European Court Of Justice Says ISPs Cannot Be Forced To Be Copyright Cops

from the good-for-them dept

Last Thursday, as many of us in the US were getting ready for a nice turkey dinner, the European Court of Justice issued a very nice ruling we should all be thankful for, saying that it is against EU law to require an ISP to set up a filtering system to prevent copyright infringement.

EU law precludes the imposition of an injunction by a national court which requires an internet service provider to install a filtering system with a view to preventing the illegal downloading of files.

Such an injunction does not comply with the prohibition on imposing a general monitoring obligation on such a provider, or with the requirement to strike a fair balance between, on the one hand, the right to intellectual property, and, on the other, the freedom to conduct business, the right to protection of personal data and the freedom to receive or impart information.

We had mentioned this was likely earlier this year, when the Advocate General had recommended such a ruling, and now the court has agreed. The specific case involved a fight between Belgian anti-piracy organization/collection agency SABAM and ISP Scarlet. A Belgian court had ruled that Scarlet had to implement a filter that would magically end infringement, or it would face "periodic penalty." Of course, that's an impossible request. The courts ruling says that a copyright holder can file for an injunction, but it must "respect the limitations" of EU law, including a prohibition on "general monitoring of information" that goes over an ISP's network.

In this regard, the Court finds that the injunction in question would require Scarlet to actively monitor all the data relating to each of its customers in order to prevent any infringement of intellectual-property rights. It follows that the injunction would impose general monitoring, something which is incompatible with the E-Commerce Directive. Moreover, such an injunction would not respect the applicable fundamental rights.

The court also makes a good point. While intellectual property should be respected, nothing in the law says it should be "absolutely protected" in such a way that tramples many other rights. It seems that many supporters of more stringent copyright laws always seem to forget this point. They don't much care about the collateral damage.

Filed Under: copyright, eu court of justice, europe, filtering

EU Commissioner Kroes: Copyright Is 'A Tool To Punish And Withhold'; New Business Models, Not More Enforcement Needed

from the she-really-gets-it dept

Neelie Kroes is that rare thing: a politician who actually seems to understand digital technologies. Before she became the European Commissioner for Digital Agenda, her current post, she was European Commissioner for Competition, and in that capacity made a speech about open standards in 2008 that included the following interesting statements:

It is simplistic to assume that because some intellectual property protection is good, that such protection should therefore be absolute in all circumstances.

and

if we extend intellectual property protection for technology, then we should only do so when it is justified under intellectual property principles, i.e. on the basis of evidence that such extension will lead to more innovations and will therefore promote consumer welfare.

Those comments were about problems with the patent system, and now Kroes has brought her frankness to bear on copyright:

let's ask ourselves, is the current copyright system the right and only tool to achieve our objectives? Not really, I'm afraid. We need to keep on fighting against piracy, but legal enforceability is becoming increasingly difficult; the millions of dollars invested trying to enforce copyright have not stemmed piracy. Meanwhile citizens increasingly hear the word copyright and hate what is behind it. Sadly, many see the current system as a tool to punish and withhold, not a tool to recognise and reward.

That's pretty stunning stuff for an EU Commissioner to be saying, given the European Commission's whole-hearted support for ACTA, and its plans for IPRED 2. Kroes goes on:

We need to go back to basics and put the artist at the centre, not only of copyright law, but of our whole policy on culture and growth. In times of change, we need creativity, out-of-the-box thinking: creative art to overcome this difficult period and creative business models to monetise the art. And for this we need flexibility in the system, not the straitjacket of a single model. The platforms, channels and business models by which content is produced, distributed and used can be as varied and innovative as the content itself.

Again, that focus on new business models rather than ever-more punitive copyright enforcement is a refreshing recognition by a very senior European politician of the real problem facing the creative industries: their failure to adapt to the vastly-different business landscape created by the Internet. Kroes picks up on that theme in her conclusion:

There are many new ideas out there – ideas, for example, like extended collective licensing as practised in Scandinavia, or other ideas that seek to both legitimise and monetise certain uses of works. Are these ideas the right ones to achieve our goals? I don't know. But too often we can't even try them out because of some old set of rules made for a different age – whether it is the Berne Convention, the legislation exceptions and limitations on the VAT Directive or some other current law. So new ideas which could benefit artists are killed before they can show their merit, dead on arrival. This needs to change.

