July 2004

IP & IT law update - new case law on copyright infringement

Copyright owners take note (and infringers beware) ...

The Copyright Act 1968 provides remedies for a copyright owner when someone infringes the owner's rights under the Act, for example by reproducing copyright material without permission.

A copyright owner may initiate legal proceedings against the infringer, and the Act provides for the owner to be compensated in civil proceedings, usually by awarding damages for losses caused by the breaches of the Act (or an 'account of profits' made by the infringer).

In addition to compensating the copyright owner, we are seeing civil Courts more frequently awarding an amount (called 'additional damages') which is intended to deter other potential infringers, and in this situation the copyright owner receives a windfall.

Importing, selling, or even offering for sale in Australia, an article that is the subject of copyright can constitute both a breach of the owner's rights under the Act and a criminal offence punishable by imprisonment after a successful prosecution.

Despite the 'fast forward' text which precedes many rental movies (and is included in the 'fine print' in many software licences), it is not often remembered that the Act also makes copyright infringement a criminal offence.

Most notably, media reports earlier this month trumpeted that the Brisbane Magistrates Court had found Mr Sydney Grant Priscott guilty of charges relating to importing, possessing and selling counterfeit DVDs.

Mr Priscott was sentenced to nine months' imprisonment (with three months to serve), a recognisance of $1,500 and five years conditional good behaviour.

To get a feel for the penalties imposed in this case, it is worthwhile noting the Mr Priscott was a true 'bootlegger', who sold counterfeit DVDs at the Eumundi Pavilion Markets in Queensland.

This is the first time an Australian has been imprisoned for offences under the Copyright Act, and we would expect a large-scale 'commercial' infringer to receive even more harsh penalties.

In light of recent criminal prosecutions for copyright infringement, for example in relation to the copying of music digitally via the Internet, and particularly the sentence imposed on Mr Priscott, we can expect to see more judgments on this topic being handed down by Australian Courts.

The lesson for infringers is clear: don't do it ? the risks are too great!

And for copyright owners: don't forget that you have a powerful tool at your disposal, if you want to stop infringers.

If you import, sell or offer for sale in Australia, any articles that are the subject of copyright, you should ensure that you have permission from the copyright owner in Australia (or come within one of the exceptions found in the Act).

She's apples ... a new US case also bolsters copyright owners' rights

Australian Courts have not had to deal with the enforceablilty of so-called 'browsewrap' or 'clickwrap' copyright licences (which you will probably have seen when downloading software from the Internet) and are not bound to follow decisions of Courts in the USA.

However, a recent USA decision provides valuable guidance as to how our own Courts might deal with the issue. A brief recap of some relevant decisions is in order ...

In 2002, a US Court refused to enforce terms in Netscape's 'offer' ('licence') to use their software. The terms were posted on the web site from which users downloaded the software, but there was insufficient evidence that a user had actually seen the relevant terms. This was because users had to scroll down their screen in order to see the terms, and there was no need to do so before downloading the software.

An earlier decision in the USA also went against the copyright owner, Ticketmaster. In that case, the user might have been aware of the relevant terms on which information was provided from Ticketmaster's web site, but the Court (in rejecting Ticketmaster's application for a court order to protect their intellectual property) found there was insufficient evidence of the user accepting the terms owing to the lack of an 'I agree' checkbox for the user to 'tick'.

Now, in what has been described as a landmark decision on browsewrap licences, the USA Court of Appeals for the Second Circuit (a very influential jurisdiction in the USA, roughly equivalent to the Full Court of our own Federal Court) has given further hope to copyright owners operating in the e-commerce world of the Internet.

The Court upheld an application by Register.com Inc for an order against Verio Inc. The defendant accessed a database of domain name registrant contact information (maintained by the plaintiff and freely available for searching via the Internet), as a source for marketing - not only by spam emails, but also unsolicited direct mail and telephone marketing. Register.com's terms of use were changed when it realised what Verio was doing, and ultimately provided the database was not to be used for mass solicitations "via direct mail, electronic mail, or by telephone".

The Court distinguished the earlier Netscape and Ticketmaster decisions, and expressly held that it was not necessary for a user to click an 'I agree' checkbox in order to form a legally enforceable agreement via the Internet. The judgement noted that:

"no doubt in many circumstances, such a statement [ie, an 'I agree' checkbox] is essential to the formation of a contract. But not in all circumstances. While new commerce on the Internet has exposed courts to many new situations, it has not fundamentally changed the principles of contract. It is standard contract doctrine that when a benefit is offered subject to stated conditions, and the offeree makes a decision to take the benefit with knowledge of the terms of the offer, the taking constitutes an acceptance of the terms ..."

Unlike the users in the Netscape case (who visited the web site once to download software), Verio was acting commercially, and performing regular, multiple and successive searches of the database maintained by Register.com. The Court found that Verio knew the terms of Register.com's terms of use, and could not rely on an argument that it had not agreed to the terms on which the database was made accessible via the Internet.

The Court likened Verio's position to that of a visitor who sees apples offered from a fruit stand for 50 cents a piece, then takes an apple. To quote the judgement again: "the visitor ... owes 50 cents, regardless of whether he did or did not say, 'I agree'."

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