On May 2, 2014, the Hong Kong Communications Authority (“CA”) announced its antitrust clearance decision for the acquisition of CSL New World Mobility Limited by HKT Limited.
Antitrust clearance was required under the Telecommunications Ordinance, as both parties have subsidiaries – “HKT” and “CSL,” in short – which hold telecommunications carrier licenses.
The CA examined the impact of the transaction in a number of “relevant markets,” and found issues in two of them: retail mobile telecommunications, and wholesale access to mobile network for mobile virtual network operators (“MVNOs”).
In retail mobile telecommunications, the CA found the transaction to raise anti-competitive “unilateral effects” – that is, the authority was concerned that the merged HKT/CSL entity would be able to raise prices unilaterally after the transaction. To reach this conclusion, the CA had to navigate around its own guidelines which stipulate that aggregate market shares below 40% would unlikely lead to a finding of “substantially lessening of competition” – the legal test for merger control under the Telecommunications Ordinance. Indeed, in terms of revenues, spectrum and (total) subscriber numbers, the merged entity’s market share was below 40%, though at times just barely.
On 21 October 2014 the CJEU had to decide in the case of Bestwater whether embedding content in a website via “framing” constitutes “communication to the public” within the meaning of Article 3 of the InfoSoc Directive and therefore infringes the copyright of the creator of the content.
“Framing” refers to the practice of linking to content in a way that the linked content is “framed” by content on the website which contains the link. The user therefore does not have to leave the website containing the link to see the linked content. This is most commonly used to display YouTube videos on third party websites. As the third party website operator only provides a link he does not have to store the video on his own servers and therefore saves web space. The difference between hyper-linking and “framing“ from the point of view of the user is that the user does not necessarily realize that the content is hosted on a different website.
In the case at hand a manufacturer and distributor of water purification systems produced a video for advertising purposes that was available on YouTube in Germany. The manufacturer claims to hold all rights to the video and that he had not given permission for the video to be uploaded to YouTube. Two sales representatives that worked for a competitor embedded this video on their own German marketing websites via framing. Users were led to believe that the video was actually stored on the website of the sales representatives.
The manufacturer sued the sales representatives for copyright infringement. He claimed that “framing” constitutes a “communication to the public” (specifically a “making available to the public”) and therefore needs permission from the copyright owner. The Court proceedings reached the German Federal Court of Justice which referred the following question to the CJEU: “Does the embedding, within one’s own website, of another person’s work made available to the public on a third-party website, in circumstances such as those in the main proceedings, constitute communication to the public within the meaning of Article 3(1) of Directive 2001/29/EC even where that other person’s work is not thereby communicated to a new public and the communication of the work does not use a specific technical means which differs from that of the original communication?“.
The German Federal Court of Justice considered that in principle a “making available to the public” is only done if a work is made available to a new audience. As normal hyper-linking only refers users to the website on which the content was already stored for all internet users to see, hyper-linking does not constitute a “making available to the public”. However the German Federal Court of Justice wondered whether this might be different in case of “framing”, as the website operator who uses “framing” to embed content appropriates the content and makes it his own in the eyes of the user.
The CJEU has now made it clear that linking does not constitute a “making available to the public” (or any other form of communication to the public), irrespective of which linking technique is used as long as the link leads to a website that is available to the public as a whole. The CJEU referred heavily to its decision in the “Svensson” case of 13 February 2014 (C-466/12), on which see our previous report, where it had already decided that hyperlinks do not constitute a “making available to the public” provided the link is to content that is freely and lawfully available online. According to the Court the same argument applies to “framing” as well as to hyper-links, namely that it must be assumed that a content owner that makes content available on a freely accessible website had already thought of internet users as a whole as audience for his work. Therefore the content is not made available to a new public if a publicly available website is linked. It is irrelevant for the Court whether the user is able to recognize where the material is hosted.
The decision of the CJEU brings legal certainty to the question of whether framing amounts to copyright infringement as long as the link leads to a publicly available website and the communication of the work does not use a specific technical means which differs from that of the original communication. There remains some uncertainty however over whether the link must also be to content that is available with the copyright holder’s consent. In this case the content was not lawfully available; it had not been placed on YouTube with the copyright holder’s consent but neither the German Federal Court of Justice nor the CJEU addressed this point.
 Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonization of certain aspects of copyright and related rights in the information society
The primary law in the United States governing the telecommunications industry is the Communications Act of 1934 (the “Act”). Congress adopted the Act during the Great Depression, at a time when the latest consumer technology was broadcast radio, and last updated the law nearly twenty years ago, when most people accessed the Internet using dial-up and “smartphones” were still science fiction.
The Communications Act has strained to keep up with the incredible changes in the telecommunications landscape in the last eighty years, and rumors of a “rewrite” of the Act swirl regularly in Washington D.C. Recent efforts by several House Republicans suggest that broad reform of the telecommunications law could be possible in the relatively near future. The result could be a significant restructuring of the way radio, television, mobile communications, and the Internet are regulated in the U.S.
