E LAW - MURDOCH UNIVERSITY ELECTRONIC JOURNAL OF LAW ISSN 1321-9447 Volume 9 Number 4 (December 2002) Copyright E Law and author File: mercurio94.txt ftp://law.murdoch.edu.au/pub/elaw-issues/v9n4/mercurio94.txt http://www.murdoch.edu.au/elaw/issues/v9n4/mercurio94.html ________________________________________________________________________ Internet Service Provider Liability for Copyright Infringements of Subscribers: A Comparison of the American and Australian Efforts to Combat the Uncertainty Bryan Mercurio University of New South Wales Faculty of Law Contents * Introduction * United States o Pre- Digital Millennium Copyright Act (DMCA) + Direct Liability + Vicarious Liability + Contributory Liability + Overview of Pre-DMCA Law o Digital Millennium Copyright Act + DMCA "Safe Harbours" + DMCA Case Law + Evolution of the DMCA * Australia o Pre- Digital Agenda Law + Telstra v APRA + APRA v OzEmail + Authorisation + Evaluation o Digital Agenda Act + Provisions of the Act + Evaluation of the Act * Conclusion * Notes Introduction 1. Copyright law aims to balance the competing policy goals of encouraging creativity and allowing public access to information.[1] This balance is particularly important and difficult when it concerns the Internet, where meaningful copyright protection must exist in order to promote further intellectual development in the Internet and failing to provide protection would lead to a reduction in the incentive to create and less material available for public use. Therefore, it is important that copyright owners are protected and compensated for infringements occurring over the Internet. 2. The rapid expansion of the Internet, however, greatly expanded the context in which copyright infringement can occur.[2] The Internet, with its inexpensive access, quick downloads and forwarding capabilities allow users to effortlessly bypass copyright laws at a substantial cost to legitimate users.[3] As the Internet expanded, laws remained static and increasingly became incapable of handling such situations. Traditional protections such as cease and desist orders and court action prove ineffective, as letters are ignored and the litigation costs outweigh recovery in most cases. Moreover, as users can easily post information anonymously, even locating the alleged offender proves difficult in many cases. No longer protected, copyright holders attempted to hold Internet service providers (ISPs) liable for subscriber infringements.[4] 3. The United States and Australia have recently enacted legislation relating to the liability of ISPs for the copyright infringements of their subscribers.[5] While American legislators could reflect on ample case precedent in drafting their legislation, Australian legislators had no case law directly on point to aid the drafting process. Perhaps as a result of the two different starting points, the American law is stringent and prescriptive, while the Australian law is more of a general guideline, lacking many of the intricacies of the American law. This article reflects upon the pre-legislation legal environment of both nations and compares the means by which the American and Australian legislation has handled this growing problem.[6] The article concludes by suggesting areas of improvement and issues which may develop as a result of the legislation in each country. United States Pre- Digital Millennium Copyright Act (DMCA) 4. Pre-DMCA liability for ISPs resulting from subscriber infringement of copyright laws focused on breaches of the Copyright Act.[7] Without clear direction from Congress, parties relied on judge-made law to resolve the dilemma of ISP liability for subscriber infringements. While relatively few cases addressed the issue, the ones that did often reached different conclusions. For instance, some courts held responsibility for the copyright infringements rests solely with the subscriber, while others held ISPs liable on various theories, including direct, enterprise, vicarious or contributory liability.[8] Direct Liability 5. Two requirements must be satisfied in order to present a case for direct liability: (1) the plaintiff must show ownership of the allegedly infringing material; and (2) the plaintiff must demonstrate that the alleged infringers violated an exclusive right granted to the copyright holder.[9] A small number of courts have held that the act of providing Internet service attaches liability to an ISP for copyright infringement. These seemingly harsh decisions are due to the fact that in response to subscriber requests, ISPs reproduce and distribute copyrighted material, as every download causes the ISPs computer to copy the material and forward it to the subscriber. 6. In 1993, Playboy Enterprises, Inc. v. Frena[10] was the first case to find liability under this theory. In Playboy, a Bulletin Board System[11] (BBS) operator was held to contravene Playboy's distribution and public display rights when another party posted Playboy photos onto the defendant's BBS, notwithstanding the fact that the defendant was unaware of the infringing material.[12] 7. Several subsequent cases, however, have discredited this theory due to the extreme and unreasonable liability it creates.[13] For instance, just two years after Playboy, the court in Religious Technology Center v. Netcom[14] stated "although copyright is a strict liability statute, there should be some element of volition or causation which is lacking where a defendant's system is merely used to create a copy by a third party."