06 September 2005

A Question of Responsibility

The morbidly curious can read the Federal Court of Australia's opinion online, for free, in its official form. That is something we can do with our Supreme Court's opinions between two and three years after issuance (hedged in a way that seems somewhat ignorant of the printing technology used to create the bound volumes), and never for any other federal court. But that's really an argument for another day that gets well away from KaZaa itself.

Some of the more-interesting elements of the opinion, albeit not directly related to the core issues of liability and responsibility for copyright infringement, concern an attempt to obtain quasicriminal damages. As inappropriate as the Court thought the sharing networks' comments, it didn't think this was appropriate.

513. In the present case, there is no direct evidence of the formation of an agreement. That situation is not uncommon; conspirators commonly act in secret. A conspiratorial agreement often has to be inferred from other evidence, particularly evidence about the conduct of the alleged conspirators. Counsel for the applicants submitted that, when Sharman acquired the Kazaa business from Kazaa BV, its principals knew that the operation of the Kazaa system had caused, and would continue to cause, damage to sound recording companies, including the first to sixth and eighteenth applicants. Yet the people concerned with the management of Sharman determined to operate the business. It is said those concerned with the management of Altnet, having the same knowledge, joined them in doing so.

514. I do not doubt that, at all material times, those concerned with the management of Sharman and Altnet realised that the operation of the Kazaa system routinely caused significant loss to sound recording companies, including the first to sixth and eighteenth applicants. I also do not doubt such losses have been sustained. However, this is not sufficient. In McKernan v Fraser, Dixon J said it was 'settled that, for a combination or acts done in furtherance of the combination to be actionable in such circumstances, the parties to the alleged conspiracy must have been impelled to combine, and to act in pursuance of the combination, by a desire to harm the plaintiff, and that this must have been the sole, the true, or the dominating, or main purpose of the conspiracy'. That cannot be said in the present case. Those of the respondents who were involved in making the agreements relating to Kazaa were almost certainly unconcerned about the adverse effect of those agreements on the applicants, but that effect was neither the sole nor main purpose of the agreements. The dominant purpose of the agreements was to make money.

515. Conspiracy by unlawful means includes the element that the conspirators agreed to carry out their objectives by unlawful means. It may be assumed, for present purposes, that those respondents who participated in the Kazaa agreements realised, and at least tacitly agreed, that implementation of their agreements would involve them in authorising infringements of copyrights and, therefore, acting unlawfully. However, that is not sufficient. It is true that, where the conspiracy involves unlawful means, it is not essential that its purpose be solely or mainly to injure the plaintiff. However, this must be at least one of the purposes of the conspiracy. The evidence in the present case does not establish such a purpose. It is not enough that the conspirators were indifferent to the effect of their actions on the plaintiff.

(citations omitted for clarity, typography unaltered) It seems to me that this conclusion should have been obvious at the pleading stage, and that it creates so many opportunities for entry of red herrings into argument and evidence that a smart plaintiff's counsel would have eschewed it but for necessity. I am no expert on Australian corporation law, but I suspect that there was indeed a "necessity": breaching the corporate shields to damages and to evidence. The advantage of a conspiracy theory is that one need only include the most-liable target within the scope of the conspiracy, and everyone is liable; one does not run the risk of leaving the "most guilty" defendant out due to lack of foreknowledge. I infer that the various record-company plaintiffs didi not wish to risk getting a judgment only against a judgment-proof defendant, and letting whatever money there is escape through various corporate veil doctrines.

So, it wasn't a conspiracy. It's pretty clear that the Court doesn't approve of what KaZaa and/or Sharman did. But what did they really do? Again, this is not clear from the core of the opinion, but only on the periphery.

418. I accept that Parliament intended to 'protect the messenger', although only to the extent indicated by the Act; notably s 112E. However, on my findings, Sharman is and was more than a 'messenger'. Whether it is 'unrealistic and unfair' that a software provider in Sharman's position should be held to have authorised copyright infringement by users of the software is a matter of opinion. The Court must take guidance from the Act, as elucidated by relevant judicial decisions. It is not for the Court to reject that guidance on the basis that the particular judge considers the result to be unrealistic and unfair. If Parliament thinks that is, indeed, the result of applying the Act, the remedy is in its hands.

419. The available evidence does not permit me to reach any clear conclusion as to the steps that might have been available to the applicants directly to protect their copyright in works reproduced in CDs distributed by them. The reason that evidence was not adduced, I surmise, is that all the respondents' counsel realised it is not a defence to an action for copyright infringement for a respondent to point to failings in self-protection by the copyright owner. Copyright law contains no equivalent of the doctrine of contributory negligence. If counsel are correct in asserting the applicants could have achieved some protection by adopting a DRM format, the applicants might do well to consider taking that course. However, neither the assertion nor the applicants' reaction to it can affect the legal issues now before the Court.

420. In my opinion, having regard to the whole of the relevant evidence, it should be held that Sharman infringed the applicants' copyright in their respective Defined Recordings by authorising Kazaa users to make copies of those sound recordings and to communicate those recordings to the public. By maintaining the Kazaa system in its present form, Sharman threatens to infringe the applicants' copyright in their other sound recordings in the same way.

(emphasis added; typography unaltered) This is a rather interesting theory, and one that should bear more than cursory examination. It is similar to the problems created by all copying of web-based materials. Put another way, the copyright theory is this: That it is the user's responsibility to clear permission, not the creator's responsibility to block inappropriate use. DRM, then, merely becomes an aggravating circumstance: breaking of DRM is evidence of purposeful infringement; systematic breaking of DRM may be evidence of conspiracy and criminal intent; but in no event is use of DRM the copyright holder's responsibility. (Of course, all of this begs the question of whether DRM really works, or is really worth it; but that's for another time.)

Some day, judges are going to stop writing only for other judges. They're going to start realizing that enabling the general public to "comport its conduct with the law's requirements" means writing so that the general public can be reasonably expected to comprehend what the law's requirements are. This is particularly important in "enabling" situations like KaZaa (and other P2P systems); it has also been particularly unusual.