Swiss Supreme Court: data protection prevails over enforcement of IP rights

In a decision of 8 September 2010 (full grounds not yet published, press release here), the Swiss Supreme Court ruled that Logistep AG may not search peer-to-peer networks for copyright infringing files, register the IP [internet protocol] addresses of the uploaders and forward them to the copyright owners, which then, based on the data, file criminal complaints against unknown (the prosecution, unlike private parties, can force the ISPs to hand over name and address of the person/entity behind the IP address).

Logistep, acting for copyright holders (not the International Federation Of Producers Of Phonograms And Videograms, IFPI, though, says IFPI) searches peer-to-peer networks for copyright infringing files, then registers the IP addresses of the uploaders (pure downloading is legal under Swiss law) and forwards these to the copyright owners. The Swiss data protection authority brought suit against them (noted on IPKat here), claiming that this business model infringed data protection law. The Administrative Court ruled in favour of Logistep, weighing the interest in enforcement of IP rights more than the privacy interest of the users. The Supreme Court, in a contested 3:2 decision, reversed. The Supreme Court held that

• IP addresses are personal data in the sense of data protection law;


• the collection of these addresses violates data protection law because it occurs without the consent of the concerned persons;


• the interest in the enforcement of IP rights does not justify the violation of data protection law: the interest of internet users in the protection of their personality rights (read: right to remain pseudo-anonymous) prevails over the interest of right owners to enforce their rights against them.

The German Supreme Court (BGH) had come to another conclusion in a decision of May 2010 (I ZR 121/08) and allowed a right owner to enforce its rights against the provider of an unsecured WIFI-spot based on data collected by Logistep (noted on IPKat here) - the BGH did not, however, explicitly rule on the Logistep business model.

According to this interview with a judge at the Landgericht Köln, in 2010 each month roughly 1,000 requests for the identification of persons behind IP addresses are filed with the Landgericht Köln, each one including 1,000 to 3,000 IP addresses. Which means that roughly, in a year at least 12 x 1,000 x 1,000 = 12 million persons in Germany are identified as illegal file sharers (it is possible that the same person is identified several times, because IP addresses assigned to end-users often change [dynamic IP address], but nonetheless, these numbers are staggering).

The Swiss decision will make it very difficult for copyright owners to enforce their rights in digital content in Switzerland; while it is formally binding only upon Logistep, it is hard to see how a court would decide differently if the right owners themselves collected the data.

The IPKat likes to announce that it remains the intellectual property Kat, not to be confused with the internet protocol Kat.

Finding the Balance: the ALCS speaks out

The IPKat has just read a press release issued by the Authors Licensing and Collecting Society today, "Finding the Balance: the Management of Digital Rights". This document declares that the ALCS is seeking a resolution of the conflict between writers and users of copyright works. It reads, in relevant part:

" ... Private copying proposals

The exceptions to copyright law proposed by the Review, whilst eminently practical in setting out to achieve a system that is clear and fair for consumers, must apply that same fairness of principle to the creator. Without this, the incentives for creators to create, and writers to write, will diminish.

Copyright can appear complex and opaque. Users need support to understand that the essential purpose of copyright is to ensure a sufficient supply of creative activity from which they benefit in a myriad of ways. Its underlying purpose is to safeguard the economic and moral rights of creators. [Says the IPKat: this is debatable. The underlying purpose of copyright today is probably what it was in 1709 -- to provide a compromise between the competing and often irreconcilable interests of publishers, writers, consumers and investors. This is why the technologies change but the protagonists' positions remain broadly the same] Whilst technology has advanced considerably the underlying principles of copyright remain the same as set out in the Universal Declaration of Human Rights:

"everyone has the right to the protection of their moral and material interests resulting from any scientific, literary or artistic production of which he, or she, is the author". [Hmm, ponders the Kat. Doesn't the same Declaration say all sorts of nice things about the other side too?]

All forms of creativity, including writing, contribute to the success of the UK's economy, [says the IPKat: it seems that unauthorised uses, including piracy and counterfeiting, also contribute to the success of the economy, but not in ways we like to think about ...] whilst copyright protection given to creators and other right holders also protects the 7.3% of Gross Value Added (GVA)[2] to the economy.

Whilst it is clear that the increased availability of written works as a result of digitalisation offers golden opportunities to writers, the increasing use of digital technologies has generated uncertainty over the future of their economic and moral rights. [says the IPKat: but that has been the case for most of the past two millennia, surely? Writers have more often had little or no certainty, being rewarded at the whim of a patron or left to pursue their craft in penury. There is a school of criticism that believes that authors write better if they suffer for their art -- and that snails benefit from being starved before they're cooked.]

Along with all its realised and potential benefits, the digital age has brought new freedoms and opportunities that enable users to copy, download and distribute illegal copies of films, plays, television programmes, electronic books, poems and journal articles without seeking permission from right-holders. The process of copying and distributing works is now so easy that it has produced an imbalance between the freedom of the user, the profits of commercial intermediaries and the losses incurred by writers. [Once again, this assumes that the previous position was "the balance" in the first place.]

For example, the Gowers' Review recommends that `private copying' be decriminalised when users are copying legally-acquired content onto an electronic device for personal, private use such as transferring music bought on the internet to their iPod or MP3 player. This exception will not allow any form of onward distribution for commercial gain or otherwise via an electronic distribution network such as peer to peer or user-generated websites. That is fair and practical for the consumer; however, it fails to address the issue of the creator being given fair reward for the re-use of that work. [This has been a growth area in recent years, with the establish of lending rights -- but "re-use" is a controversial area. Would it cover reading over someone's shoulder on the train?] It also raises the issue of policing such an exception. Would it be enforceable? [Probably not]

`Three strikes'

The Government's current initiative of `three strikes and you're out'
concerning persistent downloaders of copyright-protected material and the ISPs responsibility of following a warning procedure and then terminating their account, is a noble message. However, public opinion expressed on numerous websites following the sign-up of major ISPs to this principle showed strongly that this was a step too far for the consumer who felt their privacy was being invaded and that the age of Big Brother had arrived.

One option to balance the interests of the user and creator in this instance would be to consider a centralised remuneration scheme which is commonplace in most European states. No comparable system exists or is being proposed in the UK and as a result writers, along with all other creators, are in danger of not receiving the economic and moral recognition that is their right for the continued re-use of their work. [Does the European experience suggest that their systems do confer this level of economic and moral achievement? Not much of a level, is it, wonders the IPKat]

Internet piracy

For any solutions to advance and achieve that balance, we must take account of the reality of the world in which we live. Consumers routinely acquire content illegally and take value from copyright works at the expense of the rights-holder. In 2006 alone, there was a 46% increase in illegal downloads compared to 2005. Any legislative and punitive frameworks need to be sufficiently robust to take account of Becker's model of crime that it is "a basic assumption of human behaviour that individuals will break the law if the expected benefit is higher than the risk of detection and the scale of the potential punishment ... [But doesn't Gowers take the view that, if most people do it and the risks of detection and punishment are low, it may as well be legalised?]".