[15] The court continued, "where the infringing subscriber is clearly directly liable for the same act, it does not make sense to adopt a rule that could lead to the liability of countless parties whose role in the infringement is nothing more than setting up and operating a system that is necessary for functioning of the Internet."[16] 8. As Netcom illustrates, the direction of the Internet has expanded since the Playboy decision and courts are well aware of the stifling effect direct liability would cause for the industry. Therefore, it is extremely unlikely another court will hold an ISP directly liable for simply providing the service to infringing subscribers. Vicarious Liability 9. Although the Copyright Act does not explicitly recognise vicarious liability, American courts generally impose vicarious liability when the defendant has "the right and ability to supervise" the offender and a "direct financial interest in the exploitation of copyrighted materials."[17] Therefore, ISPs could potentially be vicariously liable since the ISP has a close relationship to the subscriber, owns the equipment that transmits the material, and could financially benefit from the infringement. 10. Courts hesitate to find ISPs vicariously liable, however, due to the fact that ISPs have little control over subscribers and the fact that subscriber actions do not directly affect ISP profitability (provided the ISP gets a flat fee for service).[18] 11. The above does not provide absolute protection for ISPs, however, as the majority of district courts have not ruled on the issue and some may be inclined to find the ISP vicariously liable if it could be construed that they receive benefit from the infringing activity. Moreover, the White Paper,[19] however dated, embraced enterprise liability[20] as desirable and noted that, as between copyright owners and ISPs, the latter should bear the cost of infringement since they are in a commercial relationship with infringers and can pass the liability costs to consumers.[21] 12. The likelihood of a court today finding an ISP vicariously liable for subscriber infringements of copyright is minimal. Instead, most courts are likely to find that the ISP does not possess the needed level of finances or resources to have the "ability" to supervise and control subscriber activity and that, when paid a flat-fee for service, does not have the direct financial interest needed for liability to attach. Contributory Liability 13. In addition to granting exclusive rights over creative works, the Copyright Act grants copyright owners with the exclusive right to "authorise" the exercise of those rights.[22] The authorisation right is explicitly mentioned in the Act to avoid any question of contributory infringement for those who do not infringe the copyright themselves, but authorise others to do so.[23] Although the Act does not mention "contributory infringement," courts have read the provision similarly and considered whether an ISP can be liable for providing services and equipment to the infringer.[24] 14. Contributory liability is the most likely way in which courts will continue to find ISPs liable for subscriber infringement. Contributory liability requires the ISP to have actual knowledge or strong evidence of, or materially contribute to, the infringing conduct of another.[25] For contributory negligence to attach, courts have held the ISP must have substantially participated in the infringement, therefore simply selling a service or good that will be used to infringe is insufficient for contributory liability.[26] 15. Courts differ on when an ISP must remove material or face liability, sometimes resulting in cases where ISPs permit actual infringement. For instance, Netcom holds that ISPs are not liable for contributory negligence unless the subscriber has no plausible claim of non-infringement and the ISP "substantially" participates in the infringement.[27] Netcom also recognised that where difficult to verify infringement, the operator would have a defence against contributory infringement.[28] Other courts, however, hold ISPs liable if they fail to act once they receive information sufficient to cause a reasonable person to investigate.[29] This implies that ISPs will become risk averse and needlessly remove non-infringing material, potentially creating 1st Amendment problems as well as increasing litigation costs for the innocent party. 16. Before the DMCA, the law governing contributory liability for ISPs was far from settled. Courts in different jurisdictions differed in their assessment of liability and blame, creating a situation where one ISP could be sued in multiple jurisdictions and be liable in some jurisdictions and held to be completely blameless in others. A situation such as this could not be tolerated. Overview of Pre-DMCA Law 17. The American law regarding ISP liability for subscriber infringements developed to provide in effect that if an ISP receives no money from subscriber behaviour, then it avoids having to monitor subscriber activity.[30] However, if the ISP receives knowledge or strong facts indicating an infringement (through compliant or voluntary investigation), then it must investigate and discontinue service if it confirms a strong case for infringement. There is no guarantee, however, that courts will continue this pattern. The uncertainty in the law caused providers to be more risk averse than needed, occasionally suspending service when no copyright infringement occurred. 