Baker & McKenzie Debate on Meltwater

Yes the blog lives. I've been so busy the last six months or so that this was the first thing to go by the wayside but now I have a couple of important things to blog so here is the first...

Last Tuesday Ben Allgrove and Iona Harding at Baker & McKenzie's New Bridge Street offices arranged an excellent debate entitled "Is Meltwater the End of Browsing". I was asked to argue in favour of the motion alongside the excellent and entertaining Neil Wilkof (Head of IP at Herzog, Fox and Neeman and IP Kat). Ranged against us were the formidable Justine Pila (St. Catherine's Oxford) and the the passionate Dominic Young (former Chairman and Director of NLA).

Did we win? Yes we did! We went from one vote to nine (an 800% increase) while the pro-NLA stance offered by Justine and Dominic went from nineteen votes to twenty-six (an increase of only 37%) or if you prefer straight numbers - we won eight additional votes, the other side only seven additional votes. Full details are on IP Kat.

In truth I don;t think either side scored a clear victory but in a room predominantly filled with in house lawyers from content providers I found our winning of eight votes to be cathartic.

My argument was based upon a change of status for web content which is passively browsed and is set out in full below.

NLA v Meltwater – Draft Outline of Argument

Argument: NLA v Meltwater is the end of Browsing

Key Principles:

1.      Consumptionis clearly distinguishable from reproduction and while copyright law restrictsthe latter it permits the former.

2.      While in copyrightlaw consumption is a permitted act (see 1), in digital distribution thispermitted act becomes a permissible act due to the operation of the system.

3.      Thisreflects an important legal migration in regard to digital consumption – wemove from permitted to permissible to what – not permitted?

4.      The InfoSocDirective, Article 5, is designed to rebalance this movement both fordistributors and consumers.

5.      The movementseen in recent cases Infopaq and in particular Meltwater has removed theprotection awarded to end users at 4.

6.      In the UKpost Meltwater environment web surfing once again is placed in its pre November2003 scenario – browsing is not an activity as of right (permitted) it is onlyallowed at the discretion of the copyright holder (permissible) which may beremoved or revoked at any time (not permitted) – this is in breach of thespirit and in my view the letter of the InfoSoc Directive.

1.      It is thetradition of copyright law that it protects restricted acts, restricting themto the copyright holder and their licensees. These acts all involve the makingor distribution of copies or adaptations. There is no copyright restriction onconsumption and there never has been. Thus if a copy of a book is left on apark bench and I pick it up and start reading it I commit no infringement.Equally if I walk along the street and look through the window of a gallery (oreven private home) and look upon an Albers hanging upon the wall, I commit noinfringement and need no license. Licences are only required where one isdealing with a restricted act (eg a PRS license for playback in private venueswhere the public or a sample of the public (such as employees) are listening.)The act of consumption (in the analogue world) is one which has never required a license. It is nota permissible act it is a permitted act.

2.      As we areall aware digital distribution unbalances this traditional model. To consumemeans to make a local copy. Local copies can be made at several points alongthe distribution model, including two final copies at consumption (1 a cachecopy) and (2 a screen copy). This is purely an effect of the digitaldistribution model. It is because instead of sending the original from point Ato point B we instead make a copy of the original available at point B. Thismakes consumption dependent upon the making of a copy and consumption as aresult moves from being a permitted act to one which requires the permission ofthe copyright holder (i.e. a license). If we strip away the technicality though there is nothing in factdifferent in reading a newspaper in physical form and reading a newspaper on aniPad or Kindle. Both are acts of consumption not acts of distribution oradaptation. 

3.      This createsa vital distinction in our manner of (legal) consumption. Whereas consumptiondid not require a license or permission of the copyright holder in the analogueworld it appears it is needed in the digital world – see e.g. Shetland times vWills 1997. This moves consumption from being a permitted act to being apermissible act – i.e. one that requires the permission of the copyrightholder. This permission unlike the freedom offered by a permitted act can bewithdrawn at any time as it is at the whim of the copyright holder. Thus afreedom is converted and lost. We lose the freedom to consume.

4.      This changein position was recognised at an EU Level. It was recognised both in thedistribution chain (also affected by the change in fact) and at the point ofconsumption. This is clear from both the recitals and the articles.

(31) A fair balance of rights and interests between the differentcategories of rightholders, as well as between the different categories ofrightholders and users of protected subject-matter must be safeguarded. Theexisting exceptions and limitations to the rights as set out by the MemberStates have to be reassessed in the light of the new electronic environment.Existing differences in the exceptions and limitations to certain restrictedacts have direct negative effects on the functioning of the internal market ofcopyright and related rights. Such differences could well become morepronounced in view of the further development of transborder exploitation ofworks and cross-border activities. In order to ensure the proper functioning ofthe internal market, such exceptions and limitations should be defined moreharmoniously. The degree of their harmonisation should be based on their impacton the smooth functioning of the internal market.
(32) This Directive provides for an exhaustive enumeration ofexceptions and limitations to the reproduction right and the right ofcommunication to the public. Some exceptions or limitations only apply to thereproduction right, where appropriate. This list takes due account of thedifferent legal traditions in Member States, while, at the same time, aiming toensure a functioning internal market. Member States should arrive at a coherentapplication of these exceptions and limitations, which will be assessed whenreviewing implementing legislation in the future.
(33) The exclusive right of reproduction should be subject to anexception to allow certain acts of temporary reproduction, which are transientor incidental reproductions, forming an integral and essential part of atechnological process and carried out for the sole purpose of enabling eitherefficient transmission in a network between third parties by an intermediary,or a lawful use of a work or other subject-matter to be made. The acts ofreproduction concerned should have no separate economic value on their own. Tothe extent that they meet these conditions, this exception should include actswhich enable browsing as well as acts of caching to take place, including thosewhich enable transmission systems to function efficiently, provided that theintermediary does not modify the information and does not interfere with thelawful use of technology, widely recognised and used by industry, to obtaindata on the use of the information. A use should be considered lawful where itis authorised by the rightholder or not restricted by law.
Article 5
Exceptions and limitations
1. Temporary acts of reproduction referred to in Article 2, whichare transient or incidental [and] an integral and essential part of atechnological process and whose sole purpose is to enable:
(a) a transmission in a network between third parties by anintermediary, or
(b) a lawful use of a work or other subject-matter to be made, andwhich have no independent economic significance, shall be exempted from thereproduction right provided for in Article 2.

