Internet Law and Regulation

Online updates to the Third Edition

Graham J. H. Smith, Bird & Bird

2-004

As to when a transient copy counts as an infringement, the Copyright in the Information Society Directive (2001/29/EC), implemented on October 31, 2003 in the United Kingdom by the Copyright and Related Rights Regulations 2003 (SI 2003/2498), exempts from infringement the making of certain transient or incidental copies for the purposes of transmission in a network (see discussion at para. 2-014 below).

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2-005

The potential for infringement by reading an electronic work now has to be assessed having regard to the "temporary acts of reproduction" exception introduced by the Copyright and Related Rights Regulations 2003 (see para. 2-014 below)

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2-012

The Directive was implemented in the United Kingdom on October 31, 2003 by the Copyright and Related Rights Regulations 2003.

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2-013

The Copyright and Related Rights Regulations 2003 extend to some 53 pages. We comment on relevant aspects of the implementation at the most convenient point in the text. However we do not attempt a comprehensive description. In particular we do not address the implementation of the bulk of the Directive's optional exceptions. A full Transposition Note prepared by the Patent Office may be found at www.patent.gov.uk/copy/notices/2003/copy_direct3a.htm.

The intermediary liability aspects of the Electronic Commerce Directive were implemented in the United Kingdom by Regulations 17-22 of the Electronic Commerce (EC Directive) Regulations 2002 (SI 2002/2013), which provisions came into force on August 21, 2002. However, the Electronic Commerce Regulations were stated not to have prospective effect. When the CDPA 1988 was amended by the Copyright and Related Rights Regulations 2003 it was therefore necessary to extend the Electronic Commerce Regulations to the amended version of the 1988 Act. This was done by the Electronic Commerce (EC Directive) (Extension) (No. 2) Regulations 2003 (SI 2003/2500).

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2-014

The Copyright and Related Rights Regulations 2003 implement the "temporary acts of reproduction" exception provided for in Article 5(1) of the Copyright Directive by inserting a new Section 28A into the 1988 Act, as follows:

(b) a lawful use of the work;

and which has no independent economic significance.".

Unlike the Directive, which exempts such acts only from the reproduction right, the Regulations purport to apply the exception to all aspects of copyright.

The exclusion of computer programs and databases, while lacking in any apparent logic, follows from the fact that the Copyright Directive does not apply to these types of copyright work. This is significant, since much website content is likely to constitute a computer program or (to the extent that the originality threshold is satisfied) a database. (See main text paras 2-066 and 2-083.)

The temporary copies exceptions are narrowly defined. They must be an "integral and essential" part of a technological process and the sole purpose must be to "enable" (not merely e.g. facilitate) the permitted purpose. While the network transmission exception should be read in the light of Recital (33) of the Directive, which states that the relevant purpose is "efficient" transmission, there is no such qualification for the "lawful use of the work" exception. So a browser cache would probably not be within the exception, since its purpose is not to enable browsing but only to speed it up (a browser still works with its caching switched off). The transient copies of the work stored in the RAM of the user's computer would be within the exception, since browsing cannot function without them. To that extent, it would no longer be necessary to construct an 'implied licence to browse' to legitimise the transient copies made by a user who accesses a website (cf main text, paras 2-005, 2-062, 2-064, 2-077, 2-080, 2-112). However, this does not significantly affect the rights of the copyright owner, since if the copyright owner withdraws permission to access a work there will be no "lawful use of the work" to which the exception can apply unless the act can be justified under another exception to copyright. This is confirmed by Recital (33) of the Directive, which states: "A use should be considered lawful where it is authorised by the rightholder or not restricted by law."

The transmission exception goes further in one respect than the similarly worded provisions of the conduit defence under Article 12 of the E-Commerce Directive. Rather than providing a defence available to a defined entity, the Copyright Directive exempts the relevant acts from infringement for all purposes.

While the transmission exception would not affect infringement by hosting, it could create a situation in which no underlying cause of action could be established against a conduit, since all the conduit's relevant activities were exempted from infringement. That could render it impossible to obtain an injunction against a conduit, notwithstanding the savings in the E-Commerce Directive for injunctions against conduits.

That concern is addressed by Article 8.3 of the Copyright Directive, which requires that right owners be able to apply for injunctions against intermediaries whose services are used by third parties to infringe rights. Recital (59) makes clear that this must be available even where the acts carried out by the intermediary are exempted under Article 5. The Copyright and Related Rights Regulations 2003 therefore introduce a specific power to grant injunctions against service providers, irrespective of the existence of any underlying act of infringement by the service provider. This is contained in a new Section 97A of the 1988 Act:

(b) the extent to which any notice includes -

(i) the full name and address of the sender of the notice;

(ii) details of the infringement in question.

All that is required is actual knowledge on the part of the service provider of another person using the service to infringe copyright. It is unnecessary to prove that the service provider was itself directly or indirectly liable for infringement. Although Article 8.3 of the Directive makes no mention of actual knowledge as a condition of the availability of an injunction, Recital (59) states that the "conditions and modalities" relating to such injunctions should be left to the national law of the Member States.

