Facebook seeks to raise $5 Billion in its initial public stock offering, making it the largest Internet IPO on record.  It is believed that its stock offering will value the company $75 and $100 billion.  Mark Zuckerberg, however, will maintain his control over Facebook with voting power of almost 60 percent of total shares.  Meanwhile, Facebook is coming under a siege of patent lawsuits.  In 2011, Facebook was named as a defendant in 22 patent infringement suits.

Google announced its new privacy policy, which is set to become effective on March 1.  The new policy will allow it to track users’ activities across YouTube, Gmail, its search engine, and nearly all of its other sites.  Users will not be able to opt out, which may trigger more scrutiny from federal regulators.

On January 23, the Supreme Court held that attaching a GPS device to track a vehicle constitutes a search under the Fourth Amendment and requires a warrant.  The ruling is considered a victory for privacy rights in the age of advanced technology, but some argue it was too narrowly reasoned on the basis of the physical intrusion of attaching the device.

Congress indefinitely shelved the controversial antipiracy bills SOPA and PIPA after over 7,000 websites, including Wikipedia and Google protested the bills, handing a crushing blow to the traditional media industry.

Following the shutdown of file-sharing site Megaupload last month and arrest of 7 company employees, Federal prosecutors announced that Megaupload user data would be deleted as early as Thursday (Feb. 2).  However, a nonprofit group stepped in at the last minute, announcing on Wednesday that it would work with data-storage providers to create a website that will allow legitimate Megaupload users retrieve their data.

Murphy had installed a Greek satellite company’s decoder card in her pub’s satellite TV system, allowing her access to the Greek telecasts of EPL games. As a result, her pub could show live soccer games at three in the afternoon–something other pubs, subscribing to English broadcast rights-holders Sky Sports and ESPN, could not offer. Sky/ESPN are obligated by their license with the EPL to black out EPL games played from 3-5 PM, a practice aimed at keeping fans in the stadiums instead of the bar stools and sofas across England.[1]

In addition to depressing attendance at matches, the use of foreign decoder cards strikes at the very foundation of the EPL’s broadcast business model: using a foreign decoder allows pub owners to get access to their soccer content at a fraction of the cost of domestic decoder. A public display subscription to domestic service costs a pub about $747 per month, whereas a subscription to NOVA (the Greek satellite provider) costs a fraction of that amount, about $184 per month. The ability to charge English subscribers a premium for their own domestic content has allowed the EPL to sell its domestic broadcasting rights for about $1 billion a year.[2]

This week’s ECJ ruling cut to the core of this business model: they ruled that the national law that made the use of such foreign decoder cards illegal was “contrary to EU law” in that it hindered a “completion of the internal market” for goods or services. Publicans like Ms. Murphy can thus no longer be stopped from (or fined for) ordering and using foreign decoders in their satellite receivers. They furthermore ruled that the EPL cannot circumvent these rules by inserting terms into their license agreements which would prevent broadcasters from selling decoders outside of their licensed territory. The scheme by which the EPL and its partners were able to extract a premium from English subscribers, according to the court “cannot be regarded as forming part of the appropriate remuneration” that rights-holders are due. In yet another potential blow to the EPL (and sports leagues throughout Europe), the court said (in what is likely dictum) that the EPL “cannot claim copyright in the Premier League matches themselves, as they cannot be classified as works” within EU copyright law. The ECJ said that only the anthem, on-screen logos, and other visual elements added by the EPL could constitute copyrightable works.

So what is the EPL to do? Its whole raison d’etre is to leverage the value of bundling the broadcast and sponsorship rights to top-flight English soccer and offer them to the highest bidders. The League took some comfort in the ECJ’s finding that the unique visual elements that the EPL tacks onto its broadcasts are subject to copyright protection. As a practical matter, this seems to be rather slight solace: once it is legal for the bartenders to buy and use these decoders in their pubs, preventing them from showing the part of the broadcasts that feature the League anthem or the League’s iconic logo seems like a chore indeed. As a legal matter, it would seem rather illogical for the EPL to be able to circumvent competition law by copyright protection what it cannot get through contract. As soccer commentators are apt to say in a close match, there is still “all to play for,” as the English court on remand might take a more favorable stance on the copyright issue and thus give the EPL the result they seek.