Congress drafted the original Communications Act to consolidate already existing laws that governed telephone, radio, and telegraph communications into a single statute. This way of conceptualizing the telecommunications marketplace still defines the Act, which is divided into sections, or “Titles,” that roughly correspond to specific industry silos such as broadcast, cable, or telephony. One problem often mentioned by advocates for reform is that the nature of what constitutes “radio” or “common carrier” services is no longer clear-cut, and can give rise to disparate regulatory treatment of otherwise closely related new industries and services.
On December 19, 2013, the Standardization Administration of China (“SAC”) and the State Intellectual Property Office issued the Regulatory Measures on National Standards Involving Patents (Interim) (“Patent Measures”). Before issuing the Patent Measures, SAC issued draft proposals for public comment in 2004, 2009, and 2012, respectively. This comment-and-revision process culminated in the Patent Measures, which came into effect on January 1, 2014.
The issuance of the Patent Measures is a significant development for standards in China, especially for the telecommunications and electronics industries. The Patent Measures provide much-needed guidance on key issues for Chinese standard essential patents (“SEPs”), such as disclosure and licensing requirements.
Disclosure obligation for standard-setting participants
Under Article 5 of the Patent Measures, organizations and individuals participating in the formulation or revision of a national standard must disclose the SEPs that they own and have knowledge of to the entity responsible for the standard. A participating entity or individual will be liable for its bad-faith failure to disclose its SEPs, but the Patent Measures do not specify what constitutes bad faith or any specific sanctions for failure to disclose.
A participating entity’s SEP disclosure obligation under Article 5 is very general, and more clarification is needed. In January 2010, SAC issued the draft Disposal Rules for the Inclusion of Patents in National Standards (“Draft Disposal Rules”) for public comment. The Draft Disposal Rules provide some guidance on including patents in standards, but they have not yet been implemented.
On 22 October 2014, Fleur Pellerin, the French minister of culture and communication presented a proposal for a law adapting French law to EU law in the field of copyright and cultural heritage (the “Proposal”).
More specifically, the Proposal aims to implement provisions of three EU directives: (i) Directive 2011/77/EU on the term of protection of copyright; (ii) Directive 2012/28/EU on certain permitted uses of orphan works; and (iii) Directive 2014/60/EU on the return of cultural objects.
The amendments are:
i) Term of protection of copyright for performers’ rights and sound recordings
The Proposal would first amend Article L. 211-4 of the French Intellectual Property Code (“IPC”) to increase the term of protection of the rights of performers, producers of phonograms and producers of videograms. The term would remain, as a principle, 50 years starting from 1 January following the year of the first performance or of the first fixation. However, according to the Proposal, the term of protection would be increased from 50 to 70 years starting from 1 January of the year following the earliest of these acts, if, during the initial 50 year period, a phonogram or a fixation of the performance in a phonogram is lawfully published or lawfully communicated to the public.
The Proposal would also amend Articles L. 212-3-1 and L. 212-3-4 of the IPC to award performers, after the first 50 years of the 70 year term of protection, a right to terminate the authorisation given to a producer of phonograms to fix their performance on a phonogram, when the producer does not offer sufficient copies to the public or does not make it available in a way that members of the public can access it at a time and place chosen by them.
The Proposal also specifies that, where a contract on transfer or assignment gives performers a right to claim a non-recurring remuneration, performers shall have the right to obtain an annual supplementary remuneration from the phonogram producer for each year following the first 50 years of the 70 year term of protection.
ii) Permitted uses of orphan works by libraries, museums, archives, schools and universities
The Proposal adds new Articles L. 135-1 to L. 135-7 to the IPC to allow public libraries to digitise and make accessible to their users the orphan works of their collections, which is notably defined by the Directive as being the works whose right holders cannot be identified or located despite a diligent search. Other organizations and institutions can do the same, in particular, museums, archives and educational establishments. The orphan works concerned are literary and cinematographic or audiovisual works and phonograms.
iii) The return of cultural objects unlawfully removed from the territory of a Member State
The Proposal would amend the French Heritage Code to provide that, in order to determine whether the possessor of the cultural object exercised due care and attention (which is a condition for compensating that person for the loss of the object), consideration shall be given to all the circumstances of the acquisition, in particular the documentation on the object’s provenance, the authorizations for removal required under the law of the requesting Member State, the character of the parties, the price paid, whether the possessor consulted any accessible register of stolen cultural objects and any relevant information which he could reasonably have obtained, or took any other step which a reasonable person would have taken in the same circumstances.
The requesting State would only pay compensation (if it is found that the possessor indeed exercised due care and attention when acquiring the object) upon return of the object.
The Government has initiated an accelerated procedure for the Proposal and the Commission of Cultural Affairs should examine the text on the 12 November 2014.
The Mexican constitutional reform in telecommunications published last year acknowledged Internet access as a human right. The recent Federal Telecommunications and Broadcasting Law (the “Law”) has introduced many new concepts, such as net neutrality, which was previously unregulated in Mexico. For more information about the constitutional reform and the Law, please refer to the previous article in this issue.
