There have been some stories about how YouTube is preparing to work with a bunch of big movie studios to sell access to movies. It's been offering up some movies for a year or so, though it hasn't really caught on. The hope is that with big Hollywood pictures, people might care more. I'm not convinced it will be that big of a deal -- especially for folks who use Netflix -- but it's an easy enough thing to do. Except... apparently two of the major studios, Fox and Paramount, are balking at the deal, because they don't like that people can find unauthorized copies of their movies via Google's search functionality. This makes no sense. Basically they're saying they'd rather that when people search on their movies, that their only options are unauthorized versions, rather than having a legitimate version at the top of the list. This is not how you "compete" with unauthorized versions.

One of the tidbits that came out of the YouTube/Viacom lawsuit was the fact that Viacom quite frequently would upload its own clips to YouTube, but did so trying to pretend they were pirated clips. In fact, they would send employees out of Viacom's offices to local printshops to upload the videos under childish sounding names, like "MMysticalGirl8, Demansr, tesderiw, GossipGirl40, Snackboard and Keithhn," to make people think they were pirated copies. Not surprisingly, it appears that Viacom was not alone in this tactic. Slashdot points us to an analysis that certainly suggests that pretty much all of the major film studios were doing the exact same thing. There are surprisingly long and clear clips of various movies, uploaded at times perfectly coinciding with major marketing campaigns, and sometimes they can even be connected (with some digging) to marketing firms. Sorta takes the sting out of the claims that YouTube clips are so damaging, doesn't it?

Earlier this year, we wrote about a lawsuit filed by Disney and Warner Bros. against Triton Media, an ad firm that apparently helped place ads on sites that linked to infringing content (hosted elsewhere). We noted that the lawsuit seemed like a huge reach for a variety of reasons. Nothing in the complaint seemed to indicate that what Triton had done had violated copyright law. Instead, it focused on the various sites for which it provided ads. And, even those sites seemed like a stretch on claims of copyright infringement. The sites didn't host any infringing content. They just allowed people to post links to content (authorized or not) that was hosted elsewhere. To go after the ad provider for a few of those sites, claiming some fourth or fifth party form of contributory infringement seemed pretty crazy.

However, THREsq is now reporting that Triton has settled the lawsuit, paying $400,000 and agreeing not to provide ad services to those sites or to similar sites. THREsq claims the studios "won" the case, but a settlement does not mean a win. It just means Triton realized it was cheaper to settle than to fight two of the biggest studios with deep pockets.

Of course, Triton is a side show. The real question is if anyone will go after Google for something like this. There's been an increase in bitching from copyright holders lately that Google ads appear on various sites, and that Google "profits from piracy." Of course, that's not an accurate statement at all, but it's grown in popularity among some lately. The fact that Triton settled may seem like good news for the studios, but without an actual court ruling on such a tortured fourth party liability claim, it seems like they're still a long way from being able to confidently bring such claims. The settlement news may be useful in scaring some other smaller advertising firms, but I'd be surprised if the studios jumped all the way to accusing Google right now. Google, I would assume, would push back hard, and has the legal resources to do so.

As you may recall, a bunch of movie studios sued popular ISP iiNet for failing to somehow wave a magic wand and stop file sharing. Thankfully, the Australian court quickly realized this was ridiculous and issued a thorough and convincing ruling that it made no sense to consider iiNet liable for copyright infringement done by its users. The judge pointed out that there's no evidence that iiNet "approved infringement." The judge also made it clear why it's nonsensical to think that ISPs should serve as copyright cops, since a determination on whether or not something is infringing takes place in a court, not by random ISP employees.

Not surprisingly, the movie studios and AFACT (the "anti-piracy" organization representing them) appealed the ruling, claiming that somehow the lack of stopping copyright infringement was effectively "authorizing" copyright infringement. That seems like a huge stretch, but the appeal has begun and AFACT is now trying to make the case that not blocking users or kicking them off is the equivalent of authorization. Hopefully the appeals court recognizes the wisdom of the lower court ruling.

