPhones required rare genius that deserves rare rewards.

There is, however, some room of agreement between the two views, as The Economist writes:

Quibbles aside, Ms Mazzucato is right to argue that the state has played a central role in producing game-changing breakthroughs, and that its contribution to the success of technology-based businesses should not be underestimated. She is also right to point out that the “profligate” countries that are suffering the most from the current crisis (such as Greece and Italy) are those that have spent the least on R&D and education. There are many reasons why policymakers must modernise the state and bring entitlements under control. But one of the most important is that a well-run state is a vital part of a successful innovation system.

We are thus left with this question: What makes a state a succesful entrepreneur? Should the state be “obsessed by competition” and “make scientists compete for research grants, and businesses compete for start-up funds—and leave the decisions to experts, rather than politicians or bureaucrats”, as The Economist advocates. Or should it be more proactive by taking on risks, promoting the spread of existing technologies, and seeking potentially lucrative scientific breakthroughs, as Ms. Mazzucato believes?

What is your view?

Source: www.shifthappens.com

The central role that innovation plays in driving economic growth is well known thanks to the pioneering work of Robert Solow (Nobel Prize Laureate in Economics in 1987). In his seminal 1957 paper, Technical Change and the Aggregate Production Function, Solow described what would later be known as the neoclassical growth model (a.k.a. the Solow–Swan or exogenous growth model).

As Solow acknowledged it himself in his Nobel Prize lecture:

“The ‘neoclassical model of economic growth’ started a small industry. It stimulated hundreds of theoretical and empirical articles by other economists. It very quickly found its way into textbooks and into the fund of common knowledge of the profession.”

(For a recent summary of this vast literature, see the 2009 paper of K. Uppenberg.)

One of the main messages of Solow’s work (and of its subsequent improvements) is that a large share of economic growth is driven by technological advance. A direct corollary is that policies aiming at fostering technological progress have the potential to boost economic growth, and thereby to meet challenges not only of the financial crisis in the short term but also of population ageing and climate change in the longer term.

Of course, this is easier said than done… One thing is to acknowledge the positive influence of science, technology and innovation on growth. Declarations along these lines do indeed abound. For instance, the two major candidates for the U.S. Presidential election in November 2012 agreed on the importance of innovation (see ScienceDebate 2012)

“I believe that in order to be globally competitive in the 21st century and to create an American economy that is built to last, we must create an environment where invention, innovation, and industry can flourish. We can work together to create an economy built on American manufacturing, American energy, and skills for American workers.” (Barack Obama)

“Innovation is the key to economic growth and job creation, and increasingly important to American competitiveness in the global economy. Three-quarters of all U.S. economic growth, and three-quarters of the U.S. productivity advantage over other OECD nations, is directly attributable to innovation, and wages in innovation-intensive industries have grown more than twice as fast as other wages in recent decades.” (Mitt Romney)

Similarly, in its Innovation Union initiative, the European Commission declares:

“With an ageing population and strong competitive pressures from globalisation, Europe’ s future economic growth and jobs will increasingly have to come from innovation in products, services and business models. This is why innovation has been placed at the heart of the Europe 2020 strategy for growth and jobs.”

Yet, translating these broad intentions into specific and effective policies turns out to be a much more challenging task.

What I would like you to do is to identify one particular policy measure proposed either by the government in your own country (or region) or by the European Commission, and to give your critical opinion about this measure.

(This post is a slight update of this previous IPdigit post.) 

Source: http://thevaluesquad.com

The central role that innovation plays in driving economic growth is well known thanks to the pioneering work of Robert Solow (Nobel Prize Laureate in Economics in 1987). In his seminal 1957 paper, Technical Change and the Aggregate Production Function, Solow described what would later be known as the neoclassical growth model (a.k.a. the Solow–Swan or exogenous growth model).

As Solow acknowledged it himself in his Nobel Prize lecture:

“The ‘neoclassical model of economic growth’ started a small industry. It stimulated hundreds of theoretical and empirical articles by other economists. It very quickly found its way into textbooks and into the fund of common knowledge of the profession.”

(For a recent summary of this vast literature, see the 2009 paper of K. Uppenberg.)

One of the main messages of Solow’s work (and of its subsequent improvements) is that a large share of economic growth is driven by technological advance. A direct corollary is that policies aiming at fostering technological progress have the potential to boost economic growth, and thereby to meet challenges not only of the financial crisis in the short term but also of population ageing and climate change in the longer term.

Of course, this is easier said than done… One thing is to acknowledge the positive influence of science, technology and innovation on growth. Declarations along these lines do indeed abound. For instance, the two major candidates for the U.S. Presidential election in November agree on the importance of innovation (see ScienceDebate 2012)

“I believe that in order to be globally competitive in the 21st century and to create an American economy that is built to last, we must create an environment where invention, innovation, and industry can flourish. We can work together to create an economy built on American manufacturing, American energy, and skills for American workers.” (Barack Obama)

“Innovation is the key to economic growth and job creation, and increasingly important to American competitiveness in the global economy. Three-quarters of all U.S. economic growth, and three-quarters of the U.S. productivity advantage over other OECD nations, is directly attributable to innovation, and wages in innovation-intensive industries have grown more than twice as fast as other wages in recent decades.” (Mitt Romney)

Similarly, in its Innovation Union initiative, the European Commission declares:

“With an ageing population and strong competitive pressures from globalisation, Europe’ s future economic growth and jobs will increasingly have to come from innovation in products, services and business models. This is why innovation has been placed at the heart of the Europe 2020 strategy for growth and jobs.”