18. Controversy has typically arisen when a copyright owner informs an ISP of the alleged infringing activity of a subscriber. ISPs are then faced with the dilemma of whether to terminate a customer's service based on what could be erroneous information, which in many cases is lodged in retaliation against a legitimate Web-based competitor, or ignoring the information and exposing itself to contributory liability. ISPs attempted to protect themselves by requiring substantial documentation from the alleged infringement victim. Some also required the victim to directly contact the alleged infringer in an attempt to settle the dispute before contacting the ISP. This proved impossible in some cases, such as when infringing materials are anonymously posted on the Internet. Alternatively, ISPs who terminated service based on a mere claim of infringement found themselves the target of litigation initiated by a customer for breach of contract, interference with contract, and interference with prospective economic advantage. This uncertainty as to ISP liability, and how ISPs should conduct business, prompted Congress to act in an attempt to add clarity and certainty to the law.[31] Digital Millennium Copyright Act DMCA "Safe Harbours" 19. The DMCA, signed into law on 28 October 1998, amended copyright law to provide limitations for ISP liability, allowing them to now avoid both copyright liability and liability to subscribers by following the specific guidelines set out in the Act.[32] Title II of the DMCA builds on existing case precedent in an attempt to provide greater certainty to ISPs concerned over their liability resulting from subscriber copyright infringements by establishing strong incentives for the ISP and copyright owners to work together in detecting and dealing with online copyright infringements.[33] The DMCA changes judge-made law, but does so by leaving existing laws unchanged while adding new procedures allowing ISPs to escape liability provided they adopt specified policies in the Act.[34] 20. Specifically, Title II limits ISP liability for four general categories of activity: (1) transitory digital network communications;[35] (2) system caching,[36] (3) information residing on systems at the direction of users;[37] and (4) information location tools.[38] In order to qualify for the limitations, or "safe harbours", an ISP's participation in the alleged infringing activity must fall within the categories of the Act. 21. An ISP is not liable for transmitting copyrighted information if: (1) the transmission of the infringing material was not initiated by the ISP; (2) the transmission is carried out through an automatic technical process without hands-on selection of the material by the ISP; (3) the ISP does not personally select the recipients of the material except as an automatic response to the request of another person; (4) no copy of the infringing material is made by the ISP in a manner accessible by customers other than the intended recipient; and (5) the ISP does not modify the infringing material.[39] In other words, an ISP is not liable for the transmission of infringing data through its server as long as the server transmits the information automatically and the ISP does not alter the content (regardless of whether the ISP knew or had reason to know that the information infringed copyright). 22. Moreover, the DMCA relieves ISPs from direct liability for their passive transmission, reception, or temporary storage of material in their networks provided the they adopt policies for terminating subscribers who are repeat offenders and implement industry-developed technical measures used by content providers to protect their work.[40] 23. To escape vicarious and contributory liability, ISPs must adhere to the two requirements listed above,[41] but must also adhere to two additional requirements. The ISP must designate an agent for receipt of statutorily prescribed formal complaints of copyright infringement[42] and follow the prescribed method for handling the complaints.[43] 24. Subscriber infringements resulting in temporary storage on the ISPs network (browsing websites and e-mails not retained) are governed the same way as direct infringements. However, if long-term storage of material occurs, such as hosting a website, chat rooms, or information location tools, such as hypertext linking, then ISP liability is governed by a "red flag" provision that eliminates liability for monetary relief if the ISP meets the following conditions: (1) the ISP does not have actual knowledge that the material/activity is infringing,[44] (2) in absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent,[45] or (3) if upon obtaining such knowledge or awareness, the ISP acts expeditiously to remove or disable access to the material;[46] and (4) the ISP does not receive a financial benefit directly attributable to the infringing activity, where the service provider has the right and ability to control such activity,[47] and (5) responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity.[48] 25. This provision generally corresponds to the doctrines of contributory and vicarious infringement, as liability is conditioned on "actual knowledge" or "awareness" of facts that make the infringement "apparent." However, ISPs can avoid liability when knowledge or awareness is imparted to them by removing or disabling access to the infringing material. The section also requires the ISP receive no direct financial benefit in cases where the ISP has the "right and ability to control" the subscriber's activity and mandates that ISPs must have a disability provision upon receipt of a statutorily prescribed formal notice by the ISP's designated agent.