Hollywood Loses Its Big Copyright Lawsuit Against ISP iiNet Down Under

from the secondary-liability dept

Well, here's some good news on the copyright front down under in Australia. You may recall that, back in 2008, a bunch of Hollywood studios (along with two Australian movie studios, just to make it seem "local") sued Australian ISP iiNet for failing to "do enough" to stop infringement. As far as we can tell, Hollywood basically wanted iiNet to wave a magic wand. We later learned, thanks to a US State Department cable leaked via Wikileaks that, not only was the MPAA really behind the lawsuit (though it tried to keep its involvement secret), but that it chose iiNet (the third largest Australian ISP) on purpose: they were "big enough to be important" but not big enough to have the resources to fight back (in the tangled mind of the MPAA). This, like so many MPAA actions these days, turned out to be a serious miscalculation.

iiNet fought back, and fought back hard -- and won at every single level in the court system, including today's High Court ruling that effectively ends the case. Oh yeah, the High Court also says that Hollywood has to pay iiNet's legal expenses -- approximately $9 million.

From the beginning, contrary to the MPAA's assumption, iiNet fought back hard. Beyond the obvious, which was pointing out that as a service provider it was not responsible for its users' actions, iiNet also protested that the notices the MPAA's anti-piracy front group AFACt, was sending were deficient:

They send us a list of IP addresses and say 'this IP address was involved in a breach on this date'. We look at that say 'well what do you want us to do with this? We can't release the person's details to you on the basis of an allegation and we can't go and kick the customer off on the basis of an allegation from someone else'. So we say 'you are alleging the person has broken the law; we're passing it to the police. Let them deal with it'.

The original district court ruling was fantastic, and did such a great job illustrating why it makes no sense to blame third party service providers for infringement -- because infringement is not an absolute, but requires a court to decide what really is infringement. As the original ruling stated:

Regardless of the actual quality of the evidence gathering of DtecNet, copyright infringement is not a straight 'yes' or 'no' question. The Court has had to examine a very significant quantity of technical and legal detail over dozens of pages in this judgment in order to determine whether iiNet users, and how often iiNet users, infringe copyright by use of the BitTorrent system. The respondent had no such guidance before these proceedings came to be heard. The respondent apparently did not properly understand how the evidence of infringements underlying the AFACT Notices was gathered. The respondent was understandably reluctant to allege copyright infringement and terminate based on that allegation. However, the reasonableness of terminating subscribers on the basis of non-payment of fees does not dictate that warning and termination on the basis of AFACT Notices was equally reasonable. Unlike an allegation of copyright infringement, the respondent did not need a third party to provide evidence that its subscribers had not paid their fees before taking action to terminate an account for such reason.

In other words, just because someone accuses someone else of infringement, it's ridiculous for the ISP to automatically assume infringement has taken place. That turns the basic concepts of due process on their head. AFACT/MPAA appealed and lost again, with the court once again pointing out that general knowledge that someone on your site infringes is not nearly enough to terminate or suspend users.

This latest (and final) ruling basically takes the same stance. The full ruling is a bit dry, but makes some salient points. It notes, for example, that as a mere ISP, iiNet has absolutely nothing to do with BitTorrent and can't control the fact that some of its subscribers used BitTorrent. It also notes that iiNet was not hosting any of the material, nor doing anything with the infringing material. On top of that, it notes the pointlessness of AFACT/MPAA insisting that iiNet has to kick people off the internet:

Termination of an iiNet account with a customer who has infringed will assuredly prevent the continuation of a specific act of communicating a film online using a particular .torrent file on a particular computer. Regrettably, however, on receiving a threat of such termination, it is possible for a customer to engage another ISP for access to the internet on that computer or access the internet on another computer using a different ISP. Whilst any new infringement would be just as serious as the specific primary infringements about which the appellants complain, this circumstance shows the limitations on iiNet's power to command a response from its customers, or to prevent continuing infringements by them.