The notice provisions of section 97A(2) are broadly similar to those of the Regulation 22 of the Electronic Commerce (EC Directive) Regulations 2002 (see update text paras 5-038 to 5-045).

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2-015

The implementation of the new right of communication to the public has resulted in some of the most significant changes to United Kingdom copyright legislation.

The concepts of a cable programme service and inclusion in a cable programme service have been abolished, respectively as a separate type of work in which copyright may subsist and as a separate species of restricted act. Instead, a new definition of 'broadcast' is adopted, replacing the existing section 6(1) of the 1988 Act:

(b) a concurrent transmission of a live event, or

The new definition of broadcast focuses not on whether transmission is made via a wireless medium, but on the simultaneity of the reception. (While that approach is similar to that of the Communications Act 2003, which seeks to exclude most internet content from broadcast-style content regulation by OFCOM, the definitional structures are completely different.)

The exclusion of most internet transmissions from the definition of broadcast has consequences for the applicability of certain exceptions from infringement. The time-shifting exception under section 70 of the 1988 Act, for instance, which previously applied to broadcasts and cable programme services, will now apply only to broadcasts. Even though the new definition of broadcast is broader than previously, when combined with the abolition of cable programme services the overall effect of the changes is to restrict the applicability of the time-shifting exception to traditional broadcasts and quasi-broadcasts via the internet.

The phrases 'internet transmission' and 'internet' are not defined. The inclusion of such technology-specific terms may cause difficulties in the future, especially when considering network technologies that do not employ internet protocols, or that employ internet protocols on part only of the network.

The separate restricted acts relating to broadcasting and inclusion in a cable programme service are abolished, and replaced by a new restricted act of communication of a work to the public:

(a) a literary, dramatic, musical or artistic work,

(b) a sound recording or film, or

(c) a broadcast.

(a) the broadcasting of the work;

Section 20(2)(b) is the 'making available' right required by the WIPO Treaties. A similar right is introduced for performers in respect of recordings of their performances.

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2-038

The implementation of these aspects of the Copyright Directive dealing with circumvention of technical protection measures was one of the most controversial aspects of the consultation carried out by the Department of Trade and Industry. The controversy focused in particular on the balance between protection of technological protection measures (TPMs) and maintenance of exceptions to copyright protection.

UK law has in fact provided some protection for TPMs for some time (see main text, para. 2-057). The consequence of the implementation of the Directive is that the existing protection (providing civil remedies) will substantially be continued for computer programs (although in a new, redrafted, section 296). But for other works a different regime will apply, providing civil remedies for the act of circumvention and both civil and criminal sanctions for making and dealing in circumvention devices and the provision of circumvention services.

The provisions for computer programs apply to "technical devices", i.e. "any device intended to prevent or restrict acts that are not authorised by the copyright owner of that computer program and are restricted by copyright."

The provisions for works other than computer programs apply to "technological measures". These are defined in section 296 ZF:

2. (b) a copy control mechanism,

which achieves the intended protection.

(3) In this section, the reference to -

3. (a) protection of a work is to the prevention or restriction of acts that are not authorised by the copyright owner of that work and are restricted by copyright; and

A specific exception for cryptography research is introduced, unless in so doing, or in issuing information derived from the research, the person affects prejudicially the rights of the copyright owner. This exception does not apply to the provisions regarding computer programs.

Where an effective technological measure applied to a work prevents a person from carrying out a permitted act (as defined), a procedure for applying to the Secretary of State is established, which may result in the Secretary of State issuing directions to the copyright owner or exclusive licensee to ensure that the copyright owner or exclusive licensee makes available to the complainant the means of carrying out the permitted act to the extent necessary to so benefit from that permitted act.

The Copyright and Related Rights Regulations 2003 also implement the requirements of the Copyright Directive concerning electronic rights management information. The regulations introduce new civil remedies where a person knowingly and without authority, removes or alters electronic rights management information which is associated with a copy of a copyright work or appears in connection with the communication to the public of a copyright work where the person knows, or has reason to believe, that by so doing he is inducing, enabling, facilitating or concealing an infringement of copyright. There also remedies for knowing distribution, import for distribution or communication to the public of works from which ERM information has been removed.

"Rights management information" means any information provided by the copyright owner or the holder of any right under copyright which identifies the work, the author, the copyright owner or the holder of any intellectual property rights, or information about the terms and conditions of use of the work, and any numbers or codes that represent such information.

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2-040

The lawsuit brought by Dr Edward Felten seeking a declaration that he was not prevented by the Digital Millennium Copyright Act from presenting an academic paper about weaknesses in copy control technologies was dismissed by the New Jersey District Court in November 2001. This followed a filing by the Recording Industry Association of America stating that it had not intended to interfere with the presentation and therefore no dispute existed. Dr Felten's paper was presented at a technology conference in August 2001, having been previously withdrawn from a conference in April 2001.