[49] If the above is followed and the material is removed, the safe harbour is preserved. 26. The DMCA operates to exclude ISPs from monetary liability for disabling or removing material in good faith, even if the material is not violating copyright. If ISPs receive information alerting them to allegedly infringing material and they fail to remove the material, however, the safe harbour provisions are jeopardised and the ISP may be monetarily liable to the copyright holder for the infringement.[50] In practice, this results in the ISP removing material every time a content provider properly complains. There is a risk of the subscriber suing the ISP for wrongfully removing their material, however, the DMCA insulates ISPs from monetary damages as long as they notify the subscriber that the material has been removed.[51] DMCA Case Law 27. To date, only a few courts have considered the relevant provisions of the DMCA. The most notable litigation is the series of cases involving Napster, a software program designed to allow users the ability to share music files over the Internet.[52] The Napster litigation began on 6 December 1999, when A&M Records and seventeen other record companies filed a complaint against Napster for contributory and vicarious copyright infringement.[53] 28. The plaintiffs alleged that Napster knew of and failed to prevent its users' unauthorised reproduction and distribution of the plaintiffs' copyrighted music.[54] In July 2000, the district court hearing A & M Records v Napster, Inc,[55] refused to consider Napster a "passive conduit" of information and refused to grant Section 512(a) safe harbour protection.[56] Instead, the court granted the plaintiffs a preliminary injunction[57] prohibiting Napster from "engaging in or facilitating others in copying, downloading, uploading, transmitting, or distributing" the plaintiff's copyrighted works.[58] 29. Even assuming that Napster was a service provider which transmits information without modifying its content,[59] the court refused to consider Napster's conduct "passive" and refused to consider Napster simply a "conduit" for copyright material for two reasons. First, the court held Napster's role in the transmission of MP3 files does not occur through Napster's system, as required in the Act.[60] In other words, Napster allows users to locate and directly exchange MP3 files by routing the request of a user to another user's browser instead of transmitting the files through its system, meaning although the connection could not take place without Napster's services, the transmission over the Internet is directly between the requesting and host users.[61] Therefore, the court found section 512(1) is not applicable, as it only applies to providers "transmitting, routing or providing connections for, material through a system or network controlled or operated by or for the service provider."[62] 30. Second, the judge ruled Napster did not comply with the provisions in Section 512 requiring "service providers" to implement take-down provisions for users who repeatedly violate copyright laws or implement software which would distinguish and block the transmission of the copyright material on the Napster system.[63] 31. In February 2001, the U.S. Circuit Court of Appeals largely affirmed the District Court's findings,[64] specifically holding that Napster had infringed copyright and that neither protection under the DMCA or the "fair use" doctrine could be applied.[65] The Court further ruled that Napster must prevent users from gaining access to copyrighted content available from other users and remanded the case to a lower court for a narrowly crafted injunction.[66] The decision forced Napster to shut down operations and effectively left Napster to die a slow death.[67] Evolution of the DMCA 32. ISPs need not comply with the provisions set out in the DMCA. Those ISPs who do not comply with the DMCA are not automatically liable to the copyright owners, but instead are simply subject to existing judge-made law. Adhering to the DMCA provisions, however, provides the ISPs a guarantee of nonliability. Not surprisingly, a majority of ISPs choose to follow the DMCA for that reason, even though it offers little relief from liability that does not already exist.[68] Thus, while the DMCA may not add much to the law, it does strengthen and clarify procedures that assist parties' understanding of the law. 33. To the extent that society wants to protect content providers interests, the DMCA is a success. Content providers can inexpensively and quickly get material they believe is infringing off the Internet. The value of the copyright is preserved and the incentive to create maintained. Moreover, ISPs face no liability for subscriber acts and user access remains plentiful and inexpensive. 34. On the other hand, to the extent society cares about justice and fairness, certain DMCA provisions may be problematic. The Act's effect on free speech is troublesome. Obviously, the existence of a copyright implies a restriction of speech rights, but acknowledgment and protection of the creator's rights easily justifies that restriction. However, in regards to the Act, it is the enforcement of those rights that may be problematic. The Act gives content providers an opportunity to silence communication and remove material which is not infringing copyright. The DMCA exposes ISPs to the risk of losing the safe harbours with but an allegation of infringement. Although the content provider, in its complaint to the ISPs, must be specific and clear about what is being infringed, the statute only requires a "good faith belief" that an infringement exists. A "good faith belief" falls short of solid evidence of infringement, therefore the ISP is forced to remove material whenever they receive a complaint or lose its safe harbours. This scenario potentially creates 1st Amendment problems.