This isn't a huge surprise, but down in Australia, AFACT, a group representing the major movie studios, which had already fought having to pay iiNet's legal fees after getting trounced in court, is appealing the ruling itself. You had to figure this would happen. The studios weren't going to go down without a fight. The main part of the appeal is AFACT claiming that iiNet somehow authorized copyright infringement by not stopping infringement:

"The court found large scale copyright infringements, that iiNet knew they were occurring, that iiNet had the contractual and technical capacity to stop them and iiNet did nothing about them."

But that actually ignores both reality and what the ruling said. What it found was that, indeed, large scale infringement was occurring, but that it was impossible for iiNet to be an effective copyright cop since copyright infringement was something for the court to decide, not for some ISP to just guess. Either way, this case won't be over for quite some time...

It looks like the iiNet ruling is already having some positive impact in Australia. The crux of the ruling is that copyright infringement is not an "I know it when I see it" violation, but rather a complex issue that requires a court to weigh in. Asking an ISP to simply assume that someone is infringing, and thus to kick them off, is problematic and potentially goes against basic due process. It appears that other ISPs are now realizing that they were being too hasty in blocking internet access. Competing ISP Exetel, who used to block access to accused file sharers, has now announced a change of policy. Of course, it could have stood up for its customers' rights in the first place, like iiNet did...

So, the Australian court ruling in favor of iiNet was quite brilliant, not just in getting the technology and the law (and common sense) right, but also in explaining why it wouldn't make much sense to change the law either. But, of course, that's not the way the big industries that rely on copyright as crutch operate. If they don't get their way, they go crying to the gov't to have their business models propped up and thrust into the law. So, of course, the "anti-piracy" (i.e., the "we can't adapt so let's drag the whole world backwards") group AFACT has already jumped out and demanded that the Australian government change the law in response to the ruling. And, of course, the Australian government says it's "examining" the issue.

Of course, this just shows how far gone AFACT and its members (Hollywood studios mainly) are out of touch with what this ruling is saying. The ruling points out, quite clearly, that the problem isn't with the law and it's not with the technology. Changing the law doesn't fix things. The problem is with how the big movie studios have failed to adapt, and are now blaming totally blameless parties for their own failures. The proper response is: "Okay, it's time to come up with better business models." It's not to ask the government to artificially blame a third party that had nothing to do with the infringement. It's really a rather stunning statement of incompetence that any industry thinks the cure to their own business model failures is to legally make an innocent third party responsible.

We already covered the basics of the Australian court ruling in favor of iiNet yesterday, but if you read the full ruling you begin to realize what a well reasoned argument the judge made, and hopefully it can become the basis of future rulings on this particular topic. The judge clearly took the time to understand the actual issues, and understand how BitTorrent works, how the internet functions, and making sure that he didn't cut corners and assume that things in the digital world were exactly analogous to the physical world. It's one of the more clueful rulings you'll read. Michael Geist has highlighted a few sections that do such a great job of explaining why ISPs should never be copyright cops. It's an argument that we've tried to make in the past, but which the judge does quite eloquently. Basically, he notes that determining whether or not something is infringing is not easy, and requires a sophisticated court, not the random claims of a right holder or the suspicions of some third party:

Regardless of the actual quality of the evidence gathering of DtecNet, copyright infringement is not a straight 'yes' or 'no' question. The Court has had to examine a very significant quantity of technical and legal detail over dozens of pages in this judgment in order to determine whether iiNet users, and how often iiNet users, infringe copyright by use of the BitTorrent system. The respondent had no such guidance before these proceedings came to be heard. The respondent apparently did not properly understand how the evidence of infringements underlying the AFACT Notices was gathered. The respondent was understandably reluctant to allege copyright infringement and terminate based on that allegation. However, the reasonableness of terminating subscribers on the basis of non-payment of fees does not dictate that warning and termination on the basis of AFACT Notices was equally reasonable. Unlike an allegation of copyright infringement, the respondent did not need a third party to provide evidence that its subscribers had not paid their fees before taking action to terminate an account for such reason.