The case against Dmitry Sklyarov and his employer Elcomsoft survived a challenge to the constitutionality of the circumvention provisions of the DMCA. Sklyarov himself had previously been released from custody and permitted to return to Russia pending trial, on the basis of an agreement with the prosecutor that he would testify at trial and having made certain admissions as to his conduct. On the basis of the agreement the charges against him were deferred for one year. The case went to trial in December 2002 against Elcomsoft and resulted in a jury acquittal.

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2-042

The Copyright and Related Rights Regulations 2003 abolished cable programmes as a species of copyright work as from October 31, 2003. Broadcasts are redefined to include some internet transmissions such as simultaneous webcasts. See para. 2-015 above.

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2-043

Similarly to the position with databases, European Council Directive 91/250/EEC on the legal protection of computer programs ("the Software Directive") provides (Article 1(3)) that a computer program shall be protected 'if it is original in the sense that it is the author's own intellectual creation' and states that no other criteria shall be applied to determine its eligibility for protection. However, this requirement is not made explicit in the UK copyright legislation.

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2-046

The Copyright and Related Rights Regulations 2003 abolished cable programmes as a species of copyright work as from October 31, 2003. Broadcasts were redefined to include some internet transmissions such as simultaneous webcasts. See para. 2-015 above.

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2-057

In Sony Computer Entertainment v Paul Owen and Others [2002] EWHC 45 (Ch) the claimant applied for summary judgment against the defendant in an action for copyright infringement based on importation and sale of chips enabling the copy-protection and region-control technology of the Playstation 2 to be circumvented, contrary to section 296 of the 1988 Act. The judge found that there was no doubt that the codes used by Sony for these purposes fell within the legislation. The copying prevented by them was the loading of the game into the computer. The defendant argued that there were lawful purposes to which the chips could be put, namely running independent software devised by people with no connection with Sony. Section 296 applied to "any device or means specifically designed or adapted to circumvent the form of copy-protection employed" imported etc by person "knowing or having reason to believe that it will be used to make infringing copies". The judge found that it did not matter if there some lawful uses, given that there were some that were not.

As from October 31, 2003 section 296 was replaced by a new section 296, restricted to computer programs. New anti-circumvention provisions contained in sections 296ZA–296ZF apply to other works. (See para. 2-038 above.)

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2-058

The Copyright and Related Rights Regulations 2003 abolished cable programmes as a species of copyright work as from October 31, 2003. Broadcasts were redefined to include some internet transmissions such as simultaneous webcasts. See para. 2-015 above.

2-061

As a result of the Copyright and Related Rights Regulations 2003, the exclusion from transmission of a work over a telecommunications system is no longer broadcast or inclusion in a cable programme service, but communication to the public (as to which see para. 2-015 above).

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2-062

The potential for infringement by viewing a work now has to be assessed having regard to the "temporary acts of reproduction" exception introduced by the Copyright and Related Rights Regulations 2003. (See para. 2-014 above.)

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2-064

As to temporary, transient and incidental copies, note the "temporary acts of reproduction" exception introduced on October 31, 2003 by the Copyright and Related Rights Regulations 2003 (see para. 2-014 above).

2-065

Much of the ground discussed in the main text is now covered by the new "making available" right introduced on October 31, 2003 by the Copyright and Related Rights Regulations 2003 (see para. 2-015 above).

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2-067

The Copyright and Related Rights Regulations 2003 abolished cable programmes as a species of copyright work as from October 31, 2003. Broadcasts were redefined to include some internet transmissions such as simultaneous webcasts. See para. 2-015 above.

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2-068 to 2-070

The Copyright and Related Rights Regulations 2003 abolished inclusion in a cable programme service as a species of infringement as from October 31, 2003. The relevant restricted act is now communication to the public, which includes broadcasting and the new "making available" right. Broadcasting is redefined to include some internet transmissions such as simultaneous webcasts. "Making available" is a broadly defined act that covers internet and other user-selectable electronic transmissions available to members of the public. See para. 2-015 above.

In Sony Music Entertainment (UK) Ltd and others v Easyinternetcafe Ltd [2003] EWHC 62 (Ch) the judge expressed the view, obiter, that the transmission of material via the internet was a cable programme service and that the decision in Shetland Times case was correct.

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2-071

In Sony Computer Entertainment v Paul Owen and Others [2002] EWHC 45 (Ch) Jacob J (as he then was) commented on the meaning of "necessary" in section 50A concerning back-up copies. He suggested that the provision was aimed at cases in which there was separate express licence other than the implied licence to use the article itself as embodied on a disc. For certain types of software, such as computer games, where there might not be a separate licence, back-ups were not necessary at all and if the CD was spoiled the customer would have to purchase a new one.

On October 31, 2003 the Copyright and Related Rights Regulations 2003 introduced a new section 50BA of the 1988 Act, to ensure compliance with Article 5.3 of the Software Directive. This provides that it is not an infringement of copyright for a lawful user of a copy of a computer program to observe, study or test the functioning of the program in order to determine the ideas and principles which underlie any element of the program, if he does so while performing any of the acts of loading, displaying, running, transmitting or storing the program which he is entitled to do. Section 296A renders void any term or condition in an agreement which purports to prohibit or restrict the act.

