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3. Copyright - is everyone liable for everything (II)?

3.1. Transmissions - who's liable?

In APRA v Telstra (1995) 131 ALR 14, a majority in the Federal Court (Black CJ and Burchett J) held that Telstra had caused musical works to be transmitted to subscribers to a diffusion service in three situations where music could be heard on the Telecom network by users `on hold': (i) where provided by a third party to the caller; (ii) provided by a Telecom service centre; and (iii) provided by Telstra as part of its `Customnet' service. Leave to appeal to the High Court has been granted.

The court interpreted the very complex provisions of s26 of the Copyright Act 1968 (Cth). Black CJ considered that the appeal turned on s26(5), via these steps:

(i) `Service' is a broad term, and includes where provided directly by a trader or indirectly (as here, via Telstra); and whether or not all customers appreciate it;

(ii) A service of `distributing' matter (musical works in this case) does not require all recipients to receive same content at same time;

(iii) `Subscribers to the service' are provided by s26(5)[6]: subscribers to Telstra's telecommunications service are deemed to be subscribers to the service of distributing musical works, because it is provided incidentally to the telecommunications service;

(iv) Section 26(4)[7] then provides that Telstra, the person undertaking with subscribers to provide a distribution service (ie the telecommunications service plus the incidental provision of music on hold via s26(5)), is deemed to the person operating the distribution service. Section 26(2)(a)[8] then deems that person (Telstra) to be the person transmitting the musical works.

Burchett J agreed, stating that Telstra does agree to provide music on hold, just as much as it agrees to provide an operator's voice. Sheppard J (dissenting), took a similar approach to Gummow J at first instance, holding that there is no agreement or undertaking by Telstra to provide the service, as required by s26(4), and that s26(5) does not deem such an undertaking to exist.

Carrier liability for services provided by others

In APRA v Telstra, none of the judges make any distinction between where Telstra provides the music on hold service, and where it is provided by some third party (such as the party called, or by some independent `muzak' provider). Burchett J equates Telstra's agreement to play music on hold in all cases where it is played (ie incl. via third parties) with its agreement to provide reception of the operator's voice. Black CJ doesn't discuss the distinction. Sheppard J (dissenting) doesn't make a distinction, as he finds no deemed agreement in any situation. However, he points out the difficulty and cost of Telstra paying royalties to APRA (if it can reach agreement) concerning all music on hold, and in Telstra reaching (compensatory) agreements with those third parties who provide music on hold).

Watts and Gilchrist[9] conclude '[t]he decision appears to impose strict liability on a telecommunications carrier for the transmission of copyright material over their networks as part of a service, regardless of whether the carrier actually supplies, operates or consents to the use of the equipment, from which the material originates, such as a computer bulletin board, a WWW site, or a CD player.' The implications of the decision do seem to be as brad as this, but only of course for those copyright subject matters that have a diffusion right (literary, dramatic and musical works, and films).

Watts and Gilchrist question the sense of imposing such liability on carriers, stressing the limits on control of content that carriers can exercise. Carrier powers to monitor communications are very limited under the Telecommunications Act and Telecommunications (Interception) Act, they have limited powers of disconnection, and obligations to provide services. To impose such content-oriented burdens on telecommunications carriers seems inconsistent with their role, and Parliament may need to review Act to protect them unless the High Court takes a different view of APRA v Telstra on appeal.

Are ISPs liable for transmission? - the APRA claim

The potential scope of carrier's liability is surprising enough, but Watts and Gilchrist also assert, without further argument, that '[t]he principles .. can possibly be extended ... to resellers of telecommunications services, online service providers ... and to the Pay Television networks'.

The same view is apparently taken by APRA, which in June 1996 is reported to have sent letters[10] to a number of internet service providers stating in part:

APRA is aware that transmissions of its copyright music are occuring on the Internet. At present

this use is unlicensed and therefore constitutes an infringement of APRA's copyright.

Consequently, APRA has formulated a licence scheme to authorise this music use.

As the law presently stands, it is the Internet Service Provider (the "ISP"), and not the content

provider, who causes transmissions of APRA's music on the internet to ISPs subscribers.