Despite its existence and application years before, net neutrality regulation has recently become a hot topic worldwide and international regulators have adopted different positions. For example, the European Parliament recently tabled proposals to: (i) differentiate specialised services from Internet access services and ISPs would be able to offer the former only if network capacity is sufficient to provide the latter; (ii) narrow the concept of network management; and (iii) prohibit ISPs from blocking, slowing down, degrading or otherwise discriminating against specific content, except for network management.1 In the United States, the Federal Communications Commission (“FCC”) submitted the highly debated Open Internet Notice of Proposed Rulemaking for comments. One of the most disputed proposals of the FCC is that ISPs may undertake individualised bargaining with upstream content and service providers in some cases.2
The concept of net neutrality regulated by the Law applies not only to licensed operators of public telecommunications services in Mexico, but also to authorised entities that commercialise telecommunications services (both considered as “ISPs”). The law provides that ISPs shall provide Internet access services in accordance with the capacity, speed and quality contracted by users, independent of the content, origin, destiny, equipment or application used, as well as of the services provided through the Internet.
Pending final approval by the Congress, on October 15 the Senate gave green light to the reform of the Spanish Intellectual Property law. The reform has been considered as a short-term solution previous to the final one which is supposed to come approximately within a year, following the recent adoption of Directive 2014/26/EU on collective management of copyright and related rights. Although there are some voices arguing that this urgent and incomplete reform is not but a stopgap solution to the current law, the Government states that there are several problems which cannot longer wait for the adoption of a new comprehensive law on intellectual property.
In this sense, the development and application of new technologies have had an extraordinary impact on intellectual property rights, which has led to the need for effective tools in order to enhance protection of these rights. However, the adoption of these measures should be without prejudice of the development of the Internet, essentially based on the freedom of users to provide contents.
The new measures adopted by the Government can be grouped into three main categories, namely: (i) a broad review of the copyright levy system, (ii) the design of effective supervision mechanisms on Spanish collecting societies and (iii) the strengthening of response instruments against rights violations which boosts the legal supply in the digital environment. Continue Reading
Net neutrality has in recent years become a prominent area of interest for BEREC – the Body of European Regulators for Electronic Communications – which is composed of high level representatives of the relevant national regulatory authorities (NRAs) in each EU Member State. In 2011 the European Commission asked it to undertake a fact-finding exercise on issues crucial to ensuring an open and neutral internet, and since then, BEREC has published various frameworks and guidelines on quality of service and transparency as well as findings on the traffic management practices and restrictions applied by ISPs.
This latest report follows its public consultation on internet access service (IAS) quality monitoring systems, and seeks to establish a basis for creating quality-monitoring that is capable of (i) enhancing transparency for end users of electronic communications services and (ii) assisting NRAs in assessing potential degradation of service and intervening with appropriate corrective measures. In this context, BEREC discusses issues relating to the metrics and methods of quality monitoring IAS, both as a whole and individually, and considers the costs benefits of controlled and less controlled measurement systems in different contexts. It recommends that:
- for the quality monitoring of IAS as a whole upload/download speed, delay and jitter, and packet loss ratio should (as a minimum) be measured at the IP layer, while for individual applications using IAS, assorted applications (i.e. content and applications) should be measured by NRAs to check whether there is degradation;
- for transparent information about IAS for individual end users, a software-based measurement agent downloaded to end user equipment can be sufficient, low cost and user-friendly, while for in-depth long-term regulatory supervision of IAS quality, a more controlled measurement system (e.g. with hardware probes) would be appropriate – NRAs will need to strike a balance between the two.
BEREC also goes on to consider the possibility of establishing a multi-NRA opt-in quality-monitoring system dedicated to regulatory purposes. This is no small feat given such a system would need to meet the current and future needs of NRAs as well as providing the basis for cross-border measurements. Although BEREC recommends an evolutionary multi-stage approach in principle, it recognises the potential practical challenges involved e.g. cost of cooperation, complexity of system, time constraints related to alignment among NRAs etc. It therefore proposes an initial feasibility study to investigate whether an opt-in approach involving the convergence of methods and sharing of infrastructure could be realised in practice, including NRAs with no existing systems.
On 14 October 2014 the Russian President signed into law a bill introducing amendments to the Russian Mass Media Law (the “Law”), which introduces severe restrictions for foreign ownership in media business in Russia. The Law will come into force on 1 January 2016. The draft of the Law was submitted to the State Duma (the lower house of the Russian Parliament) for its consideration on 17 September 2014, and passed all three readings within the State Duma and approval by the Federation Council (the upper house of the Russian Parliament) within a record-breaking time by 1 October 2014.
Previously, the Mass Media Law limited foreign ownership to 50% for (i) founders of TV and radio channels, TV, radio and video programs, and (ii) broadcasting organizations with a certain coverage area. The Law goes further and provides for stricter rules for foreign ownership applicable to all mass media, including printed publications, web publications, TV and radio channels and TV, radio and video programs, newsreel programs, and other forms of regular distribution of information under a permanent name.
In short, the Law limits direct and indirect foreign ownership of Russian mass media businesses, and applies to both existing and future foreign ownership interests.