Publications

European IP Bulletin, Issue 32, June 2006- Hot Topics

HOT TOPICS

1. Pirate Bay Shut Down

In what has to be one of the biggest deathblows to online sharing via BitTorrent, the Swedish police on Wednesday closed the lid on The Pirate Bay. More than 1 million registered users pirated copyright materials via The Pirate Bay.  The site’s operators who had become online legends for the way they have “taunted law enforcement for years,” and had enjoyed immunity from copyright law in Sweden suddenly found themselves coming to a screeching halt as more than 50 Swedish police executed search warrants and made raids at 10 locations, arresting three people. The entertainment industry welcomed the action against the site which it says is a major source of music and film piracy.

The Pirate Bay is an internet site that bills itself as the world’s ‘largest BitTorrent tracker’, and also acts as an index for .torrent files that it tracks.  A BitTorrent tracker is a server which assists in the communication between peers using the BitTorrent protocol. It is also, in the absence of extensions to the original protocol, the only major critical point, as clients are required to communicate with the tracker to initiate downloads. Clients that have already begun downloading also communicate with the tracker periodically to negotiate with newer peers and provide statistics. However, after the initial reception of peer data, peer communication can continue without a tracker. A tracker should be differentiated from a BitTorrent index by the fact that it does not necessarily list files that are being tracked. A BitTorrent index is a list of .torrent files (usually including descriptions and other information). Trackers merely coordinate communication between peers attempting to download the payload of the torrents. 

Torrent trackers have been the target of cease and desist lawsuits from copyright bodies despite the fact that they do not actually host any of the copyrighted data themselves.  The Pirate Bay maintains that the site’s function is to direct users towards the files that they search for and manage the uploads and downloads. They emphasise that the website itself does not hold any copyright files, and therefore, they are not contravening any copyright laws.  Further, they point out that their site serves as a distribution point for freely licensed material such as some Linux distributions and independent music and film.

Ironically, The Pirate Bay’s reputation within the online file sharing community indicates it is one of the more prominent websites distributing torrents that point to unlicensed copies of copyrighted material.

In some countries like the United States, offering such torrents could be considered as contributory infringment, but in Sweden this was not always the case. Only since July 2005 was this changed when new anti-piracy legislation was enacted to implement the EU Copyright Directive of 2002 which made the distribution of software for the purposes of copyright violation illegal.  It also bans technology and software such as P2P file-sharing programmes, including Kazaa and e-Donkey.

P2P technology is facing an interesting dilemma. Technology entreprenuers and business partners are often geographically dispersed, and business structures may be split to leverage advantages provided by national legal systems. As such, the digital content which can be shared using these products and services ranges back and forth across international borders. This, in turn, leads to parallel litigation instigated in most major jurisdictions. In the digital environment, there may be an irreconcilable tension between the territoriality of intellectual property rights and de jure and de facto exporting of one nation’s copyright policies.  Legal actors will increasingly need to engage with how to reconcile respect for territorial sovereignty with the inevitablity that domestic copyright policies increasingly have extraterritorial effects.

The Washington Post captured the importance of this dilemma by suggesting that the U.S. Supreme Court’s decision in MGM Studios, Inc. v. Grokster, Ltd. 125 S. Ct. 2764 (2005) forced all P2P services to ‘face the choice:  Go legitimate, as the music industry insists, shut down, or move outside the U.S. jurisdiction.’  A similar decision was reached at the same time by the Federal Court of Australia in Universal Music Australia Pty Ltd. V. Shaman License Holdings Ltd. (‘Kazaa’), [2005] FCA 1242 (Aust). 

Although Grokster has been shut down, the issues relating to extraterritorial reach of liability theories remain alive not just for domestic P2P services but also for networks established in one or more foreign jurisdictions that have international effects. Copyright owners embraced the new ‘inducement’ theory promulgated by the Grokster decision.  However, litigants may soon have to determine how the theory can be applied to conduct that occurs abroad, assuming that simple pressure is not enough.  Determining when Grokster might apply to foreign conduct implicates the principle of territoriality of domestic copyright law. (Quality King Distrib., Inc. v. L’Anza Research Int’l, Inc., 523 U.S. 135, 154 (1998)).  Yet copyright industries may seek to export Grokster, and attempt to add it to extant liability theories that enable U.S. courts to apply U.S. intellectual property legislation and interpretive doctrine to activities in foreign jurisdictions.  This strategy will likely be in addition to, rather than a substitute for, suing local defendants in their home jurisdictions.

On the other side of the world, the Kazaa decision is having an extraterritorial impact too.  The Australian Parliament enacted legislation implementing the 1996 WIPO Copyright Treaty which allows its courts to apply Australian law to copyright material that reaches audiences outside its borders. This is the ‘right to communicate the work to the public’ which includes communications both to and from Australia. The statute makes clear that the act constituting the primary infringement must occur in Australia; however, it does not specify where the authorisation needs to occur. Yet another fine example of a domestic legislature attempting to localise legal liability for conduct that has significant potential for cross-border effects.

The foregoing discussion briefly indicates that the localisation of foreign infringements in domestic copyright statutes offers copyright owners some potentially powerful liablity principles that might reach conduct in foreign territories.  While some of these liability theories, particularly those that reach communications from one nation that are to be received in other nations, may seem an affront to the traditional territoriality principle, so too is massive unlicensed distribution of copyright protected material by parties who are themselves indifferent to territorial boundaries. As Grokster and Kazaa demonstrate, those attempting to stop the flow of massive amounts of unlicensed distribution of copyright protected material may prove to be more important than the niceties of copyright’s territoriality principle.  The difficulty with this approach is that it has the potential to impose on every other nation a ‘balance’ struck with U.S. economic and technological conditions in mind.  This policy would seem to lead to greater freedom on the part of the developers of dual-use technologies to act in ways that facilitate greater circulation of copyright protected works.  Unless there is full implementation of geographical filtering, such works are likely to reach nations that see the balance between technological freedom and copyright protection differently.

 

Click here to return to the Summary page, or on any of the headings below to see the full case notes for that topic:

HOT TOPICS | COPYRIGHT | PATENTS |TRADE MARKS | TECHNOLOGY | MEDIA