[69] 35. In addition, the DMCA requires the material be kept off the server during the review process. This effectively grants ISPs the right to give content providers temporary restraining orders and a preliminary injunction without a hearing. In cases where infringement is unclear, this, coupled with the requirement of a "good faith belief," creates a judgment against speech with non-conclusive evidence and no hearing. 36. Moreover, enforcement of the above provisions may create an unnecessarily high financial burden on the individual or company attempting to enforce or protect its right to free speech. The processes outlined in the Act could be costly for the copyright holder, the ISP, and the subscriber. 37. The delicate act of balancing personal rights and fairness with expediency, protection and clarity is a difficult issue for legislators. The drafters of the DMCA clearly favoured the practicality a of clear, prescriptive Act rather than an Act which provided more recognition of free speech issues, litigation costs, and more general issues of fairness and justice. 38. While case law involving the DMCA is scarce, the law appears to be working as contemplated. The Act is designed to exempt ISP liability for subscriber infringements of copyrighted material where the ISP does not participate in the infringement, have control or knowledge of the infringing activities, and does not financially benefit from the activity. Moreover, the Act is designed to balance the incentive to create with the modern realities of information dissemination over the Internet. To date, the designs and goals of the Act appear to be working as contemplated and it is the author's opinion that the Act should not be modified until the case law is more fully developed. Australia Pre- Digital Agenda Law Telstra v APRA 39. Not surprisingly, the case law and clarity of ISP liability for subscriber copyright infringements is less developed in Australia than in the United States. The lead case, Telstra v Australasian Performing Rights Ass'n (APRA),[70] occurred when Telstra played music (in which APRA owned copyright) to persons on hold on the telephone. The majority of the High Court held Telstra infringed APRA's right to cause the works to be transmitted to the subscribers by a diffusion service (when the caller used a conventional phone).[71] While this case does not involve ISPs, it is the leading authority on the diffusion right. Subsequent to this case, APRA based its claim against ISPs on this right.[72] 40. The three to two majority stated there were three elements of s 31(1)(a)(v) which must be satisfied to prove a diffusion right violation. First, there must be a diffusion service. Section 26(1) provides a diffusion involves "the transmission of the work or other subject matter in the course of a service of distributing broadcast or other matter ... over wires, or other paths provided by a material substance." The majority held that the unwanted music transferred over telephone lines constituted such a service.[73] 41. Second, the work must be transmitted to the subscribers of the service. In Telstra, the music is being transmitted to the people who phoned Telstra, not the company that subscribes to the music on hold service (Telstra). However, since the music "service" is incidental to their purpose of business, s 26(5) deems the subscribers to the telephone service to be subscribers to the diffusion service. Therefore, the music was transmitted to the premises of the (deemed) subscribers of the music service.[74] 42. Third, the alleged infringer must have caused the transmission of allegedly infringing material. Section 26(2) provides the person operating the service is deemed to be the person causing work to be transmitted. In addition, s26(4) states, the "person who undertakes to provide the service to subscribers in agreements with them" is taken to be the "person operating the service." Since the majority deemed the callers to have an agreement with Telstra by which Telstra provides the music on hold service, Telstra is the "person operating the service" and "caused" the transmission.[75] 43. Therefore, Telstra was liable for the playing of music-on-hold, even though it exercised no control in determining the content of the music played. APRA v OzEmail 44. While the Telstra litigation was ongoing, APRA notified several ISPs alleging that they were infringing the diffusion right of the musical works which APRA owned.[76] APRA demanded a $1 license fee per subscriber and decided to litigate a test case when ISPs refused to accept liability or pay the fee.[77] On 24 March 1997, APRA filed suit against one ISP, OzEmail.[78] This case would have authoritatively decided the issue of ISP liability in Australia, but was settled before trial.[79] 45. Under the three requirements under s31(1)(a)(v) set out by Telstra, APRA's case against OzEmail probably would have been successful. First, an ISP is unquestionably involved in a diffusion service, as its main purpose is to transfer material from the Internet to subscribers.