I can't set out for you now what the model should be and indeed it's not the kind of model that should be developed from the centre. Rather we need to create a framework in which a model – or indeed several models – can develop organically, flexibly, in ways that support artists.

I see how some European stakeholders see with horror the arrival of Netflix, or the expansion of iTunes. We need to react, not to be paralysed by fear. Let's take chances. As Zygmunt Bauman put it, "the function of culture is not to satisfy existing needs, but to create new ones".

So that's my answer: it's not all about copyright. It is certainly important, but we need to stop obsessing about that. The life of an artist is tough: the crisis has made it tougher. Let's get back to basics, and deliver a system of recognition and reward that puts artists and creators at its heart.

It's tremendously good news that Kroes has not only recognized these problems but is prepared to articulate them publicly. It suggests that at least someone within the European Commission gets it. Too bad, then, that Kroes seems to be as exceptional in that respect as in her grasp of the underlying digital technologies that are driving these huge changes.

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Filed Under: business models, copyright, europe, neelie kroes, tools

Entertainment Industry Gets Another Usenet Provider To Shut Down: Is Usenet Illegal?

from the the-state-of-the-internet dept

I first got online in the days before the web existed, and spent much of my time on Usenet, that group of message boards that was useful for discussions of all types. While obviously much of those conversations moved to the web or email over the years, it's still pretty ridiculous to see the entertainment industry continue to attack Usenet and basically act as if all of Usenet is illegal. As we noted a little over a month ago, a court in the Netherlands sided with anti-piracy group BREIN, and ordered Usenet provider News-Service (NSE) to wave a magic wand and somehow figure out which Usenet posts were infringing and which weren't. Not surprisingly, that's impossible, and NSE has announced that it's just shutting down entirely instead. NSE was the largest Usenet provider in Europe. And now it's dead. Because the entertainment industry refuses to adapt, and thus blames the technology for how the technology is used, a useful (legal) service is gone. For what it's worth, NSE will continue to appeal the court's ruling... but only on principle. As an operating effort, it appears NSE is dead. Another one killed by the entertainment industry.

Filed Under: censorship, copyright, europe, free speech, usenet
Companies: brein, news-service

Europe Says Stem Cells Are Not Patentable; Confused Scientists Freak Out

from the this-doesn't-stop-the-market dept

In a major ruling from the European Court of Justice, stem cells have been declared unpatentable in Europe. This is somewhat similar to the ongoing fight in the US over whether or not genes are patentable. Here, the ECJ noted that using stem cells for diagnostic purposes may be patentable, but the simple process of separating a stem cell from a human embryo itself, is not patentable. As with genes, I think it's the right decision that such things should not be patentable.

What I find unfortunate, however, is that confused scientists are attacking this decision, claiming that without patents, there will be no investment in stem cell research. It will be interesting (and something of a natural experiment) to determine if that's true. I'm going to guess that the end result will not be what these scientists are predicting. While investment from some big pharma firms may decline, I would bet that the actual usefulness of stem cells is about to go up. Take this complaint for example:

"We are funded to do research for the public good, yet prevented from taking our discoveries to the marketplace where they could be developed into new medicines.

"One consequence is that the benefits of our research will be reaped in America and Asia."

That's from Professor Austin Smith of the Wellcome Trust Centre for Stem Cell Research, University of Cambridge. But it's also totally bogus. Nothing in this ruling prevents anyone from taking the discovers to the marketplace where they can be developed into new medicines. This is a fallacy. Professor Smith might want to look up the history of the chemical and dye industries (many of which became today's pharma industry) in Switzerland and Germany when patents were either not allowed or greatly limited -- and learn that it actually helped bring more products to market because everyone could build on the research and do more with it to make it useful. You can still bring products to market, and the incentive is to keep innovating to bring even better offerings to market. And, by not limiting who can make use of these stem cells, you get much greater research efforts and much faster advancement.

Furthermore, as we've seen in the past, many research scientists have actually been complaining about how stem cells patents had massively hindered their research. Perhaps if Smith took the time to talk to some of those researchers he might realize the benefit from keeping stem cells and other genetic material unpatentable.

If the goal truly is to improve "the public good," then this is a fantastic ruling. It means that more smart people can do more with stem cells to make them useful.

Filed Under: europe, patents, research, stem cells

Facebook Says Some of Your Personal Data Is Its 'Trade Secrets or Intellectual Property'

from the you-thought-it-was-your-life dept

A few weeks back, Techdirt posted a story about a European campaign group called "Europe vs. Facebook", which is trying to find out exactly what information Facebook holds about its users. It is doing this using European data protection laws, thanks to the fact that Facebook' s international headquarters are in Ireland.