Myunderstanding of Article 5 (especially in light of Recital 33) is that Art.5(1)specifically permits the distribution of digital copyright products, whileArticle 5(2) permits consumption (problem – this darn term “a lawful use” nowthe other side will argue this means licensed I’m going to say permitted). Theidea of article 5(2) is to place digital consumption on the same footing asanalogue consumption.

5.  There arereasons to be concerned by Infopaq and Meltwater. Infopaq started the narrowingof the temporary copies exemption (i.e. the one needed to allow distributionchains and consumption). The problem is paragraphs 62-64 of Infopaq and itsapplication in Meltwater. Starting with Infopaq, at para.54 it sets out thetemporary copies exemption as seen in Article 54.
54      The article set out five cumulativeconditions, namely:
(a) the act is temporary;
(b) it is transient or incidental;
(c) it is an integral and essential part of a technological process;
(d) the sole purpose of that process is to enable a transmission in anetwork between third parties by an intermediary or a lawful use of a work orprotected subject-matter; and
(e) the act has no independent economic significance.

Thenby paragraph 62:

62      Legal certainty forrightholders further requires that the storage and deletion of the reproductionnot be dependent on discretionary human intervention, particularly by the userof protected works. There is no guarantee that in such cases the personconcerned will actually delete the reproduction created or, in any event, thathe will delete it once its existence is no longer justified by its function ofenabling the completion of a technological process.

63      This finding is supportedby recital 33 in the preamble to Directive 2001/29 which lists, as examples ofthe characteristics of the acts referred to in Article 5(1) thereof, acts whichenable browsing as well as acts of caching to take place, including those whichenable transmission systems to function efficiently. Such acts are, bydefinition, created and deleted automatically and without human intervention.

64      In the light of theforegoing, the Court finds that an act can be held to be ‘transient’ within themeaning of the second condition laid down in Article 5(1) of Directive 2001/29only if its duration is limited to what is necessary for the proper completionof the technological process in question, it being understood that that processmust be automated so that it deletes that act automatically, without human intervention,once its function of enabling the completion of such a process has come to anend.

Thus somewhere the court has withoutjustification added a new requirement: that the copy be deleted without theneed for human intervention. This is notin Article 5 nor required by the recitals. The only reason for this appearsto be to balance the interests of the rights holders. This is a hard policydecision to ensure that permanently stored digital copies (stored in permanentmemory and which require human intervention for deletion) and external hardcopies do not benefit from the transient copies protection (this is clear inparagraphs 66 and 67 of Infopaq).

Now we come to Meltwater. Here theCourt of Appeal start from the Infopaq end point – that found by Proudman J.that “the temporary copies exception is solely concerned with incidental andintermediate copying so that any copy which is 'consumption of the work',whether temporary or not, requires the permission of the copyright holder. Aperson making a copy of a webpage on his computer screen will not have adefence under s. 28A CDPA simply because he has been browsing. He must firstshow that it was lawful for him to have made the copy. The copy is not part ofthe technological process; it is generated by his own volition. The whole pointof the receipt and copying of Meltwater News is to enable the End User toreceive and read it. Making the copy is not an essential and integral part of atechnological process but the end which the process is designed to achieve.Storage of the copy and the duration of that storage are matters within the EndUser's control. It begs the question for decision whether making the copy is toenable a lawful use of the work. Moreover, making the copy does have anindependent economic significance as the copy is the very product for which theEnd Users are paying Meltwater.”

In other words because a browsercommands a copy to be made they interfere in the technical process, thuscausing the copy to be made. Applying Inofpaq this is not permitted underArt.5(1). This leads to the ludicrous decision that “As is clear from aconsideration of recital 33 as a whole, the reference to "browsing"is "to the extent that they meet these conditions". ‘They’ refers tothe acts of reproduction. The acts of reproduction are those occasioned by thevoluntary human process of accessing that webpage. Accordingly, they fail tosatisfy any of the conditions to which recital 33 refers. S.28A does notprovide even a limited defence to the claims of infringement to which thebusiness of Meltwater is likely to give rise. This is plainly wrong “they”mean: (1) acts of temporary reproduction; (2) which are either “anintegral and essential part of a technological process and carried out for thesole purpose of enabling either efficient transmission in a network betweenthird parties by an intermediary” (distribution) OR “a lawful use of a work”(consumption) and (3) which have no separate economic value on their own.

The effect of two policy decisions isdamaging. Infopaq was about ensuring semi permanent copies do not somehow sneakthrough the temporary copies exemption by ensuring copies kept for a shortperiod but at the control of a human actor are not included. Meltwater has nowextended this to browsing which is specificallyexempted in Recital 33.

      6.  Thus in theUK post Meltwater environment web surfing once again is placed in its preNovember 2003 scenario – browsing is not an activity as of right (permitted) itis only allowed at the discretion of the copyright holder (permissible) whichmay be removed or revoked at any time (not permitted) – this is in breach ofthe spirit and in my view the letter of the InfoSoc Directive.