[80] This transfer typically takes place over telephone lines. Therefore, the transfer would qualify as a "distribution" over "wires" under s26(1).[81] The second requirement, that works must be transmitted to the premises of subscribers, is easily met. Section 26(5) is not needed to deem subscribers, as users enter into a contract with the ISP to provide services to their premises. Third, the ISP has caused a transmission because they are "operating a service." Again, because a contract between the ISP and user exists, s26(4) is satisfied without the need to use s26(5) to deem an agreement. Authorisation 46. Some commentators claim that ISPs might have also been liable for authorising copyright infringement.[82] Section 13(2) of the Copyright Act states authorising others to do an act in relation to the copyright in a work is one of the copyright owner's exclusive rights. Without the license of the copyright owner, authorising the doing of any act comprised in the copyright of a work (s 36(1)) or Part IV subject matter (s 101(1)) amounts to a direct infringement of the copyright. In this context, to authorise an infringement means to "sanction, approve, [or] countenance" the infringement.[83] 47. Authorisation is similar to American contributory and vicarious liability in that for an ISP to be liable for authorisation, it must know or have reason to suspect that infringements are taking place and have the ability to control the content.[84] Given the widespread publicity of Internet piracy, almost everyone "knows" Internet infringements are commonplace. ISPs, however, do not have "knowledge" as to actual subscriber infringements and liability only attaches to an ISP if they are deemed to have control over content. In other words, they must have the power to prevent the infringement.[85] 48. The term authorisation implies that even passive involvement in the infringing conduct, along with knowledge of the circumstances giving rise to the infringement, qualify as authorising the conduct. Taking UNSW v Moorehouse as an example, UNSW was found to have authorised the reproduction of literary work by placing photocopiers in a library for unrestricted use, even though UNSW did not have actual knowledge that infringements were taking place.[86] The Court held its ability to prevent the infringements and inaction in known circumstances of infringement amounted to authorisation.[87] 49. Even though one is not liable for simply providing equipment to later be used unlawfully, APRA warned the ISPs that inaction may be seen as encouraging misuse.[88] The fact that ISPs provided a service which was used for infringing copyright and the fact that ISPs were aware of the infringements would seem to indicate that APRA would have been successful in its case against OzEmail. The above factors, however, ignore two key points. First, ISPs do not have the financial or technical ability to monitor and control subscriber behaviour. Second, telecommunications legislation prevents ISPs from monitoring or intercepting communications on their networks, thereby possibly denying ISPs the power to prevent infringements.[89] Therefore, ISPs probably would have escaped liability for authorisation under Pre-Digital Agenda law.[90] As this section illustrates, however, the issue was far from settled and open to debate. Evaluation 50. While ISPs most likely would have escaped liability using authorisation principles, ISPs would have been liable for infringing behaviour of subscribers under the s31(1)(a)(v) requirements set out by Telstra. The test seems applicable to ISPs and the issue would have been authoritatively settled had OzEmail not settled before trial. 51. It is clear pre-Digital Agenda law would have hampered Internet development and increased the cost of Internet access to users. The government needed to lead on this issue and responded after a long and tortuous legislative process. Digital Agenda Act Provisions of the Act 52. In August 1994 Australia began one of the most ambitious legislative programs in its history with the release of the Copyright Convergence Group Report, which recommended the abolition of the diffusion right and the introduction of a broad-based, technology-neutral right to authorise transmissions to the public.[91] 53. Later, after WIPO adopted two treaties pertaining to the digital domain, Australia released an Attorney-General Discussion Paper proposing a broad-based technology-neutral transmission right and a right of making available to the public, designed to cover interactive on-demand services.[92] In relation to ISP liability, the Paper proposed the issue be determined by authorisation principles and not by a new provision dealing with liability for the exercise of the transmission or making available right.[93] 54. In April 1998, the government changed its policy and indicated ISPs would not be liable for copyright infringement "simply because the infringement occurs on the facilities of the carrier or ISP."[94] 55. The Copyright Amendment (Digital Agenda) Act 2000 (Digital Copyright Act),[95] reflects the 1998 position and aims to promote certainty for communication providers.[96] 56. The Act is intended to provide greater certainty about ISP responsibilities to copyright owners. Accordingly, the Act includes exceptions for temporary reproduction or copies of subject matter as part of the technical process of making or receiving a communication.