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Kazaa and Canadian Law

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Monday September 05, 2005
Earlier today an Australian court ruled in favour of the music industry in its copyright infringement suit against Sharman Networks, the company behind Kazaa.  I won' t venture into providing an analysis of Australian law; see Kim Weatherall's excellent, quick analysis of the case, which notes that this decision is bad for innovation.

My pre-decision comments, which focused on the diminishing market share of Kazaa and the prospect for an appeal regardless of how the decision unfolded, remain unchanged.

From a Canadian perspective, the case highlights a growing divergence between Canadian and Australian copyright law such that the outcome of a similar case in Canada could potentially be much different (more on that at our comparative conference later this month in Ottawa).  

Some of the differences between our two laws are obvious; for example, the existence of a making available right in Australia but only proposed here in Bill C-60. The more important distinction in this case, however, involves the question of authorization (or authorisation).  Critical to today' s Kazaa decision was reliance on the test developed in Moorhouse, an Australian case, for determining authorization.  The court concluded that Sharman Networks, along with several of its directors, met that standard.  While acknowledging the existence of legal warnings against copyright infringement, the court was troubled that "Sharman took no steps to include a filtering mechanism in its software, even in software intended to be provided to new users."

The Supreme Court of Canada considered the authorization issue last year in CCH v. Law Society of Upper Canada.  The Canadian court explicitly rejected the Moorhouse test, concluding that "Moorhouse is inconsistent with previous Canadian and British approaches to this issue. In my view, the Moorhouse approach to authorization shifts the balance in copyright too far in favour of the owner's rights and unnecessarily interferes with the proper use of copyrighted works for the good of society as a whole."

As for the application of authorization test, the Canadian Supreme Court stated that "a person does not authorize infringement by authorizing the mere use of equipment that could be used to infringe copyright. Courts should presume that a person who authorizes an activity does so only so far as it is in accordance with the law. This presumption may be rebutted if it is shown that a certain relationship or degree of control existed between the alleged authorizer and the persons who committed the copyright infringement."

In other words, under Canadian law, Kazaa would be entitled to presume that its services are being used lawfully consistent with its legal terms.  Could the music industry rebut the presumption against a Canadian Kazaa?  Hard to say.  It might prove to be a challenge given questions about whether downloading for personal purposes constitutes copyright infringement in Canada and the evidence needed to show a relationship or degree of control that rises to the level of authorization under Canadian law.

Comments (7)add comment

PJL said:

The RIAA and canada
Yes that's a little c on canada because it would seem that the american lawmakers are forcing other nations to do the dirty work of one of the biggest intelectual property thiefs in the world and canada is finaly falling in line and showing how imponent we truly are against american stupid law makers.

Shame on you Martin! I always suspected you were a corporate butt monkey and now you've proved it.
September 05, 2005

JoeLaw said:

so?
The funny thing is, kazaa has been dead for along time now.

People are now moving toward open source P2P applications, which naturally are not susceptiple to the same law based oppression as kazaa etc.
September 05, 2005

Matthew Rimmer said:

Kazaa reasoning flaws
In my opinion, the Kazaa judgment suffers from a few weaknesses and flaws in terms of its reasoning.

The first problem with the judgment is that it is highly fact specific. Although he makes heroic efforts, Wilcox J seems overwhelmed by the mass of detail in the trial.

The second problem with the decision is that it fails to articulate clear principles as to what constitutes authorisation. Wilcox J suggests that there are a number of factual indicia that might support a finding of authorisation - knowledge of infringement; a failure to install proper filters; and a misguided public relations campaign 'Join the Revolution'. However, he provides little guidance for technology developers and entrepreneurs in other factual scenarios - eg the developers of the iPod, TiVo, Foxtel iQ, and Slingbox.

The third problem with the decision is its failure to address wider policy concerns. Wilcox J neglects to discuss the origins of P2P networks, and consider comparative law on the subject properly. He refuses to address wider policy concerns about competition and consumer rights. Wilcox J was perhaps overly conscious of the inevitability of an appeal.

One can only hope that the appeal court seeks to remedy the crude and undiscriminating nature of Australian law on authorisation of copyright law.

September 06, 2005

Matthew Rimmer said:

Do not forget that Kazaa is a legal houd
In light of the Federal Court case, there is a great temptation to read the last rites for Kazaa.

It is worthwhile, though, remembering that the operators of Kazaa have been Houdinis in the past.

Let us not forget that Kazaa has avoided or stalled legal action in the Netherlands and the US. This has shown some ingenuity and chutzpah.

Have a look at the past skirmishes they have been involved in:

Rimmer, M. "Hail To The Thief: A Tribute To Kazaa", The University of Ottawa Law and Technology Journal, Spring 2005, Vol. 2 (1), p. 173-218, URL: http://www.uoltj.ca/articles/v...73-218.pdf

Perhaps the operators of Kazaa will be able to make the most of the order by Wilcox J - or find some loophole on appeal.

Some more media on the Kazaa aftermath:
Needham, Kirsty. "Music Industry Banks On Opening of Online Store", The Sydney Morning Herald, 7 September 2005, http://www.smh.com.au/news/tec...27482.html
September 06, 2005

Matthew Rimmer said:

Australian High Court should follow the
As I've argued before, the Australian High Court needs to re-evaluate its standard for authorisation, because it lacks refinement and finesse. The CCH decision shows what could possible be done in this area.

Rimmer, M. "Canadian Rhapsody: Copyright Law and Research Libraries", Australian Academic and Research Libraries, September 2004, Vol. 25 (3), p 193-213, URL: http://www.alia.org.au/publish...immer.html
September 06, 2005

Dominic Ryan said:

Any spots over in Canada?
It saddens me that such a decision would be made in my own country. I used a photocopier to make copies of countless copyrighted works when in high school for my assignments, but you don't see sharp being told to implement a filtering system on their photocopiers do you! Just about ANYTHING you buy can be used to break the law. Granted some (such as P2P softwware) are much more supseptable to being used illegally, but It really worries me that a precedent is being set that holds the vendor responsible for the actions of thier customers. Kazaa, as with most P2P developers go to lengths to clearly identify that thier product is not for use for illegal copyright infringment. When will common sense prevail?
September 06, 2005

Matthew Rimmer said:

Can Kazaa phoneix?
A further thought - Much will depend upon whether the entirety of the assets of Kazaa have been frozen.
Perhaps the corporate group can re-invent itself if it has other funds can be drawn upon.

Another note - Kazaa seems to be run by a complex web of companies. What is there to stop the company shifting off to a more permissive jurisdiction than Australia?

Another interesting issue - What is there to stop Hemming and Bermeister on-selling Kazaa to a third-party (much as Zennstromm did when Kazaa was initially targeted in the Netherlands)?
September 06, 2005

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