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European IP Bulletin, Issue 28, January - Copyright
Copyright
3. Sony BMG’s Anti-Piracy Software in Big Trouble
Under widespread pressure, Sony BMG announced in November 2005 that it would cease the production of music CDs with anti-piracy software and exchange CDs purchased with the non-content protected discs. Also, Sony said it would provide software to make it easy to remove the controversial software from Windows computers.
The software, called Extended Copy Protection or XCP, was developed by UK firm First4Internet, and was designed to prevent unlimited copying of the music on the disc. It only allows three copies of an album to be made and only allows the CD to be listened to on a computer via a proprietary media player. The XCP software is included on 52 commercial CD titles issued by Sony BMG and sold in the US.
In addition to the sensitive issue of copyright expansion, a more severe security concern about XCP was raised in late October 2005 by Windows programming expert Mark Russinovich, who discovered that it used a "root kit" technique more often seen in computer viruses to hide itself deep inside the operating system to evade detection. It alters registry settings to cause the Windows CD driver to become unusable if the user attempts to remove the software on their own.
Soon after Mr Russinovich disclosed how XCP worked, there was news that virus writers were starting to use XCP to hide their own malicious programs, exposing users to follow-on harm from viruses and trojans. The row has snowballed and now the States of California, New York, and Texas, as well as Italy have taken class action lawsuits against both Sony BMG and First4Internet.
There is much speculation as to the extent that the actions taken by this software are a violation of various laws against unauthorized tampering with computers, or laws regarding invasion of privacy by "spyware", and how they subject Sony and First4Internet to legal liability. However, the mere act of attempting to view or remove this software in order to determine or prevent its alteration of Windows would hypothetically constitute a civil or criminal offense under certain anti-circumvention legislation such as the controversial Digital Millennium Copyright Act in the USA.
There is also a claim that there is evidence that the XCP software infringes the copyright of the LAME media encoding library. This evidence includes direct similarities between functions in XCP and functions in LAME, as well as in another LGPL library that handles ID3 tags. If this claim is correct, then First4Internet and Sony are also both distributing copyrighted material in violation of the author's rights.4. Evaluation of EU Rules on Databases
The European Commission has published its Evaluation of the protection EU law gives to databases. The findings are disappointing. Therefore, it is now proposed that the whole Database Directive be repealed and Member States be allowed to revert to their former legislation.
When the Database Directive was passed in 1996, the intention was to protect the investment involved in making a database. Databases which are sufficiently creative and original will be protected by copyright law. However, many other databases, such as telephone directories, music charts or football match listings, which are more like compilations of information or commonplace data, do not qualify for copyright protection. The Directive was targeted to protect these databases by creating the sui generis form of protection. However, the Commission’s Evaluation makes it clear that although the Directive has now been implemented in Member State’s legislation, it has not stimulated any increase in the number of relevant databases. The intention was to provide good protection to investment in databases and licensing of their use, but there is no evidence of growth. Although publishing and database industries in Europe find the sui generis protection important for the success of their business, the evaluation shows that the problem may be that the scope of right is unclear because the terms of protection do not seem to have precise legal meaning.
Another obvious reason for dissatisfaction is the European Court of Justice ruling in respect of William Hill v the British Horse Racing Board where the Court refused to count any investment before or at the time of creating data as constituting a substantial investment in the database. A clear distinction was made between creation of data and obtaining it, with the creation of data not being protected by the sui generis right.
The Commission does not present any view on what is exactly wrong with the Directive and what should be done. It presents four options and invites interested parties to give comments. The options are:
- to repeal the whole Directive;
- withdraw the sui generis right isolation but keep the harmonised level of copyright protection for original databases;
- to clarify the sui generis right and to clarify the scope of protection;
- to leave the Directive untouched.
If the overall goal of the EU is to harmonise intellectual property legislation across the Member States, the Evaluation does not convey a promising picture for the Database Right and if the Directive is subsequently repeled this will represent a major setback in the creation of pan-EU intellectual property protection.
5. Online Management of Music Rights: the EU Commission’s Impact Assessment
The European Commission’s Impact Assessment, which reforms cross-border collective management of copyright and related rights for legitimate online music services, was released on 11 October 2005 and complemented what was expressed in the Commission’s recent Recommendation on the same topic. Both documents draw attention to the Commission’s proposals for enhancement of collective management of rights in relation to the trans-national nature of the internet.
The starting point of the Impact Assessment is the comment that Europe seems to have failed to provide the necessary legal framework for cross-border collective management. According to the Commission, this has negatively affected the provision of legitimate online music services and is the result of the perpetuation of traditional business models based on reciprocal representation agreements, largely used to acquire remuneration for rights holders when their work is exploited outside national boundaries.
The Commission claimed that, in order to fulfil the potential of music distribution on the internet, it would be best to proceed with a radical change of those agreements, entailing the elimination of all territorial restrictions and customer allocation provisions. More specifically, right holders would be given the power to appoint a collective rights manager of their choice for the online use of their musical works across the entire EU. Such a model would facilitate the needs of commercial users by providing a wider accessibility of content. Users would be able to acquire licences valid not only at the national level but also throughout all countries concerned. The Impact Assessment suggested that these changes would lead to the implementation of a flexible model, apt for use in the current technological context.
Flexibility would become possible if further transparency and accountability were achieved. However, the consequences of departing from reciprocal representation agreements would not necessarily lead to a stable level of legal certainty or transparency. On the contrary, they might lead to a certain amount of confusion. The Impact Assessment itself recognised how the new model could suit large right holders but also how it could be ineffective if not problematic for small rights holders who would remain with their national collecting society. Moreover, commentators have suggested that the option of direct licensing could actually increase the market power of certain players. This could produce advantages in terms of efficiency but, in principle, it would go against the major goal of eliminating collecting societies’ national monopolies.
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