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2-074

The point is made in the main text that a link is functionally equivalent to the user typing in the URL to the browser. The same point was relied upon by the German Federal Court in Verlagsgruppe Handelsblatt GmbH v Paperboy, (Bundesgerichtshof, No. I ZR 259/00, 17 July 2003) holding that deep linking by an aggregator who compiled an e-mail list of links to articles on the plaintiff's site was unobjectionable so long as it did not evade technical protection mechanisms and did not provide content access that the rightholder had not authorised. See further, para. 2-088 below.

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2-076

The legality of a type of in-line linking to images has been raised in the Kelly v Arriba Soft Corp litigation in the USA. The defendant in this case operated an image search engine. The engine's spider crawled the internet to find and retrieve full size images. The defendant's software used these to produce low-resolution thumbnail versions of the images, which would be stored on the defendant's server. The full size images were deleted from its server after the thumbnails were created. A user of the site would be presented with search results containing thumbnail images. Clicking on the thumbnail would cause the full-size image to be retrieved from the target site and displayed as part of the defendant's web page.

In July 2003 the U.S. Court of Appeals for the Ninth Circuit (Kelly v Arriba Soft Corp., 9^th Cir., No. 00-55521) affirmed a lower court decision that the creation and use of the thumbnails amounted to fair use. The question whether the display of the full-size images also amounted to fair use was remitted to the district court.

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2-077

As to the question whether it is any longer necessary to imply a licence to browse a website, following the introduction of the Copyright and Related Rights Regulations 2003 on October 31, 2003, see para. 2-014 above.

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2-078 to 2-079

The Copyright and Related Rights Regulations 2003 abolished inclusion in a cable programme service as a species of infringement as from October 31, 2003. The relevant restricted act is now communication to the public, which includes broadcasting and the new "making available" right. Broadcasting is redefined to include some internet transmissions such as simultaneous webcasts. "Making available" is a broadly defined act that covers internet and other user-selectable electronic transmissions available to members of the public. See para. 2-015 above.

The question now is whether linking to a work constitutes communication of the work to the public by electronic transmission (CDPA 1988 section 20(2)), or the making available to the public of the work by electronic transmission in such a way that members of the public may access it from a place and at a time individually chosen by them (CDPA 1988 section 20(2)(b)); or if not, whether it constitutes authorisation of such an act. The scope of these new restricted acts is uncertain. If the question is one of authorisation, then the problem for the plaintiff is the same as described in the main text and lighted upon by the German court in Paperboy (above, para. 2-074). That is, what is the infringing act alleged to be authorised when it is impossible to make any meaningful distinction between clicking on a link and acts (such as typing the URL into the browser) that are necessarily authorised by the website owner as a consequence of putting the content on his site? If creating a publicly available link does itself constitute a separate act of "making available", then there would be a basis for a website owner to argue that he had not authorised that act, and that it was distinguishable from his own act of putting his own content on his site and creating his own publicly available links to it.

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2-080

The existence of any implied licence now has to be considered in the light of the Copyright and Related Rights Regulations 2003 introduced on October 31, 2003 (see para. 2-014 above).

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2-081

In March 2003 the US court in the Ticketmaster v Tickets.com case granted the defendant's motion to dismiss Ticketmaster's copyright claims (2003 U.S. Dist. LEXIS 6483), including the deep linking claim. The claimant also alleged that reproduction of the claimant's URLs on the defendant's site amounted to copyright infringement. The court dismissed this claim on the basis that a URL lacked sufficient originality to constitute a copyright work. Claims alleging breach of the claimant's website terms of use were allowed to go forward. See also para. 2-089 below as to the court's findings on copyright infringement alleged to arise from the making of temporary copies in the course of spidering the defendant's website and on trespass to chattels.

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2-088

In March 2002 the Dutch Supreme Court reversed the Hague Court of Appeals judgment in NVM v De Telegraaf, holding that the investment in the original database was sufficient to qualify the 'spin-off' database for database right protection.

In a decision on the merits in Havas Numerique, SNC and Cadres on Line S.A. v Keljob, the Paris Civil Court found that Keljob, by use of its search engine crawler, had extracted data from the plaintiff's website in contravention of the database right.

In the Paperboy decision, Verlagsgruppe Handelsblatt GmbH v Paperboy, (Bundesgerichtshof, No. I ZR 259/00, July 17, 2003), the German Federal Court (Germany's highest court) held that deep linking by an aggregator who compiled an e-mail list of links to articles on the plaintiff's newspaper site was unobjectionable so long as it did not evade technical protection mechanisms and did not provide content access that the rightholder had not authorised. The court observed that without the use of hypertext links and search engines reasonable use of the internet would not be possible.

The Danish courts have held that crawling newspaper websites to compile lists of headlines deep-linked to individual news articles violated the newspapers' rights under the Danish implementation of the Database Directive (Danish Newspaper Publishers' Association v Newsbooster.com ApS, Denmark Bailiff's Court May 7, 2002; affirmed by the Copenhagen Maritime and Commercial Court (in the absence of the defendant), 2003).