The group's founder, Max Schrems, received a reply to his request for the data Facebook held about him in the form of a CD-ROM storing over 800 pages. But looking through them, Schrems noticed that important information was missing, and so contacted Facebook again, asking for the extra details. But Facebook refused:

To date, we have disclosed all personal data to which you are entitled pursuant to Section 4 of the Irish Data Protection Acts 1988 and 2003 (the Acts).

Please note that certain categories of personal data are exempted from subject access requests. Pursuant to Section 4(9) of the Acts, personal data which is impossible to furnish or which can only be furnished after disproportionate effort is exempt from the scope of a subject access request. We have not furnished personal data which cannot be extracted from our platform in the absence of disproportionate effort.

It seems hard to believe that a sophisticated, leading-edge company like Facebook can't pull out all the information about one user – the basic node of the social network - without "disproportionate effort", but that's not the real issue here. Alongside all that terrible effort, Facebook cited another reason for refusing to give Schrems the missing details:

Section 4(12) of the Acts carves out an exception to subject access requests where the disclosures in response would adversely affect trade secrets or intellectual property. We have not provided any information to you which is a trade secret or intellectual property of Facebook Ireland Limited or its licensors.

Claiming that certain aspects of your personal data is "a trade secret or intellectual property of Facebook Ireland Limited or its licensors" seems pretty extraordinary. Schrems is not letting things rest there, though, and has contacted the Irish Data Protection Commissioner to pursue the matter further. Meanwhile, Facebook has released a statement on the matter:

We are cooperating fully with the Irish Data Protection Commissioner who will come to a view on Mr Schrems’ complaint in due course.

I can hardly wait for that view - and for Facebook's response if it requires the release of some "proprietary" data.

Follow me @glynmoody on Twitter or identi.ca, and on Google+

Filed Under: europe, intellectual property, personal identity
Companies: facebook

Is Creating The Same Software Feature Copyright Infringement?

from the the-death-of-software dept

The EU Court of Justice is now considering a lawsuit between SAS and World Programming Ltd. over the extent of copyright protection in software. We wrote about this last year, when a UK court ruled against SAS, but now it's been kicked up to the EU Court of Justice. Everyone seems to agree that WPL copied a feature from a SAS product, but did so in part by looking at SAS's manual, but without access to the software itself, let alone the source code. Basically, WPL just found out about a feature, and created it on its own. It's not even quite reverse engineering (which is generally considered legal), because they didn't make it compatible with SAS's offering -- they just recreated the same basic feature.

It's hard to see how this should be copyrightable. Can you imagine just how stagnated the software industry would become if you could copyright a feature on a piece of software, such that no one else could use it? Hopefully the European Court recognizes the problems such an extreme interpretation of copyright law would create.

Filed Under: copyright, europe, features, reverse engineering, software
Companies: sas, world programming

How Copyright Extension Is Harming Classical Music

from the for-shame dept

With all the talk of the EU's decision to retroactively extend copyright from 50 to 70 years, despite no evidence that this is needed or useful, very little attention was paid to the massive harm this causes. Multiple studies showed that such an extension wouldn't provide much, if any, money to musicians, but most of the money would actually be diverted from artists to major record labels. And it gets even worse. Copycense points us to some reports about how copyright extension is guaranteeing that plenty of classical music won't be heard:

Last week, the EU ratified a new law extending copyright in music recordings to 70 years. That, argued Bob Stanley, was a bad thing for most musicians, and for music itself: much would now remain locked in the vaults of the big record companies. Stanley had been looking at the world of rock and pop, but PristineAudio, who runs a label specialising in out-of-copyright recordings, explained the ruling had far-reaching implications for classical music as well. "One major release of ours earlier this year illustrates well something this new act most certainly will kill off. A historic concert given in 1960 by British conductor Leopold Stokowski with the Philadelphia Orchestra … fell into the public domain in Europe [in 2011], and we were able to transcribe the conductor's own copies of the master tapes, prepared for him by the radio station, and release in the highest quality a concert that has long been of great interest to collectors.

"The irony of copyright law as it stands is that historic orchestral broadcasts are often almost impossible to reissue by anyone, until they pass into the public domain. The standard contract with an orchestra would allow for an initial broadcast and then a single repeat transmission. Thereafter, a new contract would need to be drawn up with the musicians for any further use of that recording. Trying today to track down the performers (or their estates) for a symphony orchestra that existed in 1960 is well-nigh impossible."

