Damn the heroes of the past


Some people think that law is about fairness, that by knowing what is just, we can second guess a court’s decision and that by summoning up what the rules used to be we can tell what they will be.

In 1906 the UK’s House of Lords ruled that De Beers, a diamond company based in South Africa, was a UK resident and should pay tax not only from the profits of its British shareholders but from its operations worldwide. The company tried to argue that it was set up on the African continent and all its mines, machinery and workforce were there. They lost the case.

Did this decision follow from a law that had existed before this ruling? Maybe so, but a better way to rationalise it would be to say that their Lordships reaffirmed the growing meaning of communication technologies in running international trade - not just controlling it - from any place in the world.

VGTRK, All-Russia State Television and Radio Broadcasting Company is one of the largest copyright holders which owns several TV and Radio channels. In 2008 it launched legal actions against VKontakte, the Russia’s largest internet company, a kind of hybrid of Facebook and YouTube: users not only communicate with one another but upload, share and watch video files.

This is a peculiar case. Russian law does not have the ‘safe harbour’ rule which was introduced in the US by the Online Copyright Liability Limitation Act or in Europe by the Electronic Commerce Directive to shield internet companies from liability. In Russia a social network is not so different from a good old chain store accountable, we would think, for its concessionaires when they sell counterfeit products.

VGTRK lost the case in the first instance, then won an appeal and lost again in cassation. For two years the country waited for what the Supreme Commercial Court had to say. Yet the court had no inclination of stepping in. The judges decided that the issue was a matter of fact not of law and, as the Supreme Court does not retry facts, the case was closed.

Russian law presumes the fault of a copyright infringer. A claimant only needs to show that its movie, music or book is used without permission. A judge then must assume the guilt of the infringer and, unless the latter can prove that he acted with reasonable care to prevent infringement, the copyright owner should win the case. It turns out that little is expected from internet companies: VKontakte merely stated in its terms that users must not upload stolen content.

There is something truly amazing about all this. Just a few years ago a lame excuse like that would be unimaginable as would have been the suggestion that a chain store could stock its shelves almost entirely with stolen products simply because it is big, ignorant and deals with too many suppliers.

The ruling in VGTRK v VKontakte seems to challenge our sense of fairness. Even if VKontakte did not know about this particular infringement, who should be punished: those who made the movies or those who made the means to steal them?

The ruling in VGTRK v VKontakte contradicts our sense of fairness

We might not like copyright owners, those fat cats, but without them there would be no Chekhov nor Nabokov nor Star Wars nor the Simpsons. Film producers or book publishers not only risk their money, as venture capitalists do, but support new productions and new authors: by no means all books and movies achieve success and those that fail are funded by those that succeed. This complicated system of redistribution of money and expertise is what makes the creation of new art and entertainment possible. Since the invention of the printing press our whole culture has been based on it.

VKontakte, on the other hand, is a piece of programming code.

There is, though, another way to analyse this case. Instead of looking back and deciding who should bear the costs, we might try to look ahead and decide what ruling will offer better prospects for the future.

In the 19th century a usual way of hunting a finback whale was to throw an exploding harpoon on to its back. The whale did not die instantly. It would disappear, sometimes for weeks, until its dead body was washed up ashore miles from the accident. When the whale was found it did not belong to the finder but to the harpooner. There are many ways to argue that was wrong: injuring an animal does not usually make you an owner. What makes a winning argument for the harpooner is that if ownership goes to the person who finds the whale then ‘this branch of industry must necessarily cease’. At the end of the day it is the industry, says Professor Farnsworth from Boston University, that must be protected.

VKontakte has become a huge business that may complement existing copyright owners’ business models. It provides a torrent of publicity and content developers now view it as an opportunity rather than a threat.

The problem with the VGTRK’s claim is that it seeks to ruin VKontakte. If it had succeeded then VKontakte, and most other internet companies, would have been drowned under the flood of court cases – you can upload a video on the VKontakte’s site and then, without a warning, launch a lawsuit. To punish VKontakte is one thing, to kill it is another.

Though we seem to care about our history and, to some extent, about the heroes of yesterday, the law is being developed not as an appreciation of our past but as a means of building our future. That is why the decision in the VGTRK v VKontakte is probably right, yet clearly unfair and possibly against the law as we used to know it.

picture: hellotim - Fotolia.com



When a decision is right, yet unfair and against the law