The Austrian Supreme Court in December 2002 held in favour of a defendant whose site linked to weather charts from the plaintiff's site and displayed them within frames on the defendant's pages. (Meteodata v Bernegger Bau, Austrian Supreme Court December 17, 2002)

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2-089

In March 2003 the US court in the Ticketmaster v Tickets.com case granted the defendant's motion to dismiss Ticketmaster's copyright claims (2003 U.S. Dist. LEXIS 6483), including a claim that the temporary copies made in the course of the spidering of the claimant's site amounted to copyright infringement. It also dismissed the claimant's case based on trespass to chattels.

The finding as regards temporary copies was that the copying amounted to fair use, where the purpose of the copying was to enable the defendant to extract mere facts (which were not copyright) from the claimant's website. The copies came into existence for some 10-15 seconds in the defendant's computers.

The trespass case was dismissed on the basis that the claimant had shown no adverse effect to the use or utility of the claimant's computers.

That finding foreshadowed a decision of the California Supreme Court in Intel Corporation v Hamidi (Ct.App. 3 C033076 30 June 2003). That case concerned en ex-employee of Intel who sent thousands of e-mails to Intel employees. Intel sued for trespass. The California Supreme Court, by a majority of 4-3, held that unwelcome content was insufficient to constitute trespass. Nor did time spent by Intel's staff attempting to block the messages constitute relevant damage. There had to be some actual or threatened impairment of the functioning of the system.

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2-091

See above discussion of linking cases (para. 2-088), some of which also concern framing.

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2-093

See above discussion of linking cases (para. 2-088), some of which also concern search engines. See para. 2-076 above for updated information on the Kelly v Arriba Soft Corp litigation.

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2-095

The potential applicability of the time-shifting provisions of section 70 of the 1988 Act to much internet activity has been done away with as a result of the amendments made by the Copyright and Related Rights Regulations 2003. "Cable programme services" are abolished. The time-shifting provisions now apply only to broadcasts, which are restricted to traditional broadcasts and quasi-broadcasts over the internet (see update text, para. 2-015 above).

Further, the time shifting provision is tightened up so as to be restricted to domestic premises and to catch onward distribution of copies made with the benefit of the time-shifting exception. The Regulations substitute a new section 70 as follows:

(3) In subsection (2), "dealt with" means sold or let for hire, offered or exposed for sale or hire or communicated to the public.".

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2-096

In the Sony v Easyinternetcafe case (for facts see below, para. 2-105) the defendants sought to rely on section 70, arguing that the bulk of customers would be making the copies for private or domestic use. The judge rejected that argument, first on the basis of lack of evidence, and second in any event on the basis that the fact that the Defendant was doing the copying, for the purpose of selling the CD to the customer, was fatal to the argument.

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2-098

Articles 12 to 15 of the Electronic Commerce Directive are implemented in the United Kingdom by Regulations 17-22 of the Electronic Commerce (EC Directive) Regulations 2002 (SI 2002/2013). The Regulations (with the exception of Regulation 16, which came into force on October 23, 2002) came into force on August 21, 2002.

Although the matter is not entirely free from doubt, the Directive and the Regulations probably confer the benefit of the liability provisions only on online intermediaries established in the European Economic Area.

For copyright, the liability provisions for online intermediaries will in future have to be read in conjunction with the Copyright and Related Rights Regulations 2003, which will come into force on October 31, 2003. These restrict the copyright protection available in respect of some types of transient copies created on networks, and make specific provision for copyright injunctions against internet service providers even though the service provider may not itself be liable for infringement. These provisions are discussed above (para. 2-014).

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2-102

In contrast to the US decision in Napster, a US court has held that the purveyors of software that enabled distributed peer to peer file sharing, and who did not provide a centralised index of shared files, was not liable for contributory or vicarious infringement (MGM Studios, Inc. v Grokster, Ltd, CV 01-08541-SVW (C.D. Cal. April 25, 2003). In an action brought in the Netherlands against the publishers of similar distributed file-sharing software, Kazaa, the Dutch Supreme Court on December 19, 2003 held Kazaa not liable for infringement (Kazaa BV v BUMA/STEMRA).

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2-105

In Sony Music Entertainment (UK) Ltd and others v Easyinternetcafe Ltd [2003] EWHC 62 (Ch) the defendants were the proprietors of a chain of internet cafés. The defendants offered a CD burning service at each café. Upon payment of a fee, a customer was provided with access to the internet via a PC. Those PCs were connected to a central server. There were no copying or other facilities that could be used by the customer at the screen. Upon payment of the fee the customer was given a user ID. Files downloaded by the customer could be stored by the customer on a private directory on the café's server identified by reference to the personal ID.

After the termination of a session the customer could ask staff to download on to a recordable CD the material in his private file area. That could include sound recordings downloaded from the internet. If the option were taken up, the customer would present his user ID to the staff member, who had access to the relevant customer's allocated area, and download the relevant files on to the CD using a CD writer program. The customer paid £5 for this, comprising £2.50 for the CD and £2.50 for the service.