The First Sale Doctrine

The first sale doctrine was established by the Supreme Court in Bobbs-Merrill Co. v. Straus where a book publisher printed the following note on its copyright page: “The price of this book at retail is $1 net. No dealer is licensed to sell it at a less [sic] price and a sale at a less [sic] price will be treated as an infringement of the copyright.” The Supreme Court held that, under existing copyright law, copyright holders have the exclusive right of distribution over the “first sale” of their works, but further distributions are outside of their control.  The first sale doctrine was later codified in the Copyright Act.

As a legal principle, first sale strikes a balance between the rights of copyright holder and the rights of the owner of a copy of said material. The doctrine also embodies the general principle in property law that unreasonable constraints on alienation (gifting, selling, etc.) are void.

First sale also promotes the value of free access to information by making out of print copyrighted works widely available and lowering prices through the existence of secondary markets.

Many copyright owners justifiably dislike the first sale doctrine because it prevents them from maintaining a monopoly on their copyrighted works, and it enables secondary markets which tend to drive down prices.

The Vernor Decision and the Sale/License Distinction

The essential facts of Vernor are straightforward. Vernor purchased used software at a garage sale and attempted to sell it on eBay. The copyright holder, Autodesk, filed several DMCA take-down notices with eBay. After some back and forth, Vernor brought a declaratory action in Federal District Court to establish that his resale was protected by first sale doctrine.

The primary legal issue was whether the transfer of Autodesk’s software to the customer who had sold it to Vernor constituted a sale or a licensing. This is the legal hook: if all that was transferred was license, the “first sale” has not occurred and the doctrine does not apply.

The licensee/owner distinction was not clear law prior to Vernor. The District Court in Vernor, determining that there were conflicting precedents on point, applied the 9th Circuit case United States v. Wise and found that the critical factor in the sale/license distinction was whether the purchaser had a right to possess the copyrighted work perpetually or whether he was required to return it to the copyright holder. The court found the right to perpetual possession and thus held that Vernor was covered by the first-sale doctrine.

On appeal, the 9th Circuit held that the license/ownership distinction depended on only three factors: (1) whether the copyright owner specifies that a user is granted a license (2) whether the copyright owner significantly restricts the user’s ability to transfer the software (3) whether the copyright owner imposes notable use restrictions. Applying this test to Autodesk, the court found that the transfer in question was a mere transfer of license and, thus, that Vernor was not protected by the first sale doctrine.

Criticism of the Vernor Test

The problem with the Vernor test is clear: a copyright holder can completely avoid the first sale doctrine by using the term “license” coupled with the “significant” transfer and use restrictions. Thus, under Vernor the application of first sale doctrine depends solely on the discretion of the copyright holder and what “magic words” he chooses to place in the license agreement.

The Vernor test completely undermines the first sale doctrine and all of its underlying policies. First sale is meant to balance between the rights of copyright owners and the rights of owners of copies; Vernor undermines that balance by making its applicability contingent on a copyright holder’s preference. Under the Vernor test, if Bobbs-Merrill Co. had written its note slightly differently, referring to the purchaser as a licensee, and imposing more use and transfer restrictions, the case would have come out the other way—an absolutely preposterous result.

And finally, Vernor effectively negates the principle against unreasonable restrictions on alienation as they apply to copyrightable works. A copyright holder only has to write the “magic words” in a licensing agreement to prevent resale. Thus, there is little standing in the way of copyright holders from unilaterally destroying secondary markets—the used software, book, DVD, CD and videogame market—and maintaining a monopoly on its work.

Currently, the plaintiffs in Vernor are petitioning for an en banc rehearing in the 9th Circuit. If denied, they will likely take it to the Supreme Court. Vernor as it stands today has the potential to fundamentally change not only the legal relevance of the first sale doctrine, but the entire economic, social and legal landscape for copyrightable works.

Content Which Falls Under Fair Use Is Not Infringing

One of the elements that Lenz had to prove for her 512(f) claim was that Universal knowingly asked YouTube to take down a video that was not infringing. In its brief, Universal tries to claim that this can never happen when it argued that “because fair use is a defense to an otherwise infringing use, Universal could not – under any analysis – have made any misrepresentations (knowing or otherwise) when it notified YouTube that Plaintiff had incorporated “Let’s Go Crazy” into her video without authorization from the copyright owner.”