And, once again, the court finds that mere notice of infringement certainly is not proof of infringement, and requiring iiNet to investigate further is too big a burden:

Updating the investigative exercise in the AFACT notices would require iiNet to understand and apply DtecNet's methodology – which, among other things, involved a permission to DtecNet from AFACT to use the BitTorrent system to download the appellants' films. Before the filing of experts' reports in the proceedings, the information in the AFACT notices did not approximate the evidence which would be expected to be filed in civil proceedings in which interlocutory relief was sought by a copyright owner in respect of an allegation of copyright infringement. Also, any wrongful termination of a customer's account could expose iiNet to risk of liability. These considerations highlight the danger to an ISP, which is neither a copyright owner nor a licensee, which terminates (or threatens to terminate) a customer's internet service in the absence of any industry protocol binding on all ISPs, or any, even interim, curial assessment of relevant matters.

iiNet's inactivity after receipt of the AFACT notices was described by the appellants as demonstrating a sufficient degree of indifference to their rights to give rise to authorisation. However, the evidence showed that the inactivity was not the indifference of a company unconcerned with infringements of the appellants' rights. Rather, the true inference to be drawn is that iiNet was unwilling to act because of its assessment of the risks of taking steps based only on the information in the AFACT notices. Moreover, iiNet's customers could not possibly infer from iiNet's inactivity (if they knew about it), and the subsequent media releases (if they saw them), that iiNet was in a position to grant those customers rights to make the appellants' films available online.

All in all, this is a good ruling concerning copyright and secondary liability -- and a bunch of money down the drain for the MPAA, who could have spent this time helping its studios to innovate, but has instead focused on this quixotic legal strategy.

Of course, it doesn't sound like this ruling will have the MPAA come to its senses either. The AFACT front group is already claiming that the ruling means Australia must change its laws to turn ISPs into copyright cops:

The Australian Federation Against Copyright Theft (AFACT) is ramping up the pressure on the government to act. It said today's judgment exposed the failure of copyright law to keep pace with the online environment and the need for the government to act.

"It would seem apparent that the current Australian Copyright Act isn't capable of protecting content once it hits the internet and peer-to-peer networks...," AFACT managing director Neil Gane said.

No, Neil, it's not Australian law that's the problem. It's reality, and the fact that the movie studios refuse to bother to understand how the internet works and how they can adapt. No law will fix this. It will only make things worse. And Gane and the MPAA should be careful, lest they think they can try to pass another SOPA down under. I get the feeling that won't go over well.

Filed Under: australia, bittorrent, hollywood, liability
Companies: afact, iinet, mpaa, wikileaks

Hollywood Still Trying To Kill The Golden Netflix Goose

from the incredible-mistake dept

Netflix has made its share of mistakes lately in dealing with its customers, but the company's biggest problem may be that Hollywood is so jealous of its success that it's now seeking to kill off the company's service by refusing to license movies and TV shows to Netflix. This isn't a surprise. We've seen similar stories over the past year or so, but the fact is that Hollywood is so short-sighted that it's trying to hold back the tide, and in the process, causing itself more harm. Netflix isn't "the enemy." It's found a way to offer a good service that many people want and use at a price point that makes sense.

Of course, it's that part that makes Hollywood freak out. They fear the "threat" of new business models that undercut their legacy deals, and that means they want Netflix to boost prices, put even more annoying limitations on use and greatly delay and limit selection—because they stupidly think this will drive more people to the more expensive offerings from the studios themselves. The're wrong. All this does is drive more people to piracy, while killing off one of the few services that was allowed (if briefly) to effectively compete with "piracy" by offering a better overall service.

The problem for Hollywood doesn't appear to be piracy. It looks like it's Hollywood's own fear of piracy that is leading it to make really short-sighted decisions.

Filed Under: hollywood, licensing, piracy, streaming
Companies: netflix

Chris Dodd Suggests Backroom Negotiations On New SOPA Are Well Underway

from the not-dead-yet dept

Update: The MPAA has now attempted to backtrack on these comments.

Ah, Chris Dodd. It seems like every time he opens his mouth, he makes things worse. In an interview with the Hollywood Reporter, he responds to a series of questions about SOPA by trying to tiptoe around the issue, but basically admits that there are backroom conversations going on between a small number of people, and that "between now and sometime next year," Hollywood and the tech industry will "come to an understanding." He's asked specifically if there are conversations going on now, and if the White House is pressuring folks to come to such "an understanding."

THR: Are there conversations going on now?

Dodd: I'm confident that's the case, but I'm not going to go into more detail because obviously if I do, it becomes counterproductive.

THR: Did you feel personally blindsided by Obama over SOPA?

Dodd: I'm not going to revisit the events of last winter. I'll only say to you that I'm confident he's using his good relationships in both communities to do exactly what you and I have been talking about.