Yet, translating these broad intentions into specific and effective policies turns out to be a much more challenging task.

What I would like you to do is to identify one particular policy measure proposed either by one of the two U.S. presidential candidates or by the European Commission, and to give your critical opinion about this measure.

Making up for lost time

Every smart-phone contains at a minimum hundreds of patented components.  These are the fruits of decades of innovation by companies in the sector, who have contributed tens of thousands of patents.  Manufacturing a mobile device without using other companies’ patents is a gamble, so producers typically negotiate cross-licensing agreements, though sometimes only after costly legal proceedings.  The upshot is that royalties can represent up to a quarter of the value of a smart-phone.

Phones carrying the Android OS are no exception.  Google is not directly concerned, since it does not produce handsets, but it finds itself today being forced to watch helplessly as third-party patents come to light that cover technologies inside “Google phones”.   Indeed, manufacturers using the Android OS are currently involved in a number of lawsuits – starting with the conflict pitting Samsung against Apple in several different jurisdictions – and the main ones (Samsung, HTC, LG) have already accepted to pay Microsoft for technology they are using.

A realisation of the weakness of its position seems to have prompted Google to change tack, and last summer’s bankruptcy of North American handset manufacturers gave it the opportunity it needed.  Though Google missed out on Nortel’s 6000 patents (which were bought by a consortium led by Apple and Microsoft), it has managed to buy Motorola Mobility, with its 17,000 patents, for twelve and a half billion dollars.  Armed with such a portfolio, Google now has firepower comparable to that of the sector’s other giants.  Both competitors and competition authorities the world over are wondering anxiously how it will use these new weapons.

The “nuclear weapon” of essential patents

The “essential” patents acquired by Google are the focus of these concerns.  They are “essential” because they cover two technological standards on which the entire mobile industry is dependent. The first is the H.264 codec, which allows videos to be viewed on different terminals (e.g. smartphones, tablets, PCs, DVD/Blu-ray players).  The second is the Wi-Fi standard.  These standards obviously need to be incorporated into all smartphones.  This is why patent holders traditionally commit to licensing their technologies on FRAND (fair, reasonable and non-discriminatory) terms when standards are under development.  Players in the market realise that refusing to license is not a realistic option – the only question is what constitutes a “reasonable” royalty.

Motorola, like others, had made such commitments.  But it rescinded them shortly before declaring bankruptcy – and in so doing, set a dangerous precedent.  Pulling out of its FRAND commitments enabled the company to claim injunctive relief via the courts, forcing competitors accused of infringement to suspend production of the offending products – in other words, to shut down pending a court judgment.   This “nuclear” weapon gave Motorola a big stick to impose its will.  The upshot is that Microsoft, for example, is looking at licence fees of 2.25% of the final sale price of whole products – smartphones, Xboxes or PCs – for access to 50 patents contained in the H.264 standard, a rate that is a hundred times what MPEG-LA, a patent pool bringing together 29 firms, charges for 2300 other patents reading on H.264

Google, heir to Motorola’s ongoing litigation,   appears set to continue down the same path.  Queried by the US Department of Justice recently, Google refused to rule out the use of injunctive relief for its new essential patents (in stark contrast to Apple and Microsoft, who were asked to make similar commitments in the context of the Nortel acquisition and complied with the requests).  Its approach is difficult to understand since the company is anything but financially vulnerable.   Whether it is just trying to shore up Android or really intending to hold competitors to ransom, the implications of its conduct are profound.

New rules of the game

This use of essential patents as a legal weapon is already prompting opponents of Google-Motorola to reply in kind, potentially triggering a tit-for-tat escalation that would be ruinous for the whole industry.  Even worse, it undermines the credibility of FRAND commitments, and as a result the industry’s ability to set common standards.  The risk ultimately is that companies will be forced to retreat into their own proprietary ecosystems, each increasingly walled-off from the others.  It goes without saying that this would be against interests of the six billion consumers who would be affected by such a course of events.

The stakes are high enough to have attracted scrutiny from a number of competition authorities.  Almost simultaneously, the US Department of Justice and the European Commission issued warnings to Google regarding the use of essential patents in tandem with their respective approvals of the MMI acquisition (see video of Commissionner Almunia’s interview on this topic).   As if to reinforce the message, DG Competition has launched an investigation into possible abuse of injunctive relief by Samsung against Apple.   With its submission of a formal complaint on 22 February, Microsoft has weighed in along the same lines.

Competition authorities, though, have neither the means nor the mandate to regulate the creation of standards and access to essential patents ex ante.   If Google persists in its current approach, the sanctions those authorities would be able to bring to bear will not be adequate to address the fundamental problem.  Instead, at the end of the day it will be for the mobile industry itself to put out the fire, by finding some viable means of preserving their common standards.  What irony that it should be Google – self-proclaimed champion of the open Internet – that lit the fuse!