To understand this difference, it’s helpful to look at criminal law. Defenses to crimes tend to fall into two different categories: “I didn’t do it” or “I did it, but I had to.” One helpful analogy is to look at a self-defense argument in the case of murder. You are still admitting that you killed someone and that that is wrong, but you are also arguing that it should be excused for some other reason (generally that the person you killed was threatening you).

Similarly, Universal is arguing that each and every post that uses infringing content in any way, even those ways explicitly identified by the statute as fair uses, are infringements on copyright. They claim that fair use is an affirmative defense (the self-defense of copyright) which may excuse the infringement after the fact, but which does not change the legal status of the original use.

It is easy to see why Universal would seek such a ruling. If this were the case, Universal or any other copyright owner would not need to take any care when sending out takedown notices to ensure that the use was infringing. It could simply send out notices as it chooses and potentially rely even further upon automated processes to do so.

Fortunately, the judge pointed out, both in this decision and a prior one, that this seems to be clearly wrong. In the prior order, Judge Fogel states that “if copyright owners are immune from liability by virtue of ownership alone, then to a large extent Section 512(f) is superfluous.” This is clearly the correct decision. After all, fair use is even defined in the statute as non-infringing: “Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work…is not an infringement of copyright.”

No Requirement of Monetary Harm, But Must Prove Proximate Cause

This latest decision focused heavily on a discussion of what damages are available to a plaintiff in a case like this. Both parties put forward competing interpretations of the language of 512(f). The relevant language states that a party in violation of the section “shall be liable for any damages, including costs and attorneys’ fees, incurred by the alleged infringer, by any copyright owner or copyright owner’s authorized licensee, or by a service provider, who is injured by such misrepresentation, as the result of the service provider relying upon such misrepresentation in removing or disabling access to the material or activity claimed to be infringing, or in replacing the removed material or ceasing to disable access to it.”

Lenz argued that the phrase “any damages” should be interpreted to mean “any harm whatsoever” and points out that this language is broader than the “actual damages” language used in other areas of Title 17. Universal contested this reading, stating that the “actual damages” languages was meant as a contrast to statutory damages, not as a form of limitation.  Universal instead argued that, by analogy to common law fraudulent misrepresentation, damages should be limited to economic harm. It also further argued that the misrepresentation must be the proximate cause of the harm, due to the “as the result of” language in the passage above.

Judge Fogel’s decision ultimately draws from arguments put forward by both sides.  He agrees with Lenz on the issue of what damages may be considered, stating that “requiring a plaintiff…to demonstrate in addition not only that she suffered damages but also that those damages were economic and substantial would vitiate the deterrent effect of the statute.” The impact of this decision may be enormous. It’s likely that most plaintiffs who might suit under this section would be just like Stephanie Lenz: individuals whose personal videos were removed. There’s not likely to be economic harm suffered by such a plaintiff, and Fogel’s decision opens the way for such a plaintiff to sue and still recover for other harm, such as the harm to their First Amendment rights. As one of Lenz’s lawyers stated, “what’s important here is that someone who’s had their speech chilled can move forward and bring a lawsuit under 512(f).”

However, Fogel’s decision did place a significant burden upon such plaintiffs when he subsequently found that such damages “must be proximately caused by the misrepresentation of the copyright owner to the service provider and the service provider’s reliance on the misrepresentation.”  He pointed out that were this not the case, plaintiffs could show they have suffered harm merely by filing a suit and thereby incurring costs and fees.

The biggest constraint this puts on plaintiffs is that Judge Fogel interpreted this proximate cause requirement (combined with the fee shifting provisions already in place in 17 U.S.C. § 505) to mean that plaintiffs cannot recover attorney’s fees from after the litigation commences, since those fees are not proximately caused by the misrepresentation. This may end up taking the teeth away from 512(f), as most plaintiffs will not want to bear the brunt of their attorney’s fees when bringing such claims, especially since without monetary harm, their recovery is likely to be relatively low.

Now What?