Yes, you know why it would be "counterproductive" to go into more detail? Because he knows damn well that the problem with SOPA was that it was negotiated in the backrooms with private parties and no participation from the actual stakeholders: the public.

So, yes, admitting that you're doing the same thing all over again would be counterproductive. You know what would be productive? Stopping this political backroom dealing crap, and finally coming out and having a public discussion. But he won't do it, because Dodd is a coward and a DC-insider who only knows how to cut deals, not how to actually respond to the public's best interests.

Later in the interview he trots out a nearly identical line to the one he's been using recently, about how he only just discovered that the movie industry wasn't just about red carpets and movie stars.

There's so much misunderstanding about this business. Before I started this job, I would have said it's about Oscar night, red carpets, movie stars and glamorous lives. But there are 2.2 million people who get up every morning and work in this business. I think it's unfortunate there isn't a deeper understanding of how important this industry is to this country.

Not only does this sound ridiculous (and call into question why someone so clueless about the industry was given the top lobbying job for the industry), but it's entirely false. 2.2 million people do not "get up every morning and work in this business." As has been detailed many times, the actual number is less than 400,000 (and that's from the Congressional Research Service), and the number of jobs for people who actually make movies is growing. The only real decrease has been in those who work at theaters -- and that's due to consolidation.

Filed Under: backroom deal, chris dodd, hollywood, sopa

Hollywood Up And Comers Recognizing That The Big Gatekeepers May Be More Of A Threat Than Silicon Valley

from the fighting-the-status-quo dept

Despite the MPAA's insistence that it wants to "talk" to Silicon Valley, it still seems to think that just means getting together with Google's lobbyists in Washington DC. Thankfully, the MPAA doesn't really represent the full movie industry, and plenty of young filmmakers realize that the tech industry isn't the enemy and has been providing tons of great tools and services that up-coming filmmakers rely on every day. Some of them are realizing that perhaps the real fight is between the legacy gatekeepers and the up-and-comers... and as such, the up-and-comers should have a much closer relationship with the tech industry.

Gina Hall is a young Hollywood filmmaker who reached out to me and some others in Silicon Valley to begin this discussion, recognizing that perhaps the MPAA's claims don't match up with her best interests:

I feel like the solutions proposed from Hollywood establishment just might be in favor of the status quo rather than helping up-and-comers. Call it a hunch. So while industry bosses are distracted with their fight to sustain the old business model, I figured it might be a good time to start a series of conversations between the tech sector and young Hollywood to make some sense of the seismic shift happening in the industry.

There are a few quotes from me in that article, in which she notes that it really does seem like the tech industry is coming up with all the cool stuff that actually helps young filmmakers today -- from tools (like cheaper cameras) to services (like YouTube) to ways to monetize (like Kickstarter). Old Hollywood? Not so much:

Masnick's M.O. is disruptive innovation -- or as he describes it "how we get cool stuff." Creating cool stuff -- honestly, isn't that what most of us get in the business to do? The problem is, Hollywood isn't responsible for creating enough cool stuff these days (especially locally) to keep us all employed. A lot of the cool stuff is now coming from the tech sector with Hollywood standing idly by. In conversations with those employed with the studios, production companies and agencies around town, I've heard projects worked on self-described as "lame," "derivative," or the backhanded compliment: "Meh, at least it'll make money."

I'm looking forward to her continuing series, showing that the tech industry and young Hollywood are very much in alignment. The only real problem is with the legacy players in the business who are just looking to keep making money the way they used to, without actually changing with the market.

Filed Under: enablers, gatekeepers, gina hall, hollywood, pipa, silicon valley, sopa, young hollywood

Distributor Neglects Indie Filmmaker's Movie, So He Asks Fans To Pirate It

from the creators-versus-gatekeepers dept

As all sorts of creators, from musicians to authors to filmmakers, have been discovering for decades, being scooped up by one of the entertainment industry's big-business gatekeepers isn't always the career-changing windfall that popular romantic notions believe it to be. Whether through crafty accounting, creative interference or a total lack of support, doing business with big labels, distributors and publishers often fails to deliver the financial and career benefits that creators expect. Once upon a time there was very little they could do, but with the direct-to-fan communication potential of the internet, we're seeing more and more artists publicly turn on their supposed partners and implore their fans to route around them. Recently we covered the indie band Streetlight Manifesto, who encouraged fans to either buy the music directly from the band or just pirate it, so long as they don't give their money to Victory Records. Now, via Twitter, @cephyn points us to a similar story in a blog post from indie filmmaker Jordan John Michael Thomas, asking fans to please pirate his movie Corpse Run. Thomas explains how, after success on the festival circuit, he came head to head with the unfortunate realities of getting a film distributed the Hollywood way:

The first thing we had to do was get a Rep for our film, this Rep would then try to sell it to different distributors and take a small fee. We had many offers for Representation and ended up going with the most prominent one that had the lowest fees. They took a retainer fee to pay for their expenses. – of course this retainer would never be returned.

They did find us a few different distributors and we ended up going with the one that they reccomended the most. This was exciting, as our film was about to get released, we would soon see it on netflicks, on some cable stations and in video stores!

We didn’t get any money up front, which is the general practice in the indi world – I know you hear about these million dollar deals, but they are by far and away the exception to the rule, as Cicero would say, “You can’t hear the prayers of the dead on the ocean’s floor.” So we had a backend deal, a completely fair backend that I was happy with.

And then what happened? Our film was shelved. We had no recourse, it just sat on the shelf doing nothing, sitting there for years! In fact, They still have it for two more. Recently it has been released on Amazon as a print on demand title. And that is it. Well I don’t think my distributors should make any money for doing nothing.

So I am asking you, begging you, please steal my movie.

Entertainment industry gatekeepers have long profited from the cultural myth that once an artist has their blessing (a record contract, a distribution rep, a publishing deal) then they're on the fast-track to success and possibly stardom. That's never been true for any but the tiniest minority of creators, and now that the rest have the tools to expose the reality of these deals, gatekeepers are rapidly losing their status. Some will default to criticizing Thomas for encouraging people to break the law, and he is, but that is missing the broader lesson: contrary to the claims of groups like the RIAA and MPAA, entertainment gatekeepers are not all about protecting and benefiting artists. Their vilification by the creators they exploit is long overdue, and as it gains momentum, the myth of artists "making it" by hitting the "big time" is going to be swept away for good. And make no mistake: that myth is at the core of what sustains their dwindling relevance.

Filed Under: corpse run, hollywood, jordan michael thomas, sharing

Hollywood Hackers Vs. Reality

from the CIP-#1,831-for-why-the-internet-is-scary dept

Perhaps no single "demographic" is more misunderstood (and feared -- especially post-SOPA debacle) by Hollywood than "The Hacker." In the hands of the movie machine, hackers are portrayed as fast-talking (and fast-typing) young men (and very occasionally, women) with unfortunate hairdos, huddled around multiple screens making use of thoroughly impractical GUIs, all the while spouting a confounding mixture of instantly-outdated slang and acronyms.

Saturday Morning Breakfast Cereal breaks this down in an incredibly concise and incredibly awesome two-panel comic: Maybe Hollywood uses this creative license to keep its fears at bay. It's got IT departments full of young men (and women) with unfortunate hairdos to handle anyone trying to DDOS its kilobytes, allowing it to breathe easy and sleep the deep sleep of the blissfully unaware. To confront the fact that anyone with half-decent social engineering skills could talk them and their underlings out of sensitive information is probably way too alarming.

Filed Under: hackers, hollywood

Hollywood's Latest 'Conciliatory' Effort Towards Silicon Valley? Forcing Lobbyists To Drop Tech Companies As Clients

from the they-may-regret-that dept

Remember how Hollywood keeps saying that they now want to have this "conversation" with Silicon Valley and not be so antagonistic? It seems that feeling does not extend to lobbyists. According to Politico, the folks in Hollywood have been putting pressure on lobbying shops not to work with the tech industry -- and Facebook in particular:

"They are doing everything they can to ensure that the tech industry and Facebook in particular doesn't have any talent to go up to the Hill," one tech lobbyist said of the content providers.

Fierce, Isakowitz & Blalock, the Glover Park Group and TeleMedia Policy Group have all terminated their lobbying contracts with Facebook, according to sources familiar with the lobbying terminations.