The Stop Online Piracy Act (SOPA) and Protect IP Act (PIPA), were two bills introduced in the US Congress, aiming to fight « rogue websites », i.e. foreign sites dedicated to copyright infringement (for a comprehensive summary, see Masurlaw). Whereas the existing provisions in the DMCA (also provided by the european Infosoc directive) focused on the removal of infringing content by internet service providers (such as Youtube, Dailymotion, or … Megaupload), the SOPA bill further allowed the right holders to send notice requiring payment providers (such as Paypal, etc.) and advertising services (e.g. Google Adwords) to stop serving the site. As with the DMCA, these intermediaries would be immune from any liability for any damage due to actions taken against alleged infringers, which gives them incentives to comply zealously. Moreover, the bills enables the Attorney General to bring suit against « foreign infringing sites », and have a court order that the site be cut off by services providers, search engines, payment providers, advertising service, and (in PIPA) even DNS servers (that runs internet adresses, or URL). As the DNS blocking solution has already been critized here, I’d like to emphasize the issue of due process : whenever a right holder deems that a website violates its copyright, he could ask a court to order, without any prior opportunity for hearing for the defendant, that the entire website be shut down.

After a global web protest seeing more 7 million signatures and 115 000 websites going dark, the sponsors of the bills finally announced that they were shelved.

What is immediately apparent from the Megaupload case, regardless of its merits, is that a US court can already issue an indictment against a foreign website, and have its domain name blocked. The adress http://www.megaupload.com/ now points to a banner from the FBI and the Department of Justice, stating that « This domain name associated with the website Megaupload.com has been seized pursuant to an order issued by a U.S. district Court ». Note that the DNS blocking by a US court produces effects worldwide, whereas the same measure taken by a Belgian court in another case only affects national users. This is probably because the District Court of Virginia acted on the primary domain name servers of the network, whereas the court of Antwerpen order applied only to belgian Internet providers Telenet and Belgacom. This might trigger some concern about the continuing dominance of the United States on the Domain Name System of the Internet, and its control on all the widespread .com and .org domains.

The main conclusion is that under the current legal regime, there seem to be sufficient « enforcement tools » at hand. The objection (made by RIAA’s spokewoman Cara Duckworth) about the difficulty of enforcing the law in countries such as Russia or China, unlikely to cooperate with a US or European investigation, does not seem to build enough ground to support new legislation. First, these repressive regimes might not be so hospitable towards website hosting unrestricted content, for political reasons. Second, decent download speed (the principal advantage of file lockers compared to peer-to-peer file sharing) requires to set up servers located near the users, which would therefore make them reachable within a non-lax IP jurisdiction.

Certainly, court procedures take time, but it is the cost of justice : some amount of efficiency in law enforcement must be traded off against due process. There’s a tendency in copyright law to assume that the best way to speed up court process are to skip the procedural guarantees of a fair trial, or to skip the trial altogether. Indeed, in addition to the legal means against piracy, the actors are more and more resorting to para-legal enforcement. We are actually seeing a growing tendency that has been labelled the « invisible handshake » (Birnhack & Elkin-Koren), where a convergence of interest between the state and private parties often leads the powerful intermediaries of the digital environment to cooperate to law enforcement and control of the network, among themselves or with the government. This can be seen in such trivial mechanisms as the « notice and take-down » systems, or more elaborated private initiatives such as the « six strikes » agreement against copyright (the private version of the french Hadopi law – see also James Grimmelmann). Whereas the efficiency of enforcement is certainly increased, this is not always for the best. Not only does some legal provisions incentivize intermediaries to adopt an overreaching view of copyright enforcement, to the detriment of users claims of ‘fair use’ (with the previsible chilling effects on speech), but often private companies already have well enough (if not too much) incentives to accede to takedown requests made by powerful actors, whatever their legitimacy. Great powers coming with great responsibilities, the control that the intermediaries have on information must not remain unchecked. A good illustration of this worrying trend is the speed with wich payment providers, hosting services, and domain name services responded to suggestions by US officials that « No responsible company – whether American or foreign – should assist WikiLeaks in its efforts to disseminate these stolen materials » (Senator Joe Liberman, quoted by Yochai Benkler in yet another excellent paper), eventhough Wikileaks was not carrying out any illegal activity, and could have quite arguably been entitled to constitutionnal protection under the freedom of the press.

Even if the Protect IP / Stop Online Piracy Act bills are probably halted for the time being, their provisions still echoed a growing trend towards a hurried delegation of copyright enforcement to private actors that have their own agenda and often couldn’t care less about balancing copyright protection and users’ privileges, or protecting freedom of speech and the open Internet. This is a perversion of the promises of the early Internet utopies : where the network was supposed to emancipate the individuals from the channeling of information by mass media and economic interests, the current evolution of the Internet regulation could actually lead to a far worse state of affairs. It is this trend that should spark our worries, more than the short-term legal problems possibly caused by digital lockers like Megaupload.

Maxime Lambrecht