Piracy prevention vs. policing: Industry debates piracy code, website blocking

Telecommunications industry group Communications Alliance on Wednesday hosted a panel of rights holders, internet service providers (ISPs), and intellectual property experts to discuss the progress of the two primary topics in the policing of piracy in Australia: The still-incomplete three-strikes code, and the recently passed website-blocking legislation.

Both the code and legislation have yet to resolve the issue of cost sharing between ISPs, rights holders, and government, with rights holders arguing that the former should contribute in the effort to police piracy because they are now content providers, too.

This close monitoring and policing of piracy is the line continuing to be pushed despite those present on the panel all agreeing that availability of content, both in terms of cost and timeliness, is key to reducing piracy.

However, the demands of government and the desires of rights holders mean the industry is continuing to diligently nut out the details of the code, which will focus on the "education" of consumers -- with a steady increase towards more punitive measures.

Three-strikes piracy code

In April, a piracy code written in collaboration by ISPs, rights holders, and Comms Alliance was submitted to the Australian Communications and Media Authority (ACMA), in accordance with the deadline given by Attorney-General George Brandis and Communications Minister Malcolm Turnbull.

The code's development had been ordered in spite of a leak of the Trans Pacific Partnership (TPP) draft document in November 2013 saying that a three-strikes piracy policy would not be included in the international trade agreement, to which Australia will be subject.

Under the draft code [PDF], rights holders will send reports to ISPs identifying IP addresses that have allegedly infringed on copyright, with the ISPs to then match IP addresses with account holders and send the associated customers infringement notices. Customers can be warned three times over a 12-month period in escalating education notices, warning notices, and final notices, after which the ISP involved must make a user's details obtainable through a Federal Court order.

A copyright information panel (CIP), made up of two ISP representatives, two rights holder representatives, and two consumer organisation representatives, will adjudicate and maintain the system, but has yet to be appointed.

The regime was originally set to be implemented from September 1, but had to be pushed back due to stalling negotiations over the costs imposed by instituting this scheme, and whether the 70 ISPs involved will receive any compensation for being required to enforce copyright on behalf of rights holders. This would again be contrary to the TPP, with a leak in October last year revealing that the trade partnership had decided ISPs should not have to bear large costs arising out of obligations to prevent the copyright infringement of users.

In an effort to determine the costs likely to be shouldered by ISPs in sending out infringement notices to customers, Comms Alliance last month revealed that ISPs and rights holders had together commissioned an "independent expert".

During the panel on Wednesday, Gary Smith, Optus head of regulatory compliance and affairs, and chair of Working Committee 66, which developed the three-strikes code, said the role of ISPs has changed from simply providing a communications service to expanding their systems to offer streaming videos and over-the-top players.

As such, "the government has seen fit to impose a more significant regulatory burden on ISPs," Smith said in Sydney on Wednesday.

Bruce Meagher, director of Corporate Affairs at Foxtel, agreed, arguing that content providers have a vested interest in preventing piracy and as such should contribute to costs.

"We've contended that there are reasons why ISPs should contribute some portion of that cost ... because we're all in this together, and as ISPs increasingly become content providers, either directly or through partnerships and arrangements, I'm sure that the business imperative to make sure that people are actually valuing those services, taking them up and paying for them, will become more and more important to them," Meagher said.

Both Meagher and Smith said that the purpose of the scheme is to promote "education" and "awareness" of copyright infringement -- although Meagher admitted that rights holders were unhappy with the code's present form, as they were after something more punitive. He suggested that a high volume of notices would need to be sent in order for the code to be taken seriously by consumers.

"This is fundamentally an education code," he acknowledged. "We did argue for a code that had more teeth than this code has, we were unsuccessful in that argument. So, what we need is for this code to be having a demonstration effect on the community, for enough people to be getting notices for those things to be known, to be raising awareness of all these issues, and hopefully having an educative effect."

Regardless, once final notices are sent out and a consumer's details are obtained through the Federal Court, punitive measures will be sought.

While Smith said a simple, uniform letter would be formulated, this will likely be affected by the judicial decision made recently in the Federal Court; earlier this month, Justice Perram ruled that Dallas Buyers Club's draft letters to send to alleged infringers had overreached in its claims for damages, and would need to be rewritten.

Rajiv Shah, BAE Systems general manager for International Services and Solutions ANZ, spoke at the Comms Alliance panel about a similar piracy code currently being implemented in the United Kingdom, though he admitted that it, too, is only in its formative stages.

Under those regulations, alleged copyright infringers in the UK will be sent four alerts via email, increasing in severity -- although, according to Shah, these notices are without the threat of consequence, instead aimed purely at education. Alleged copyright infringers are also given a 20-day period of grace between notices.