The Defendant's evidence was that members of staff were prohibited from looking at the contents of any files unless the customer agreed. In the logon process a significant number of warnings were given to customers in respect of copyright infringement.

The Claimants were the owners of copyright in five sound recordings. They alleged that the Defendants were liable for copyright infringement. The Defendant did not dispute that if there had been a downloading and copying in the way described, the customer would (subject to a statutory defence) infringe copyright in the sound recordings. The Defendant denied that it was liable itself by virtue of that process. The Claimants applied for summary judgment.

The Defendants argued that the Defendant was an involuntary copier, similar to the owner of a fax machine who receives infringing material sent by someone else; and that intervention of the human operator made no difference, as the operator had no knowledge of what was being copied.

The judge found that in this case the copying was voluntary, not involuntary. The lack of knowledge arose only because of the terms on which the Defendant chose to permit customers to copy information. Further, the Defendant was doing this for a profit. The judge rejected this and other defences and granted summary judgment.

The judge also commented, obiter, that an internet service provider would be an involuntary copyist, since it could not stop material being sent to it.

As noted in the main text, in English law copying specifically includes storing. Even if material is received involuntarily, can the recipient be held liable for continuing storage?

In Ocular Sciences Ltd and Another v Aspect Vision Care Ltd [1997] RPC 289 Laddie J held that the activity of putting something into computer storage involved making a copy, in digital form, of that thing. The purpose of specifying storage in the 1988 Act was to avoid arguments that making a copy in a series of magnetic locations was not reproduction in a material form. That did not affect the general requirement that for a defendant to infringe he must have performed some activity. Being in possession of a medium on which a copyright work was recorded, for example, a floppy disk, was not of itself an act of infringement. On the hand making the recording or lifting data into and out of storage could be.

This analysis suggests if an argument of involuntary copying is available to a defendant on the basis of copying, it would also be available in respect of storage.

The fact that copying is involuntary will does not prevent an injunction being granted against an internet service provider under the provisions of the Copyright and Related Rights Regulations 2003 (see para. 2-014 above). Even if the acts associated with an ISP's receipt of information are involuntary, it does not necessarily follow that acts associated with sending out the information are also involuntary. A claimant could be expected to argue that a service provider who hosts a website is engaged in a voluntary act of communicating the work to the public (see para. 2-015 above), even if the work was received and stored by him involuntarily, subject only to any hosting defence that might be available under the Electronic Commerce Directive. The service provider would argue that since it has no participation in any decision as to what information to make available from its servers, any making available by it of information posted by its customers is no more volitional than the receipt and storage of the information.

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2-106

From 31 October 2003 a host who makes material available for downloading may also be liable for infringement of the new right of communication to the public (see para. 2-015 above)

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2-107

The injunction against linking to DeCSS software in the DeCSS case was upheld by the US Court of Appeals for the Second Circuit in November 2001 (Universal City Studios Inc. v Corley, 2d Cir., No 00-9185 November 28, 2001).

Courts in Denmark and France have held that web links to infringing music files on the internet constitute infringement (Koda and others v Lauritzen and another, Vestre Landset, [2002] E.C.D.R. 25, 259; SCPP v Conraud District Court of Epinal, October 24, 2000).

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2-112

The status of network and browser caching now has to be considered with regard to the "temporary acts of reproduction" exception introduced by the Copyright and Related Rights Regulations 2003 (see para. 2-014 above)

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2-113

The Copyright Directive was implemented on October 31, 2003 by the Copyright and Related Rights Regulations 2003. The intermediary liability aspects of the Electronic Commerce Directive were implemented in the United Kingdom by Regulations 17-22 of the Electronic Commerce (EC Directive) Regulations 2002 (SI 2002/2013), which provisions came into force on August 21, 2002.

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2-115

The penalties for criminal copyright infringement have been increased to, in some cases, a maximum of ten years' imprisonment and/or a fine (Copyright, etc and Trade Marks (Offences and Enforcement) Act 2002).

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Confidential information

2-119

For more recent cases discussing the extent to which privacy is now embraced by the law of breach of confidence, see: Venables and Another v News Group Newspapers [2001] 1 All ER 908, A v B [2002] 3 W.L.R. 542 C.A., Campbell v MGN Ltd [2002] EWCA Civ 1373, Douglas and Another v Hello! Ltd and others [2003] EWHC 786 (Ch) and Wainwright and Another v Home Office [2003] UKHL 53.

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2-125

For a recent application of FSS Travel to a claim brought against ex-employee software engineers, see BCT Software Solutions Ltd v Jones and Others [2002] 12 E.I.P.R. N-196.

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2-155A

In February 2002, the European Commission published a Proposal for a Directive on the Patentability of Computer-implemented inventions. With one important exception, the draft Directive was not intended to change the law on patenting software but only to codify and clarify it. However, the scope of protection to be offered is narrower than the position presently adopted by the EPO in that programs loaded onto a carrier rather than a computer would be excluded.