While it’s unclear what larger impact this decision will have, it has already raised ordinary people’s awareness about the ways in which the provisions of the DMCA could impact their lives and demonstrated first hand what you can do if you experience a takedown. Statistics on YouTube currently indicate that the video has received over a million views and over a thousand comments, which demonstrates the degree to which people have been interested in this controversy. Stephanie Lenz herself seems to have become an activist in this area. Her personal blog indicates that this case has caused her to become interested and explore other topics affecting free speech and fair use. Though Stephanie Lenz may have suffered few monetary damages, it’s easy to see from her writings that she feels the harm to her speech rights very keenly.

Authorizing infringement

In a nearly two hundred-page judgment, Justice Dennis Cowdroy found that the applicant companies had succeeded in proving that users of iiNet’s services had “made available online,” “electronically transmitted,” and “copied” certain films. However, the applicants had failed to show that iiNet had “authorized” those infringements. The case centered around the use by iiNet’s customers of the peer-to-peer BitTorrent protocol to share movie files, in breach of the studios’ copyrights. The critical issue in the case was whether iiNet, by failing to take any steps to stop infringing conduct, authorized the copyright infringement by its users. Under Australian copyright law, authorizing the infringement of copyright by another is itself treated as an infringement.

Three step reasoning

There were three main steps to Justice Cowdroy’s reasoning:

1. He found that, though iiNet had knowledge of the infringements and did not act to stop them, this did not lead to a finding of authorization. Under the Australian law of authorization, there is a distinction between providing the “means” of infringement, and providing a “precondition” for infringement. Justice Cowdroy distinguished the present facts from earlier cases, including a 2005 Federal Court ruling in a case brought against the licensors of the Kazaa file-sharing software. In the Kazaa case, the software provided the “means” for infringement, whereas in the case of internet services, there did “not appear to be any way to infringe the applicants’ copyright from the mere use of the internet.” Here, the means of infringements at issue was the BitTorrent system, which iiNet had no control over.
2. AFACT had pushed for iiNet to implement a system of notification, suspension, and termination of infringing customers, but the judge found that this would not have been a “reasonable step” for the purposes of Section 101(1A)(a) of the Copyright Act 1968. This section provides that, in determining whether a person has authorized infringement, a court must consider, among other things, (a) the extent of the person’s power to prevent the infringement; (b) the nature of any relationship existing between that person and the infringer; and (c) whether the person took “any other resonable to steps to prevent or avoid” the infringement. The judge noted that “[t]he applicants appear to premise their submissions on a somewhat binary view of the world whereby failure to do all that is requested and possible to co-operate with copyright owners to stop infringement occurring, constitutes approval of copyright infringement. Such view is not the law. It is possible to be neutral. It is possible to prefer one’s own interests to those of the copyright owners.” (para. 504). iiNet could therefore not be held to be authorizing the infringements on the basis that they had failed to adopt a system such as the one urged by the applicants.
3. iiNet could not be seen as sanctioning, approving or countenancing copyright infringement, as it had done no more than to provide an internet service to its customers. In the Kazaa case the respondents intended copyright infringements to occur, and the software was deliberately structured to achieve this result. By contrast, in this case there was no evidence that iiNet “favored” infringement in its provision of access to the internet.

A disappointing ruling

The judge noted that the applicants would be disappointed by the ruling, as it was clear that infringement of their copyrights was occuring on a large scale, worldwide (para. 19). Yet this fact did not compel him to find authorization of infringement merely because “something must be done.” Australian law recognizes no positive obligation to protect the copyright of others, and the judge found that iiNet provides a legitimate communication service which is neither intended nor designed to infringe copyright (para.20). Justice Cowdroy is also reported to have remarked that “[i]f the ISPs become responsible for the acts of their customers, essentially they become this giant and very cheap mechanism for anyone with any sort of legal claim.”

The battle may not be over, however, as reports from before the ruling was issued suggest that AFACT may appeal the decision to the High Court of Australia, which could take another two years.