[97] Since numerous temporary or incidental copies of copyright material are made in the course of making available and electronically transmitting material, this exception was necessary for the continued growth of the Internet.[98] Moreover, the exception for temporary copies includes the browsing of copyright material online, thus excluding users from liability for browsing.[99] Further, reproductions made in the course of some caching are excluded from liability.[100] 57. The Act also responds to ISP concerns regarding the uncertainty of liability for copyright infringements by customers. The Act limits and clarifies the liability of ISPs in relation to both direct and authorisation liability. In doing so, the Act overcomes the Telstra decision and protects ISPs who do not determine the content of the material on their server.[101] 58. By immunising ISPs against liability for authorising infringement and contributory negligence, ISPs escape liability for merely providing the facilities to enable infringements to occur.[102] Further, the Act provides an inclusive, non-exhaustive list of factors to assist in determining whether the authorisation of an infringement occurred. This codification of authorisation principles from Moorehouse[103] provides greater certainty for all players in the digital environment. The list, contained in subsections 36(1A) and 101(A), include the following: (1) the extent (if any) of the person's power to prevent the infringement; (2) the nature of the relationship between the person and the infringer, and (3) any reasonable steps (including complying with a relevant industry code of practice) that the person took to prevent the infringement.[104] 59. Liability for direct copyright infringement would also be limited to ISPs responsible for "determining the content of the communication."[105] Because ISPs generally allow communications to pass through their servers without "determining" its content, the theory is that ISPs will not violate the provision by providing the network and will only violate the provision if they take some control over allegedly infringing content, such as by editing communications. 60. The Act states the amendments, combined with the Internet Industry Association of Australia's Code of Practice, provides certainty and liability avoidance to ISPs.[106] Interestingly, however, the Act does not exclude rights holders from taking action against ISPs that encourage, facilitate, and provide means for infringement. In failing to insulate ISPs from these actions, the government implicitly allows for authorisation actions against ISPs which facilitate the unauthorised reproduction and communication of copyright services (i.e.- Napster-like software).[107] In addition, the Code of Practice does not even contain the word "copyright." The Code is designed to handle defamation and pornography problems, not copyright infringement. The Act's reference to the Code can only be due to oversight and ignorance.[108] Evaluation of the Act 61. The amendments provided by the Act are similar to American, European, and WIPO standards,[109] and even with their problems, should provide sufficient coverage to limit ISP exposure to liability resulting from subscriber copyright infringements. The Act provides that ISPs are not liable for providing the facilities used to commit infringements. In addition, ISPs are not directly liable for communicating infringing material, provided they do not determine the content of that material. Moreover, ISPs face no authorisation liability in certain instances and authorisation liability is avoided in all circumstances providing the ISP has little or no power to prevent the infringement, has no strong relationship with the infringer, and takes reasonable steps to prevent or avoid further infringement. 62. The Act, however, has several substantial shortcomings which may pose problems in the future. The Acts' protections are intentionally not as complex or detailed as the American protections. The government reviewed the highly detailed US provisions and decided the detail would "add an unnecessary level of complexity to the Act."[110] For this reason, the Australian Act uses a combination of authorisation principles and express limitations of liability to regulate the area. 63. This approach allows ISPs to rebut authorisation claims, and as ISPs have little or no ability to monitor subscribers, they should escape liability. However, while the Explanatory Memorandum to the Digital Agenda states that only ISPs which encourage, facilitate and provide the means for copyright infringement will not be protected by the Act, the meaning of such a statement is unclear and can only be determined through judicial interpretation. Additionally, in not providing blanket liability as a starting point, Australian ISPs will be exposed to more litigation, costs, and liability than American ISPs. ISPs will simply pass the increased costs on to the consumer in the form of higher service fees. 64. The definition of "knowledge" and correspondingly, ISPs liability resulting from knowledge, could be another problem. In applying the authorisation principles established in Moorehouse, where an ISP knows or should know that infringing activity is taking place, it must take "reasonable measures" to protect itself. However, what constitutes a "reasonable step" is undefined. Moreover, the Act fails to clarify if an ISP which takes precautionary steps will be found to have control over the content of the communication, thus breaching 22(6) and possibly exposing itself to direct liability for copyright infringements. [111] However likely Australia is to follow the American lead on this issue, the fact still remains that the Australian Act lacks clarity in this respect and allows for a wide range of varying judicial interpretation. 