Furthermore, the court found that it's troubling to have ISPs cutting off users based on accusations, without a court weighing in on the actual details:

One need only consider the lengthy, complex and necessary deliberations of the Court upon the question of primary infringement to appreciate that the nature of copyright infringements within the BitTorrent system, and the concept of 'repeat infringer', are not self-evident. It is highly problematic to conclude that such issues ought to be decided by a party, such as the respondent, rather than a court. Copyright infringement is not a simple issue. Such problems as identified are not insurmountable, but they do weigh against a finding that the respondent could conclusively decide that infringement had occurred and that it had the relevant power to prevent by warning, suspension or termination of subscriber accounts, even if it had the technical capability to do so.

These arguments are important, though often brushed aside as meaningless by supporters of turning ISPs into copyright cops or expanding the concept of contributory or secondary liability for copyright. They claim "but of course people know what's infringing," when the truth is it's not that easy. A third party has little way of knowing whether or not content was released on purpose, or if it's use is fair use. Those sorts of things require a sophisticated legal analysis, done in a court -- not by the copyright holder with a demand that the ISP take action. It's great that this court recognized this issue clearly, and hopefully others will start to follow suit.

Another victory for common sense. Down in Australia, we've covered the lawsuit filed by movie studios against popular ISP iiNet. The studios were upset that iiNet wasn't doing enough to stop unauthorized access to movies by its users. iiNet took a very strong pro-consumer stand, and pointed out that it had no reason to act as the movie studio's personal police force:

They send us a list of IP addresses and say 'this IP address was involved in a breach on this date'. We look at that say 'well what do you want us to do with this? We can't release the person's details to you on the basis of an allegation and we can't go and kick the customer off on the basis of an allegation from someone else'. So we say 'you are alleging the person has broken the law; we're passing it to the police. Let them deal with it'.

The company claimed further that based on Australian law, its customers actually weren't violating copyright law in trading files directly, since the law only covered distributing content "publicly" and a one-to-one trade is not "public." Furthermore, it argued that the studios' demand that it monitor its customers activities would violate Australia's telecom act and violate users' privacy rights.

Not surprisingly, a lot of folks have been waiting for the verdict and it's in! The court has ruled in favor of iiNet, saying that just because it provides access, it does not mean it is a party to infringement. Not only that, the court has told AFACT, the Australian anti-piracy organization that handled the case, that it needs to pay iiNet's legal fees. The ruling looks fantastic. Some snippets from the ITnews article linked above:

"I find that iiNet simply can't be seen as approving infringement," said Justice Cowdroy.

Justice Cowdroy found iiNet users had infringed copyright by downloading films on BitTorrent, but he found that the number of infringers was far less than alleged by AFACT.

More importantly, Justice Cowdroy said that the "mere provision of access to internet is not the means to infringement".

"Copyright infringement occured as result of use of BitTorrent, not the Internet," he said. "iiNet has no control over BitTorrent system and not responsible for BitTorrent system."

The fact worldwide piracy was rife "does not necessitate or compel a finding of authorisation, just because it is felt there is something that must be done", he said.

This is a huge victory for those who believe that the efforts by copyright holders to push secondary liability on ISPs is a very dangerous policy. It's great to see the court get this one right.

Honestly, at what point do entertainment execs finally figure out that by purposely not making content available in the format people want it in, they're only encouraging them to get that content through unauthorized means? We already knew that the big movie studios were annoyed with Netflix and trying to get Netflix to delay movie rentals until at least a month after the DVD comes out. Now we have an explanation why. As JJ was the first (of a few) to send in, the studios apparently are quite annoyed that, in order to jumpstart its movie streaming offering, Netflix routed around the movie studios, and signed a deal with Starz that allowed it to stream the same movies without a direct deal with the studios. It's not clear how or why Starz had the right to also stream movies through Netflix, but I'm guessing it was a loophole in Starz' deals with the studios -- a loophole that's now closed. So, Netflix is saying it needs to convince Hollywood it's not the enemy, but Hollywood isn't quite buying it yet.

This really shouldn't be a huge surprise. After all, this is Hollywood, where reports that actually show that the movie industry will grow quite a bit in the next decade are also used to claim that rental services like Redbox and Netflix are killing off jobs. It's also the world where Hollywood execs still think that the answer to their problems (problems like its best box office year ever) is to just add more release windows. It's as if they still think that keeping content away from people makes them more likely to buy.