ISP liability in the United States

In the United States, secondary liability for copyright is dealt with as a matter of vicarious or contributory infringement, rather than “authorization” (though the concepts involved are similar). However, ISPs are protected from copyright infringement claims by Section 512(a) of the Copyright Act, which provides that service providers will not be liable for “infringement of copyright by reason of the provider’s transmitting, routing, or providing connections for, material through a system or network controller or operated by or for the service provider.” This section provides strong protection for ISPs, and likely explains why a case such as the one brought against iiNet in Australia has not been brought against a U.S. ISP.

Timeline

The first trial took place in 2007. A jury found that Thomas-Rasset (then simply Thomas) had “willfully” infringed and held her liable for $222,000 in damages. That figure came from a penalty of $9,250 per song, out of the $150,000 per song maximum permitted by the Copyright Act .

Thomas was granted a retrial because of a jury instruction that making a copyrighted file “available” was sufficient to show infringement. Federal Judge Michael Davis, who presided over the first trial, came to believe after appeal that his jury instructions were incompatible with Eighth Circuit precedent. Citing National Car Rental System, Inc. v. Computer Associates International, Inc. (8^th Cir. 1993), Judge Davis decided that the plaintiff had to show that defendant actually shared a file with a third party, rather than simply making the file available for sharing.

In the second trial in 2009, Judge Davis set aside a jury award of $1.92 million, calling it “monstrous” and pointing out that Thomas-Rasset did not make a monetary profit from her infringement. Davis reduced the damages to $54,000, allowing the parties to accept the award or proceed to a third trial.

The RIAA not only accepted the damages, but reduced them further in a settlement offer of $25,000. The RIAA’s terms allowed Thomas-Rasset to pay the award in installments to a fund for musicians. As a condition for the settlement, the RIAA said the judge would have to vacate his remittur (reduction) of the jury award.

Thomas-Rasset’s lawyers have announced her intention to reject this and any other settlement offer that requires her to pay damages. The RIAA’s deadline for accepting the offer was last Friday, January 29^th.

Issues

The major issue raised in this case is the constitutionality of the awards against Thomas-Rasset—and, by implication, future file-sharers like her. She intends to challenge the constitutionality of not only the $1.92 million jury award in the second trial, but also the judge’s reduced award. Even the reduced award, her lawyers contend, is unconstitutionally excessive: it is 2,250 times the usual $1 price of a downloaded song.

The RIAA is adamantly opposed to any finding that the judge’s awarded damages are unconstitutional. Moreover, the RIAA is trying to vacate the judge’s remittur because it is keen to prevent any precedent allowing judges to reduce jury awards in copyright infringement cases. That is why the vacature (making the original judgment legally void) of the remittur was the sole—and firm—condition of its settlement offer. For its absolute insistence on this point, the RIAA has been accused of bullying. Joe Sibley, one of Thomas-Rasset’s attorneys, recently described the situation as the RIAA trying to “scare” people into paying “exorbitant” damages. Nevertheless, the RIAA continues its attempt to vacate the remittur and thus keep the legal door open for million-dollar damages awards in file-sharing cases.

This trial raises another issue, namely what exactly it takes to prove infringement against a particular individual. Proving that songs were shared from a particular computer or IP address is often simple. However, proving that a particular user of that computer was the infringer is a different matter. Here, the files were shared from Thomas-Rasset’s password-protected computer at her IP address, using a username she had used for a number of years. The two juries evidently found this compelling evidence of Thomas-Rasset’s guilt, although Thomas-Rasset’s lawyers argued that anyone could have used the computer and username in question. Judge Davis was not convinced by and did not approve of Thomas-Rasset’s attempts to suggest that her children or ex-boyfriend infringed using her computer. The defense lawyers argued that alternative explanations were possible, and that MAC and IP addresses (identifiers for a particular computer that are transmitted during file-sharing) can be spoofed, though they offered no evidence that this had happened here.

Possible Future Developments

Wired recently described the RIAA as “winding down” its lawsuit campaign against file-sharers and shifting its efforts to getting internet access to infringers cut off. But there are still loose ends. Thomas-Rasset insists on going to a third trial rather than accepting a settlement. Therefore, it is still unclear whether there will be the precedent of a judge setting aside a jury award in a copyright infringement case will stand. That will depend on the outcome of the third trial.  Additionally, Thomas-Rasset’s challenge to the constitutionality of the judge’s award is still unresolved.