The Proposal suffered from serious flaws in its original form and a number of modifications were proposed. The European Parliament voted upon the proposal on 24 September 2003, introducing a number of far-reaching changes. It is this amended draft which is discussed below, although there is no certainty that this form will ultimately be adopted.

There seems to be a consensus that the Directive should preserve the present requirement that a computer-implemented invention is only patentable if it makes a "technical contribution". By preserving this requirement, the draft excludes the possibility of patenting computer-implemented business methods. The United States permits such patents because its law does not require that a patentable invention should make a "technical contribution". Instead, an invention need only fall within the technological arts, and merely using a computer or software means that an invention will be part of the technological arts if it provides "a useful, concrete and tangible result".

Other than this single point, there is no consensus as to what patent protection is appropriate for software. The draft as approved by the Parliament attempts to change the Directive from a mechanism to harmonise existing practice into one to roll back the possibility of using patents to protect software inventions to a very constrained level.

It specifies that a computer-implemented invention must meet all of the normal criteria for patentability - novelty, inventive step, industrial application and sufficiency of description - but in addition specifies (Recital 11, Article 4) that for an inventive step to be present the invention must make a technical contribution to the state of the art. The intention is that the technical contribution must be manifest in the inventive element of the whole, rather than in the use of conventional technical apparatus to implement a non-technical invention, such as a business method (Recital 13a).

The draft further specifies that a technical contribution can only be present if a technical problem is present (Recital 12), thereby encoding the decision of the EPO Technical Board of Appeal in Sohei/Yamamoto's Application (1995), holding that an invention comprising functional features implemented by software is not excluded from patentability under Article 52(2)(c) and (3), if technical considerations concerning particulars of the solution of the problem the invention solves are required in order to carry out that same invention.

The question of whether the inventive element must be in the technical aspects of the invention, or could be in non-technical aspects implemented by known techniques, has caused the drafters some difficulties. Article 4 as proposed, by the Parliament's Legal Affairs Committee, specified that "the technical contribution shall be assessed by considering the state of the art and the scope of the patent claim considered as a whole, which must comprise technical features, irrespective whether or not such features are accompanied by non-technical features." This was an improvement on the original proposed draft, which appeared to be circular in its definitions as to what might be a technical contribution and what might be an inventive step. The European Parliament's Committee on Culture, Youth, Education, Media and Sport wanted the comparison with the state of the art to be restricted to the technical features of the claims, excluding any possibility that an invention might be taken as patentable because, commonplace technical features being present, some novel and inventive non-technical features were also included. This possibility remained under the Legal Affairs Committee's draft. The European Parliament's proposed amendments spelt out that patent claims granted in respect of computer implemented inventions include only the technical contribution which justifies the patent claim (Article 4(1a)), which may reflect the intention behind the original draft . Thereafter, the Parliament's changes carve out a number of specific areas from patentability even if they meet the legal criteria for patentability. For example, a new Article 3(a) prohibits all patenting in the field of data processing (which may be in breach of TRIPS, which requires members of the WTO to enable patent protection in all fields of technology).

The revised draft also includes a requirement at Article 4(3a) that in order to have a technical effect the invention must constitute a new teaching on cause-effect relations in the use of controllable forces of nature. This expression may derive from historic German law, when the only patentable software was that used to control an industrial process, for example the rate of feed of catalyst into a reactor, or the temperature and pressure conditions. However, taken at face value it appears to require in effect that to be patentable a computer-implemented invention must constitute a new breakthrough in physics, since this is the only discipline conventionally concerned with cause-effect relations in the use of controllable forces of nature. Such a requirement would make nonsense of the nominal objective, of introducing clarity as to when computer-implemented inventions are to be patentable. It would also be contrary to Article 52 EPC which states that scientific theories and discoveries are not patentable.

Amended Article 4b now says that computer implemented inventions shall not be considered patentable merely because they improve efficiency in use of resources in a data processing system -which appears directly contrary to the original EPO Guidelines which have been accepted practice for 17 years.

The impact of later amendments appears even more radical. New Article 5(1)(b) renders unenforceable all patents relating to information handling / processing / distribution / publication. This is not even limited to "data" or "digital information" but to information generally. It could arguably be interpreted to cover and therefore render unpatentable a mechanical printing press.

Amended Article 6(a) says that using any "patented technique" (again far wider on its face than computer-implemented inventions) for a "significant purpose" is not an infringement. This by definition encompasses most useful patents: if there is no significant purpose, there is probably no industrial application. Many of those patents which in fact repay their inventors' efforts would be rendered unenforceable, and therefore worthless.

An example is given of a significant purpose, being to ensure conversion of the conventions used in two different computer systems or networks so as to allow communication and exchange of data content between them. However, this is only given as an example and it would (if passed) remain for the national courts to interpret 'significant purpose' in the light of it. Although the context of the Directive would probably lead to this restriction being limited to the field of computer implemented inventions, within that field there would inevitably be a new defence raised in every infringement action, that the technique was for a significant purpose and therefore unenforceable. It could take many years to define through national, and potentially divergent, case law. Further, both the latter provisions affect the scope and value of existing patents, because infringing acts would be exempt after enactment.