By virtue of subsections 26(2) and (4) the person operating such a service is also the person

causing the matter to be transmitted whether or not that person actually transmits the matter.

Consequently, it makes no difference that the matter delivered does not originate with the ISP

nor that the ISP does not own or control the pathways of that delivery. It is the ISP

who is causing the transmission of music to subscribers to a diffusion service, and is therefore

responsible for any infringements of copyright which occur by reason of the transmission.

On its face, APRA's claim seems to be supported by APRA v Telstra. Although in that case the circumstances of the infringement of the musical work (playing on hold) meant that the work could be heard at the time of infringement, that should not be necessary, as a musical work can be transmitted in a number of forms, and whether transmitted as a downloadable copy of a sound recording, or as sheet music, or as `real audio', this should make no difference to the transmission right. APRA v Telstra also illustrates that multiple locations of reception, and non-concurrent reception by different subscribers don't seem to matter either.

The aspect of the APRA claim against ISPs that makes it quite extraordinary is that one transmission of a musical work could make numerous ISPs, from content providers to various access providers, liable if they `handle' the transmission in any way in the course of its delivery, plus of course the telecommunications carrier (assuming that such a service is also `incidentally' provided with a telecommunications service: APRA v Telstra). Everyone may be liable for everything.

This may be a weakness in the argument, because s26(2)(b)[11] could be read to mean that only one party (`no person other than ...') is to be regarded as operating a diffusion service, although if this was the case then it would presumably have been considered in APRA v Telstra.

The High Court may succeed in removing some of the obscurity from s26, or it may be made largely irrelevant by the introduction of legislation for a new broad form of transmission right, to implement the `Convergence' committee's recommendations. It is unlikely that the problem will be resolved finally until there is a legislative framework that allows the different functions of different types of internet service providers to be more reflected more fairly in their liabilities.

3.2. The broadcast right - are ISPs liable?

Where the music on hold was heard via mobile phones, all three judges in APRA v Telstra agreed that it was an infringement of the broadcast right. Sheppard J held that the `broadcast' did involve transmission to the `public', following case-law in holding that `the provision of music on hold could not be regarded as "domestic or quasi-domestic" in character', but rather, it is `a use which the copyright owner may reasonably regard as his or hers to control'. Burchett J added that the Explanatory Memorandum makes it clear that it is still a transmission even though it is not to the `general public' (ie one caller on hold on one musical item is enough). Arguments based on confidentiality of phone calls wrongly assume that `broadcast' has same meaning as in broadcasting law.

In relation to any internet services distributed via mobile telecommunications networks, we could expect that carrier liability would apply in relation to any copyright subject matter which has a broadcast right (ie all subject matter except artistic works).

In relation to the liability of internet service providers, the question is whether the Court would find that anyone other than the mobile carrier 'broadcasts'?

3.3. Authorisations - who's liable?

A key question for ISPs is under what circumstances they may be liable for authorising some infringements of copyright that take place using the facilities they provide. In APRA v Telstra the Federal Court did not need to consider the question of authorisation, because it found Telstra directly liable for transmission by means of a diffusion service, and broadcasting via mobiles.

There is as yet no substantial Australian authority directly on the position of ISPs, with the most useful criteria probably still those set out in UNSW v Moorhouse (1975) 133 CLR 1 by Gibbs CJ as a set of four sufficient conditions for authorisation: `It seems to me ... that a person [i] who has under his control the means[12] by which an infringement of (c) may be committed - such as a photocopying machine - and [ii] who makes it available to other persons [iii] knowing or having reason to suspect that it is likely to be used for the purposes of committing an infringement and [iv] omitting to take reasonable steps to limit its use to legitimate purposes would authorise any infringement that resulted from its use' (emphasis and numbering added). He later adds `.. it is clearly sufficient if there is knowledge or reason to suspect that any one of a number of particular acts is likely to be done...' . Moorhouse was a very strong case because UNSW (i) owned and could control the copying equipment (photocopier); (ii) provided the copyright material to be copied; (iii) supplied the copying medium (paper), and (iv) could even control the copying location (ie who used the library).