65. Another problem may be its lack of specificity regarding procedures for removing infringing material. While the US Act clearly outlines these procedures, the Australian Act remains silent on the issue, simply stating the ISP must take "reasonable steps" to prevent or avoid the infringement. It would seem this would mean removal of the infringing material, but could it mean simply sending a letter to the subscriber asking for the material to be removed or even investigating and removing the material only when it has been found to be infringing. The failure to define "reasonable" leaves the term vague and open to judicial interpretation. 66. In addition, unlike its American counterpart, the Act is silent on the extent of ISP liability for removing non-infringing material and leaves undefined any recourse resulting from a wrongful takedown. Interestingly, the Broadcast Services Amendment (Online Services) Act 1999, outlines notification and takedown procedures resulting from offensive material being posted on the Internet and levies fines for those refusing to comply with the procedures.[112] The regulation of material in that Act cannot be imparted to copyright infringements, however, as that Act specifically only deals with RC/X rated content.[113] The lack of procedural guidance in the copyright area is problematic and the lack of clarity inevitably invites confusion and litigation. 67. One apparent advantage of the Digital Agenda over the DMCA is the Australian's ability to hold ISPs liable if it becomes legally and technologically feasible for them monitor infringing activity on their servers.[114] Due to the wording of the DMCA, this is not capable in the United States and an amendment will be needed to supplement the Act.[115] 68. Overall, the Digital Agenda is based on a strong foundation but lacks some of the intricacies needed for it to effectively operate against a number of potential challenges. While judges may interpret the Act's less defined sections to operate like that of the United States, until that time comes no one can be certain of the exact meaning of several sections of the Act, therefore leaving the status of ISPs' liability uncertain in several key areas. Nevertheless, the Act improves the situation for ISPs and users and most likely will effectively allow rights holders to enforce their rights. In addition, the Act ensures that an appropriate balance is maintained between the rights of copyright owners and the rights of copyright users. While the end result is likely to mirror that of the American Act, the lack of formality and procedures may cause problems, litigation, and increased costs to the ISPs and the consumer. Conclusion 69. The rapid expansion of the Internet, coupled with the law remaining static, created numerous problems for copyright holders attempting to protect their works. Traditional protections proved ineffective against actual infringers and thus, ISPs were forced to defend themselves against claims of copyright infringement. Both the American and Australian governments recognised that copyright owners should be protected and compensated for infringements occurring over the Internet, however, they also recognised that ISPs should not be held liable for their subscribers' copyright infringements where they simply provide a service. Therefore, both governments introduced schemes designed to encourage further development of the Internet whilst maintaining the balance between encouraging creativity and allowing public access to information. 70. The American scheme is a complex and intricate set of rules and procedures that precisely guide ISP action. Their Act starts from the position of immunity for ISPs, provided they have followed procedure, and clarifies and stabilises the law. The DMCA should curb needless litigation and ISPs will not have to figure such expenses into the price of their server. The Act's only flaw may be its treatment of removing allegedly infringing material, which potentially may create 1st Amendment issues. As case precedent develops, legislators may find it necessary to review these provisions in the Act. 71. On the other hand, the Australian scheme is more of a general guideline, lacking many of the nuances of its American counterpart. Certain sections, including its treatment of authorisation liability as well as its lack of guidance regarding the removal of allegedly infringing material, appear troublesome. There presently is no case law on the issue and while the laws will likely develop along lines similar to the United States, no one can authoritatively reach that conclusion. Regardless of how the courts will rule on the issues, the mixture of authorisation principles and express limitations (in certain circumstances, as opposed to the American starting point of immunity for ISPs), leaves the probability of litigation in the Australian context high. Moreover, the Act's vague stance on numerous issues only increases the probability of litigation. Amendments appear necessary to clarify the troubling provisions in the present legislation. Notes [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. [103] 133 CLR 1. [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.