Digital Copyright Law Exploring the Changing Interface Between Copyright and Regulation in the Digital Environment Nicholas Friedrich Scharf PhD University of East Anglia UEA Law School July 2013 Word count: 98,020 This copy of the thesis has been supplied on condition that anyone who consults it is understood to recognise that its copyright rests with the author and that use of any information derived there-from must be in accordance with current UK Copyright Law. In addition, any quotation or extract must include full attribution. Abstract This thesis seeks to address and clarify the changing interface between copyright law and other forms of regulation in the digital environment, in the context of recorded music. This is in order to explain the problems that rightsholders have had in tackling the issue of unauthorised copyright infringement facilitated by digital technologies. Copyright law is inextricably bound-up with technological developments, but the ‘convergence’ of content into a single digital form was perceived as problematic by rightsholders and was deemed to warrant increased regulation through law. However, the problem is that the reliance on copyright law in the digital environment ignores the other regulatory influences in operation. The use of copyright law in a ‘preventative’ sense also ignores the fact that other regulatory factors may positively encourage users to behave, and consume in ways that may not be directly governed by copyright. The issues digital technologies have posed for rightsholders in the music industry are not addressed, or even potentially addressable directly through law, because the regulatory picture is complex. The work of Lawrence Lessig, in relation to his regulatory ‘modalities’ can be applied in this context in order to identify and understand the other forms of regulation that exist in the digital environment, and which govern user behaviour and consumption. By combining his work with that of other scholars in the field, a bespoke ‘Lessigan’ framework is formulated to address and analyse those other regulatory factors in conjunction with actions undertaken by rightsholders to secure their copyrights in the digital age. The thesis will analyse the effect such reliance on copyright law may have on these regulatory influences, and the creative potential of the digital environment. 2 Contents Acknowledgments 7 Chapter 1: Introduction 9 1. Research methodology 12 2. Context 16 2.1 Content industries 16 2.2 Rightsholders 21 2.3 Creativity 22 2.4 Originality and Fixation 24 2.5 Creative environment 25 2.6 Users 33 3. Research 34 Chapter 2: Essential background – copyright and new 39 technologies 1. Philosophy 40 1.1 Utilitarianism 41 1.2 Natural rights 49 1.3 Personality 52 2. Horrible Histories 54 2.1 The Internet 58 2.2 MP3 62 2.3 Peer-to-peer 66 2.4 The ‘Holy Trinity’ 70 3. Regulation 76 3.1 WIPO Treaties 78 4. Conclusion 81 Chapter 3: Modalities of Regulation 84 1. Introduction 85 2. The Law 88 3. Norms 95 3 3.1 Community 98 4. Markets 104 4.1 ‘Free’ 105 4.2 Market concentration 110 5. Architecture 119 5.1 Digital Architecture 121 6. Conclusion 127 Chapter 4: Napster and peer-to-peer 131 1. Introduction 132 2. Napster 133 2.1 Infringement 134 2.2 Fair use 138 2.2.1 Sampling 143 2.2.2 Space-shifting 145 3. Grokster 148 3.1 Supreme Court decision 149 3.2 Inducement 150 4. The Pirate Bay 153 4.1 Principle offence 154 4.2 Complicity 154 5. ‘If it looks like a duck...’ 156 Chapter 5: Digital Rights Management 166 1. Introduction 167 2. Legal Background 168 3. Definition 171 4. Traditional fences, traditional problems 176 4.1 DRM and copyright exceptions 177 5. Remix? 187 6. Better business models 194 6.1 Streaming 195 6.2 The position of users 198 4 7. Conclusion 204 Chapter 6: ISP Liability 210 1. Introduction 211 2. Legal Principles 213 3. European Approaches 221 3.1 Belgium 221 3.2 Ireland 224 3.3 Spain 230 3.4 France 235 3.5 The ECJ 237 4. The UK 241 4.1 Judicial Review 243 4.2 Beyond ‘graduated response’? Newzbin(z) 247 5. Conclusion 255 5.1 ISPs and the law 255 5.2 ISSPs and content 257 Chapter 7: Creative Commons 265 1. Introduction 266 2. The Creative Commons Movement 267 2.1 Operation 270 3. Incompatibility 274 3.1 Commons incompatibility 277 3.2 Copyright incompatibility 281 3.3 Content incompatibility 287 4. Intermediaries 291 4.1 Revenue 294 5. Conclusion 298 Chapter 8: Conclusion 305 1. Research Value 307 2. Research findings 308 5 3. The Law 317 4. And finally 321 Bibliography 322 Appendix 361 Published work 362 6 Acknowledgements I would like to offer my sincerest thanks to my supervisory team of Professor Chris Wadlow of the University of East Anglia (UEA) and Dr. Daithi Mac Sithigh of the University of Edinburgh. Their constant support, encouragement, constructive criticism, and feedback has been of great help to me over