Similar `control' elements would need to be considered in many situations where the liability of ISPs. In the recent United States decision on the issue Religious Technology Centre v Netcom (1995) 33 IPR 131 (US District Court - N Dist. Calif.), Whyte DJ held that Netcom's automatically retransmitting Usenet posting to 'neighbouring' Usenet computers was not a direct infringement (ie primary infringer by reproduction). While it was undisputed that a copy of the message was made on Netcom computer and held for 11 days, he considered that the question was who made or caused the copying, and concluded that 'Netcom's act of designing or implementing a system that automatically and uniformly creates temporary copies of all data sent through it is not unlike the owner of a copying machine who lets the public make copies with it.'

However, on the question of contributory infringement (closest to our 'authorisation') Whyte DJ held there was a genuine issue to be tried, as two necessary elements were present. 'Knowledge of infringing activity' was present once RTC warned Netcom about the alleged infringing postings[13], and 'substantial participation' was arguable from the automatic repositing facility[14]. It was a genuine issue whether Netcom should be liable for not taking simple measures to prevent damage once it had notice.

This approach taken in Netcom seems similar to Australian law on authorisation, and can give little comfort to Australian internet service providers.

Example - inline images

An interesting example of unique authorisation issues that can arise in cyberspace is the inclusion of an in-line image link in the HTML for a web page, where the image referred to is an image created by someone else and the image file is located on their server in a public_html directory[15]http://seidel.ncsa.uiuc.edu/copyright/].

There are commercial issues: people can view your images without seeing the surrounding advertisements. There are moral rights issues: your image can be displayed in an unintended and possibly offensive context. But are there any real copyright issues?

There must be a primary infringement before there can be authorisation. Providing an inline image link in your HTML does not constitute reproduction of the image, and it is likely that a URL will not itself be protected by copyright[16]. Only the user of your page (arguably) reproduces the image when loading your page by use of their browser software.

Normally, placement of image in a public_html directory by the owner of the copyright work will constitute an implied licence to users to copy that work (why put it there otherwise?). The real issue this raises is the scope of an implied licence: is it only a licence to users to download the image in its intended context (ie on your page, with advertisements)? If so, the person providing the 'unauthorised link' may be authorising copying outside the scope of the implied licence. However, it seems very unlikely that this 'express' authorisation would be sufficient to overcome the lack of most of the control elements in Moorhouse.

This example typifies those cyberspace issues that arise because access, not reproduction, is the substance of the issue.

[6] Copyright Act 1968 26(5) Where a service of distributing matter over wires or over other

paths provided by a material substance is only incidental to, or part of, a

service of transmitting telegraphic or telephonic communications, a subscriber

to the last-mentioned service shall be taken, for the purposes of this section, to be a subscriber to the first-mentioned service.

[7] Copyright Act 1968 26(4) A reference in this section to the person operating a service of

distributing broadcast or other matter shall be read as a reference to the

person who, in the agreements with subscribers to the service, undertakes to

provide them with the service, whether he is the person who transmits the broadcast or other matter or not.

[8] Copyright Act 1968 26(2)... (a) the person operating the service shall be deemed to be the

person causing the work or other subject-matter to be so transmitted; and

[9] Watts and Gilchrist 'Stop the music: Carriers and content' Australian Communications, February 1996

[10] See a copy of the the letter (not an original APRA document, put a purported copy) at http://www.on.net/users/tomk/docs/apralet.htm and comment by Dan Tebbutt `Copyright Threat to ISPs', Australian Personal Computer (http://www.com.au/apc/9606/specials/copyisp.html)

[11] Copyright Act 1968 26(2)(b) no person other than the person operating the service shall

be deemed to be causing the work or other subject-matter to

be so transmitted, whether or not he or she provides any facilities for the transmission.

[12] Although only referring to photocopiers here, Gibbs CJ says later 'The University had the power to control both the use of the books and the use of the machines'

[13] But it was arguable that the allegation of infringement were too equivocal, given Netcomms's possible defences.

[14] 'Providing a service that allows for the automatic distribution of all Usenet postings, infringing and noninfringing, goes well beyond renting a premises to an infringer'

[15] See Peter Leppik `Inline Images and Copyrights' for an example and discussion.

[16] A URL would seem to constiute a merger of idea and expression, or alternatively too insubstantial for protection. However, given the result of Autodesk, this must be regarded as arguable.

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