This is interesting timing. And by "interesting" I mean "bad," for those lobby shops at least. Remember, Facebook, which is growing at an insane rate, just filed for a massive IPO and is going to be flush with cash. Meanwhile, the entertainment industry has actually been scaling back some of their lobbying efforts. Betting on the losing team isn't exactly a winning strategy. Of course, as the article correctly points out, this is Hollywood still thinking that the SOPA/PIPA fight was about lobbying, when it had little to do with that (not to say that lobbying wasn't done over the issue, but no amount of lobbying was going to win that fight -- it was the public activism that did it).

Either way, it's an odd choice to go after Facebook's lobbyists anyway, considering how little Facebook had to do with this fight at all. Of all the big internet companies, it actually seemed the least willing to even bother to do anything about SOPA/PIPA. Of course, Facebook has been ramping up its DC policy efforts on other fronts, so the lobbyists lose out, and this does nothing to benefit Hollywood. Kind of a weird move. Hollywood gets a few more lobbyists on its side... and it's unlikely to have a significant impact on how the public views these attempts by Hollywood to attack the internet, rather than adapt to market realities.

Filed Under: dc, hollywood, lobbyists, pipa, sopa
Companies: facebook

Dear USTR: Want Other Countries To Sign Your Trade Agreements? Stop Letting Hollywood Write Them

from the just-saying dept

With more and more countries in the EU backing away from signing ACTA, and even the EU Parliament's president speaking out against it, it's raising serious questions about the ability to get the EU signed on to ACTA.

Harold Feld, over at Public Knowledge, has published something of an open letter to the USTR suggesting that, just maybe, if it stopped letting Hollywood lobbyists drive the agenda for their international trade agreements, such agreements wouldn't be chock full of crazy -- and might result in an agreement that countries actually want to sign.

So let me give USTR and the non-Hollywood industries involved right now in negotiating trade agreements like the Trans-Pacific Partnership Agreement (TPPA) another spot of free advice. (I won't even try to suggest this to Hollywood, given they are still in denial there was ever anything wrong with SOPA.) Do not let hollywood hijack your trade negotiations to put in even crazier stuff no one in the world likes, wants, or will sign on to. I know Hollywood has probably already been pushing for plenty of crazy stuff and doing crazy things like saying Canada's not moral enough to join you all on the Group W Bench at the TPPA negotiations. But it is never too late to take them aside and talk some sense into them. You can point out that we now have yet-another-study from academics rather than paid industry flunkies showing that peer-2-peer piracy has little impact on U.S. box office revenue and that Hollywood could do a lot to cut down on international piracy by making content available (for a fee) in a time and manner that customers want rather than insisting on an out-dated, complex "release windows" system developed in the old days when folks either went to theaters or waited 'til it showed up on DVD. So perhaps Hollywood should ratchet back the crazy stuff, or risk getting cut out of the negotiations entirely so every one else can get a trade agreement done?

It's such sensible advice that it'll never happen.

Filed Under: acta, hollywood, tpp, ustr

Yet Another (Yes Another!) Study Suggests Hollywood's Problem Is Dumb Release Windows That Cost It Money

from the damn-the-facts,-it's-piracy-piracy-piracy dept

It really was just two months ago that we pointed to yet another study saying that the problem that Hollywood was facing with infringement was almost entirely its own fault for creating stupid "release windows" that make it harder for consumers to view what they want, when they want it. It's that point alone that is driving significant amounts of infringement. It doesn't add much new, but a new report suggests that if the studios got rid of the windows, they would actually make more money. In aggregate, people would end up spending more money on movies. Of course, we've made this argument for years.

To be fair, a big part of the reason this doesn't happen is because of the theaters themselves. Any time the studios seek to take away the box office window by releasing something elsewhere earlier or at the same time, the theaters throw a complete hissy fit -- effectively admitting that they're so bad at the service they provide, that they can't compete with home theaters. Of course, it's not all the theaters' fault. As we've seen with studios like Warner Bros., they're so obsessed with the ability to price differentiate through windows, that they keep seeking to add new windows, which only serve to drive more consumers to infringe.

Honestly, I'm at a loss as to why Hollywood can't do the math here, in terms of how much they'd gain from doing day-and-date release for everything (even if it meant fighting the theaters). It seems like a clear win, with multiple studies supporting that, including this new one. They seem to think the only way to price differentiate is through windows -- but, as lots of others have discovered, you can launch a variety of differentiated offerings at the same time and offer them at different prices, and the market self-segregates. Sooner or later, someone at a movie studio is going to figure this out, and make that studio a lot of money.

Filed Under: business models, hollywood, research, windows