That's not the "irony" of copyright. It's the design of copyright, which has always been about granting monopolies to a few players, while limiting the market. It's a protectionist plan designed to protect a few industry leaders, rather than do what it says on the face of the box: promoting progress by increasing cultural output.

Filed Under: access, classical music, copyright, copyright extension, europe

Europe's Copyright Strategy: Have Europeans Send As Much Money As Possible To US Companies

from the that-doesn't-make-much-sense dept

Joe Karaganis, from the Social Science Research Council (SSRC), has a fascinating blog post, in which he digs in a bit on the European approach to copyright law and notes that the end result is basically to divert as much money as possible to US interests and away from EU citizens. In typical SSRC fashion, the reasoning is pretty detailed. He looks at the audiovisual industry -- where he notes that Europe imports a hell of a lot more from the US than they export out:

About 56% of those imports ($8.35 billion) come from the US. The EU, in turn, exports about $1.7 billion to the US, resulting in a net negative trade balance of around $6.65 billion. This does not include software licenses, where US companies monopolize larger parts of the European consumer and business markets.

From there, he looks at who actually benefits from stricter enforcement, and who benefits from infringement. And it's not hard to see that it's basically the US companies who will get a massive amount of the benefit... and its EU consumers who will lose out under a stricter regime. In the end, the result is pretty clear: stricter IP enforcement in Europe will do little to "protect" European heritage and culture, and will actually serve to take away from it, and push more money to US legacy entertainment companies.

It is important to be clear about the future that the EC is promoting with its IP policies. It is not a defense of European heritage or–primarily--a vision of the French auteur able to bring his or her distinctive vision to a global audience. It’s a vision of European production companies as slightly better integrated junior partners in global Hollywood.

It’s this junior partnership that should be weighed against the wider sacrifices of privacy and freedom of speech built into so many recent national and EC-level IP enforcement policies, such as the French ’3-strikes’ plan, which will cut French citizens off of the Internet for the piracy of Hollywood productions. Strong enforcement reinforces status quo positions in the market, but at an escalating public cost as consumer behavior becomes the real focus of enforcement activities. There is nothing in these policies will alter the balance of cultural power or change the direction of payments. That’s why I’ve characterized the EC enforcement plan as: “send money to the US.”

It's important to recognize all of this, because the rationale being bandied about in Europe for greater copyright protectionism is the belief that it will actually help "protect" local culture. And yet, as Karaganis details in his post, there's little evidence to support this, and most of the evidence seems to support a result that is entirely counter to that. The deal on things like ACTA is so bad for EU interests that Karaganis wonders just what the hell happened to get the EU to be in a position where it appears to be negotiating against its own best interests. Turns out, US lobbyists are pretty good at what they do, and have convinced clueless EU bureaucrats to support their own cultural demise by having them focus on nostalgia and putting up smoke and mirrors when it comes to the actual economics:

How did Europe get here? Tellingly, there was initially little European enthusiasm for a broad trade agreement on IP in the 1980s. By most accounts, lobbying by US tech and pharmaceutical industries made the difference, capitalizing on a wider overestimation of–and nostalgia for–Europe’s role as a cultural superpower, when it was the primary beneficiary of stronger international IP laws. More narrowly, the European Commission’s IP activism can be traced to the actions of a handful of American CEOs, who convinced their European counterparts of the benefits of a global IP deal in the run-up to the WTO agreement in the 1980s. Those counterparts, in turn, applied pressure on their national governments and, through them, the EC.

One way to get out of that mess, is to take the "moral" argument out of the copyright debate, and focus in on what really matters: the economics. This is a trade discussion and morality plays no role. But the EU politicians think that this is a moral issue, while the US negotiators, at the pushing of a few key industries, has convinced the EU to sell out its own economic and cultural best interests, by pretending this is a moral debate.

Filed Under: copyright, europe

European Nations Wish To Ban Negative Thoughts Or Investments On Their Financial Position

from the towards-a-more-patriotic-hedge-fund dept

It seems that no country is immune to the sting of financial opinions. As we saw recently, S&P's decision to strip an "A" off their rating for the U.S. debt resulted in President Obama's dismissal of the rating ("We're still AAA."), Michael Moore's call for something a bit more drastic ("show some guts and arrest the CEO of Standards and Poors") and, finally, the Senate Banking Committee's decision to explore its options, including a possible hearing involving S&P ("We won't arrest them. We'll just take them downtown to answer a few questions.")