Many of the Parliament's amendments appear contrary to certain of the recitals, which remain in the draft. For example: Recital 14: " The Directive simply clarifies the present legal position...." Recital. 16: "The competitive position of European industry in relation to its major trading partners will be improved if the current differences in the legal protection of computer-implemented inventions are eliminated.....". In the knowledge that Europe already offers less protection for software than US and probably Japan, it will be politically difficult for the Council to accept amendments which go against key recitals.

Given the radical nature of these proposals, it is now rather less likely that the Directive will be passed - at least in its present form. The next step, if the draft Directive continues through the normal legislative process, is for the Commission and Council to reach a Common Position on the Parliament's amendments. The Parliament would then consider the Common Position. It is most unlikely that any Common Position would return to the Parliament for consideration before Autumn 2004.

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As to indirect infringement under S60(2) Patents Act 1977, see Menashe Business Mercantile Ltd and Another v William Hill Organisation Ltd (2003) 1 W.L.R. 1462 (discussed in update text, para. 6-055) for the application of S60(2) to alleged infringement of an internet gaming system patent.

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In Menashe Business Mercantile Ltd and Another v William Hill Organisation Ltd (above) the Court of Appeal held that an internet gaming system patent was capable of being infringed within the United Kingdom, notwithstanding that the server hosting the game was located outside the United Kingdom.

3-016

In February 2002, the architecture of the root servers was changed. The ultimately authoritative root zone file is now held on a hidden 'distribution master', which distributes root zone file updates to each of the 13 public root servers (including the A root server). The function of the A root server as the master server was finally disabled in November 2002.

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All of the seven new gTLDs referred to in the main text are operational.

Regulation (EC) No 733/2002 of the European Parliament and of the Council

on the implementation of the .eu Top Level Domain was made on of April 22, 2002. No .eu TLD has yet been implemented.

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The European Court of Justice held in Arsenal Football Club plc v Reed (ECJ November 12, 2002, explained in Arsenal Football Club plc v Reed [2003] EWCA Civ 696) that it was not necessary for infringement to be found under s.10(1) of the Trade Marks Act 1994 that the mark be used so as to indicate the origin of the goods or services. The relevant consideration was whether the use complained about was likely to affect or jeopardise the guarantee of origin which constitutes the essential function of the trade mark.

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The European Court of Justice has held that the protection of Art. 5.2 of the Trade Marks Directive (on which s.10(3) is based) may be, and indeed must be, applied by a Member State which opts to implement Art.5.2, where the allegedly infringing goods are similar to those for which the trade mark is registered as well as where they are not similar (Case C-292/00 Davidoff [2003] ECR I-389; Case C-408/01 Adidas AG and Another v Fitness World Trading Ltd (2003)). As a consequence of these decisions, s.5(3)(b) of the Trade Marks Act 1994 has been repealed and s.10(3) amended, in both cases to remove the references to non-similar goods or services. These amendments were effected on May 5, 2004 by the Trade Marks (Proof of Use, etc.) Regulations 2004, made under the European Communities Act 1972.

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In Bonner Media Ltd v Smith and Another (Scottish Court of Session, Outer House, July 1, 2002) one of the defenders (who were outside the jurisdiction) had registered a number of domain names containing or comprising variations on the name of a Scottish newspaper published by the pursuers. The court was able, on the facts, to infer that the defenders, acting together, intended to set up a website designed to pass themselves as the pursuers, or to make use of a name sufficiently close to the pursuers' trade mark as to be an infringement. As to whether any of those threatened acts had delictual consequences within the Scottish jurisdiction, the court (after reviewing 800-FLOWERS and Crate and Barrel) decided that the test was whether the website was unlikely to be of significant interest within the jurisdiction: "if the impact of a website in a particular country is properly to be regarded as insignificant, no delict has been committed there." (See also discussion under para. 6-033, below)

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eResolution ceased to accept proceedings commenced after November 30, 2001. The Asian Domain Name Dispute Resolution Centre was approved as from February 28, 2002.

In 2002, the Max Planck Institute for Foreign and International Patent, Copyright and Competition Law published a comprehensive study of the operation of the UDRP system. The study concluded that as a matter of principle, the UDRP was functioning satisfactorily and that no major flaws had been identified in the course of the evaluation. Several issues were identified where the application of the Policy was unclear and needed further consideration. These were in particular the conditions under which a domain name should be found to be confusingly similar with a mark, measures to safeguard free speech, and rules about burden of proof and the standards to be applied in the assessment of the parties' contentions.

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On April 19, 2004, Nominet issued a consultation paper requesting views on a number of suggested changes to the DRS, arising out of experience with its operation. Among the suggested changes are:

1. The existing reversal of burden of proof, which applies in the case of tribute/criticism sites where the domain name is identical to the name in which the complainant claims rights, should be removed.

2. That it be made clear that the "without prejudice" rule of litigation will not apply, so that DRS Experts will be entitled to take into consideration any materials or evidence contained within or annexed to the submission