Furthermore, a second infringement case with a U.S. defendant also went to trial in July 2009: the recording industry’s suit against Joel Tenenbaum. The jury held Tenenbaum liable for $22,500 per song; since he was found to have infringed 30 songs, this amounted to $675,000 in damages. The judge finalized the jury award in December 2009. Like Thomas-Rasset, Tenenbaum is challenging the award’s constitutionality. Anyone who has ever shared a song using BitTorrent, Kazaa, or LimeWire should probably pay attention to what happens next.

• Twitter is a source of evidence for a murder charge, reports the New York Daily News.  But could those tweets be copyrighted?  Law.com’s Law Technology News weighs in.

• The Electronic Frontier Foundation provides a good, link-heavy analysis of the unanswered questions surrounding Google’s decision to stop censoring their Chinese services.

• For some reason, Psystar keeps fighting Apple, posts Gizmodo.

• Custom and Border Protection’s laptop searches may have gone too far, as revealed in a series of Freedom of Information Act requests for documents, reports Gizmodo.  EFF is looking for potential plaintiffs.

• The Wall Street Journal Law Blog analyzes how advances in medical science have impacted the rights of surrogate mothers.

• IBM gets the more U.S. patents than any other company for the 17th consecutive year, says MSN’s Moneycentral.  But Microsoft’s much smaller patent portfolio is worth more, reports The 271 Patent Blog.

• The Prior Art offers a fascinating look into the jury’s decision in i4i v Microsoft, complete with juror interviews.

• Chief U.S. District Judge Vaughn Walker in San Francisco decided to allow showing the trial challenging California’s Proposition 8 on YouTube, reports the San Francisco Chronicle.  The Wall Street Journal Law Blog questions whether that’s a good thing.

• Patent Librarian notes that Wikipedia citations in patent applications are up 59%, but Patently-O puts that increase in perspective.

• A report commissioned by the French government recommends taxing Google on their online advertising revenues in France to help fund legal outlets to buy media hurt by online piracy, reports the Mercury News.  President Sarkozy supports the measure, says PC World.

• The Wall Street Journal reports that Philip K. Dick’s estate claims Google infringed on its intellectual property by using the name “Nexus One” for the new Google-branded phone.  It brings to mind this recent post by Seth Godin.

• The Electronic Frontier Foundation responds to Bono’s recent New York Times Op-Ed, in which the musician / global icon lamented media piracy and suggested digital tracking be used to help criminal enforcement.

• Law.com provides an insightful guide to mining web 2.0 as a source of evidence.

• The Colorado Department of Transportation created an iPhone app to tell users if they’re too drunk to drive, the latest in a series of state efforts “to reach out to the Twitter-iPhone-Facebook generation,” according to the Wall Street Journal.

• The Ninth Circuit Court of Appeals affirmed [decision, pdf] a district court ruling that tasers should only be used in limited circumstances, as they pose a greater threat to their targets than other non-lethal police weapons.  The San Jose Mercury News reports on the suit that originated from a city police officer using a stun gun on a San Jose State student.

• Broadcom agreed to settle the securities fraud class action against it, says the Wall Street Journal Law Blog.

• The L.A. Times reports that the California Science Center has been sued for canceling a showing of film attacking Darwinian evolution and promoting intelligent design.

• Blizzard helps police make a drug arrest of a suspect tracked by his World of Warcraft account, posts kokomo perspective.

• Patent Docs reviews Senator Patrick Leahy’s proposals for patent reform.

• Third Circuit gives “Spam filter ate my filing notice” excuse a second chance, from the Technology & Marketing Blog.

• EFF sues to find out how the government spies on us using social networks; Indiana University students makes a Freedom of Information request to find out much the big telcos charge the government to spy on their networks, says Wired.

• The New York Times opines in favor of the Empire State’s decision to collect sales tax on online purchases from out-of-state retailers delivered in New York.

• Lazy IP enforcement leads to prosecution of the wrong guy, who makes a big deal out of it, says Ars Technica.

• FTC isn’t done with Intel yet, now looking into anticompetitive behavior with regard to Nvidia, reports BusinessWeek.

• Google to end free access to subscription news, blogs Gizmodo.