Being unable to graciously accept financial criticism isn't just an American problem, however. As several European nations continue their slide into bankruptcy, their respective governments have stepped up to do the only thing that makes sense: ban short sales on government-backed bank shares (following on a similar plan to ban negative ratings). It's yet another case of governments attempting to suppress expression it doesn't like (i.e., "We think failure is the most likely option.") through legislation. And as Matt Levine of Dealbreaker explains, there's a whole lot of unintended consequences to banning "sad thoughts about banks:"

This is hard to believe because all European banks are obviously well capitalized and any suggestion to the contrary is just rumor and speculation. But! Sometimes things go wrong. Sometimes banks need to raise money. When equity investors are staying away from them, sometimes they do this by selling convertible bonds...

The short sale bans are mostly for just 15 days, but repeatedly changing the rules in the financial markets will have effects well beyond the brief share-price gains. If you're a convertible arbitrage investor, it's now pretty clear that you should never buy convertibles issued by a European bank, because you may not be able to hedge when you need to. Which can't be good for the banks' future capital raising needs.

Oddly enough, the protectionist legislation meant to protect the banks from "evil" speculation will also work against their ability to raise funds in the future, which extends the damage from "just right now" to "an indefinitely longer period."

Then there's this bit of extremely broad terminology coming from Spain's entry into the "the only correct position is a positive position" ban-happy sweepstakes:

This preventive ban affects any trade on equities or indices, including cash equities transactions, derivatives in regulated markets or OTC derivatives, that has an effect of creating a net short position or increase a previous one, even if on an intraday basis. A net short position means any position resulting in a positive economic exposure to falls in the price of the stock.

In much simpler words: investors are not allowed to profit when stock prices dip. This also means that investors can't mix in a few shorts with the rest of their investments to insulate themselves against price drops. Or rather, that they can do that, but only if the end result of the investments is that they lose money when stock prices fall. Spain, it would seem, is only going to allow bullish investments despite the realities of the market, and it will be watching this on a day-to-day basis, if the language above is to be believed. Adios, bear market day traders!

France ties things down even further in its extensive AMF document:

3 - Is an investor allowed to create a net short position in one of the securities concerned by using derivatives?
No, investors are not allowed to use derivatives to create a net short position; they may only use derivatives to hedge, create or extend a net long position.

France is also savvy to other devious, speculative moves as well:

6 - Are trades in index derivatives allowed where the basket of securities includes one or more of the securities concerned?
a) Investors exposed to the equity market are allowed to hedge their general market risk by trading in index derivatives. In this context, the AMF accepts the marginal net short positions in the securities concerned that may result from that trading in index derivatives.
b) Trading in index derivatives for any other purpose than hedging general market risk is not allowed unless the resulting net short positions in the securities concerned are offset by long positions.

Again, this overly broad ban against speculators who have the audacity to express their lack of confidence in a financial system via their market activity will also steamroll "legitimate" investors who are just looking to "not lose money," as Levine points out:

We wonder how you would test whether a net short position in an index derivative is for the purposes of "hedging general market risk" or for the purposes of "profiting on spreading false rumors" (or other non-legitimate purposes, like hedging specific market risk). Presumably anyone shorting European indexes does so because they don't want to lose money when the market goes down. Even speculators.

Oh, and one more thing: these bans are still in effect if you're a citizen of these short-sale-banning countries, no matter which country you actually reside and/or do business in:

The Decision applies to any natural or legal person, French or foreign, regardless of whether trading takes place in France or in another country, or on a regulated market or not.

All of this ridiculous legislation is due to various governments suddenly developing very thin skin when investors insult them tangentially with their financial decisions and opinions. There's nothing to be gained by banning short sales and plenty of unintended consequences to unleash into an already-disrupted marketplace. Levine sums up their attitude this way:

You take shorting of bank shares as a personal affront, and your goal is not to have functioning markets but just to prove that you’re tough.

While I'm sure most governments would love all of their citizens to believe that their respective nations will overcome all odds and rise to greatness once again, in the meantime, investors are still going to bet on what is likely, rather than just wrapping themselves in the flag and throwing their money into whatever the legislative body deems to be proper, patriotic investments.

Filed Under: debt, economics, europe, markets, opinion, short selling, sovereign