By contrast, Patrick Fair, partner at law firm Baker & McKenzie, said that under the stricter Australian code, if a consumer were to indulge in a "binge weekend" wherein they downloaded a high volume of copyright-infringing content, they could receive all three notices at once.

Rights holders and ISPs in the UK are also continuing to negotiate on the code, with rights holders making a "significant contribution" financially.

Website-blocking legislation

Copyright issues have become a consistent issue permeating Australian law and politics, with the Comms Alliance panel also discussing on Wednesday the piracy site-blocking legislation that both houses of parliament passed in mid June.

The new Copyright Amendment (Online Infringement) Act 2015 will allow rights holders to obtain a court order to block websites hosted overseas that are deemed to contain copyright-infringing material or facilitate user access to copyright-infringement material.

Whenever a website is blocked by the Federal Court, a landing page will need to be hosted informing any would-be copyright infringers about the block, and providing information on where legitimate content can be found.

Again, educating the consumer on piracy is the stated purpose of the law.

"We need to be able to educate people both on the dangers and problems that piracy causes, and the legitimate means by which it can be achieved," Meagher said, adding that in order to achieve this, "The landing page is very, very important."

Optus' Smith, however, flagged that the government has not specified whether it would be a single blocking page redirected from all blocked sites or many landing pages, who would host the landing pages, who would contribute to the cost of hosting those landing pages, or how long a block would need to be in place.

Costs were also not determined prior to the passage of the law, with the government not ordering a cost-benefit analysis nor detailing who would bear the costs of implementing the scheme. However, it has since been projected to cost ISPs more than AU$130,000 per year to implement.

Availability of content

Questions surrounding costs are particularly pertinent after research [PDF] released last month by the Department of Communications revealed that only 21 percent of respondents said an education notice would prevent them from consuming copyrighted content for free.

Respondents to the survey said the primary factors that would stop them from infringing in the future are a decrease in the cost of legal content, the availability of legal content, and the simultaneous release of content in Australia alongside the rest of the world.

"These results suggest that while there is a role for a copyright notice scheme code in Australia to assist in fighting infringement, more work needs to be done to make legal content more affordable and more available, to combat the root causes of infringing activity," Comms Alliance CEO John Stanton said in July.

"The widespread pattern of online infringement in Australia, indicated by the research, underlines the fact that rights holders -- as indicated by the government -- should be ready to pay the majority of the costs of operating a copyright notice scheme, given the enormous financial upside that will flow to rights holders from changing the behaviour of online infringers."

On Wednesday, Smith recognised that the explosion in digital content meant different approaches had been taken globally in regards to availability, geographical release dates, and pricing. As a result, piracy had become widespread.

This research by the Australian Department of Communications also revealed that users who consume paid content in addition to downloading copyright-infringing content actually spend more than users who consume only non-infringing content -- meaning the piracy code could actually be counter-intuitive.

"Rights holders' most powerful tool to combat online copyright infringement is making content accessible, timely, and affordable to consumers," Turnbull said last month.

Digital amendments to the Copyright Act

One digital copyright reform where costs are being considered prior to making changes to the law is in the amendments the government is proposing to make to the Copyright Act in order to adapt to the digital world.

The Australian Attorney-General's Department recently commissioned a cost-benefit analysis into the recommendation by the Australian Law Reform Commission (ALRC) to implement a fair use provision into these amendments -- because the costs would be imposed on copyright holders rather than ISPs.

Brandis has historically taken the perspective of copyright holders in considering the three-strikes policy, the website-blocking laws, and now the amendments to the Copyright Act.

"Without strong, robust copyright laws, they are at risk of being cheated of the fair compensation for their creativity which is their due, and the Australian government will continue to protect them," Brandis said in December 2013.

"In considering the recommendations, we will be particularly concerned to ensure and we will approach the consideration of the report with the view that no prejudice be caused to the interests of rights holders and creators," he added in February 2014.

"Australia's creative industries are not only a vital part of our culture; they are a thriving sector of our economy. Just like any other workers in our economy, they are entitled to the fruit of their efforts."

In spite of this point of view, the Australian Productivity Commission in June expressed reservations that tighter intellectual property regulations could actually encourage anti-competitive behaviour to the detriment of the Australian economy.

The Trade and Assistance Review 2013-14 report [PDF] pointed toward how the TPP could further increase stringent intellectual property rights protections once it is signed off.

"The history of IP arrangements being addressed in preferential trade deals is not good," the commission said.

"Indeed, to the extent that the return to IP holders awarded by more stringent IP laws outweighed the benefits to the broader economy, the provision would also impose a net cost on both partners, lowering trading and growth potential across the bloc."