the course of writing this thesis. Chris, your knowledge, ability to help me view my work from alternative perspectives through your challenging of my own viewpoints in our meetings, and constructive feedback has been invaluable to me in completing this thesis. Daithi, your thoughts and ideas, as well as your detailed feedback have been of great assistance, as well as your suggestions regarding source materials. Their supervision has, I believe, helped consolidate this piece of work and led to a much more coherent, solid, and robust body of research. I would also like to express my gratitude to Mr. Robert Heverly, Assistant Professor of Law at Albany Law School. As my original supervisor when I began this thesis, his assistance at this early stage was a great help to me. I began to develop my specific interest in Digital Copyright Law under his tutelage during my LLM degree at UEA in 2005-2006, during which period he was also my academic advisor. I would like to thank Professor Norma Dawson of Queen’s University, Belfast for nurturing my interest in Intellectual Property Law during my undergraduate studies. I do want to say a particular thanks to my friends and PhD colleagues who have supported me during this process. In particular: Chris, Ciaran, Martin, Russell and Sam; thank you for the laughs and the music. 7 Finally, I could not have reached this point in my life without the unwavering support of my Mum and Dad who have supported me constantly during my studies. For your patience, guidance, support, and love, I am truly grateful. 8 Chapter 1: Introduction 9 Introduction This thesis seeks to address and clarify the changing interface between copyright law and other forms of regulation in the digital environment, in the context of recorded music. This is in order to explain the problems that rightsholders have had in tackling the issue of unauthorised copyright infringement facilitated by digital technologies. The problem is that the reliance on copyright law in the digital environment ignores the other regulatory influences in operation and this thesis will proceed to analyse the effect such reliance on copyright law may have on these regulatory influences, and the creative potential of the digital environment. In its conception, copyright could be said to have evolved in line with technological developments, (from the printing press and beyond) leading to the copyright system that we may recognise today. Copyright law is inextricably bound-up with technological developments; perhaps never more- so than when users became universally connected on the Internet. This, and other related digital technologies, allowed the opportunity for wide-ranging and virtually cost-free sharing of content. Digital technology has facilitated the convergence of content into a single digital form available through a digital platform i.e. the Internet. In the past, there was a stable pattern of control over content, but the impact of digital technology has led to a loss of ‘centrality’ in terms of reproduction and distribution of content1. This was perceived as problematic by rightsholders who have since utilised copyright law in order to secure their rights in the digital age. However, digital technology has operated to the benefit of the user; as such, there appears to be a fundamental dichotomy between the interests of rightsholders and those of users. It has also created an environment where consumption and production of content may be strongly intertwined, such that the creative potential of digital content, digital technologies and the digital environment must be appreciated, The focus of this thesis will be on 1 See chapter 2, p73. 10 the digital music market with as the music industry was largely the first victim of digital technology 2, and it is an area close to the author’s own heart3. The issues digital technologies have posed fo r rightsholders in the music industry are not addressed, or even potentially addressable directly through law, because the regulatory picture is much more complex. The use of copyright law in a ‘preventative’ sense ignores the fact that other regulatory factors may positively encourage users to act, behave, and consume in a certain a way that is not directly governed by copyright. The regulatory environment is complex and may encourage as well as discourage behaviour. It is intrinsically linked with digital technology through the engendering of norms and the opening up of new markets through the opportunities afforded by such technology. However, the focus of copyright regulation was on the cause of its diminished effect i.e. digital technologies, thus ignoring other regulatory influences. The author will seek to address and analyse these other regulatory factors in conjunction with actions undertaken by rightsholders to secure their copyrights in the digital age.