• And for an international perspective: BioTechBlog reports on IP and the biotech industry in India.

The Anti-Counterfeiting Trade Agreement

ACTA is a proposed agreement between the United States, the European Union, Australia, Canada, Japan, Singapore, Morocco, Mexico, the Republic of Korea, New Zealand, and Switzerland. The purpose of the agreement is to combat the spread of counterfeit goods, including software and information technology.

All states that have been party to the negotiations know the details of its provisions. Additionally, ACTA proponents in the recording industry, critics at Public Knowledge (home page), as well as some internet providers and electronics companies have been given the text of the agreement. Yet despite this information-sharing among the key players, the actual text of ACTA is still a “properly classified” secret—a state of affairs that has sparked ire and curiosity among those watching its progress.

The Obama administration claims to be keeping the text a secret for reasons of national security.  The White House denied a Freedom of Information Act request for the text of ACTA by Knowledge Ecology International in March 2009. This follows the Bush administration’s decision to deny a similar FOIA request by the Electronic Frontier Foundation and Public Knowledge in early January 2009. EFF and Public knowledge later dropped their suit, finding it futile.

As the MPAA memo shows, proponents argue that ACTA is a reasonable—indeed, a necessary and overdue—response to increased global piracy. They argue that the entertainment and recording industries will suffer tremendously if this piracy is allowed to continue, and that ACTA is a win-win solution for creators, copyright owners, and consumers. The Office of the United States Trade Representative (USTR) ACTA Fact Sheet (pdf) also points to physical threats to health and safety from counterfeit medical supplies, as well as alleging the economic dangers of Internet piracy.

Controversial Aspects

ACTA opponents point to public comments and leaked documents that suggest problematic aspects of the proposed agreement. Although the secrecy of ACTA negotiations prevents any precise legal analysis of its terms, particular concerns have emerged among ACTA critics.

Leaked documents suggest ACTA proponents want the agreement to “encourage” ISPs to “cooperate” with copyright holders in removing infringing materials. There are no specifics on what this cooperation means or how it will be encouraged. However, the Electronic Frontier Foundation notes that ACTA-supporting copyright holders are the same people who want Internet providers to terminate customers’ Internet access after repeated allegations of copyright infringement. These ACTA supporters also want to make network-level filtering mandatory for Internet providers, which would involve deep packet inspection (looking at the data of Internet transmissions) of customers’ communications. These measures have serious privacy implications because Internet providers would have to look closely at the actual content of their users’ communications. There are also due process issues. Would a copyright-holder have to prove infringement in court to get an Internet provider to cut off service to an alleged repeat offender? Or would a complaint from a copyright-holder be enough?

ACTA might also create greater border search power, which has inspired fears of inspectors seizing travelers’ iPods filled with downloaded songs.  Participants in ACTA negotiations have sought to allay these fears by saying that ACTA will not target personal use of iPods and computers. The ACTA Fact Sheet contains a statement that ACTA’s focus is on large-scale infringement and does not require searching personal iPods or laptops.

ACTA critics also have more generalized concerns. First and foremost, as Public Knowledge argues, is the secrecy of the ACTA proceedings.  The USTR denies any secrecy in the fact sheet linked above, pointing out that preliminary negotiations were announced and that the USTR asked for comments from the public. However, it is undeniable that proposed provisions have been kept secret and even been declared classified. Another concern is that ACTA will not actually be a treaty. Instead, it will be an “executive agreement,” which means it will not require Congressional approval. Finally, critics fear ACTA will be used as leverage to pass expansive domestic copyright legislation.

While ACTA may be controversial and scary to many, its supporters show little sign of slowing.

ACTA Timeline

The 6th round of ACTA negotiations took place November 4-6, 2009. Representatives from the various countries agreed to meet again for another round in January 2010. They aim to conclude the agreement “as soon as possible” in 2010.

For More Information

• ACTA Summary of Key Elements Under Discussion, from the Swedish Presidency of the European Union (document link at top of right sidebar)
• Comments filed with USTR by various organizations of differing views on ACTA
• EFF’s ACTA page
• The Free Software Foundation’s ACTA campaign (ACTA critics)

By Anjali Bhat and Paul Sullivan.